People who use flexible office spaces want to increase their usage there to comprise half of their workweek – an increase of 19% from current levels – while decreasing their remote working time by the same percentage, according to a report issued this week by Cushman & Wakefield in conjunction with WeWork.
With sentiments such as these, the argument for companies contemplating using flex office space has perhaps never been stronger.
Companies and workers are finding flex space working arrangements to allow for valuable collaboration, a better balance of office and remote work, and more options overall, and businesses appreciate the opportunity to avoid lengthy lease terms.
Avoiding ‘Too Much’ WFH
Rob Lowe, executive managing director and partner at Stream Realty Partners, tells GlobeSt.com that one of the main lessons learned from the pandemic is that workers enjoy the flexibility of working from home – no commute, less unwarranted supervision, more comfortable work attire, etc.
“And employers learned that many corporate functions perform well without the requirement of a five-day, in-person work week – accounting, marketing, etc. The question persists as to what’s the right WFH balance.
“Today, employers have landed on the conclusion that too much WFH takes away from culture, learning, accountability, and ultimately productivity. Workers are accepting this conclusion with the mandate that they have more flexibility in their work schedule.”
Flex Office Use Strong Well Before Pandemic
Kevin Fagan, Moody’s Analytics’ Head of CRE Economic Analysis, tells GlobeSt.com that flex office usage has been very strong, even before the pandemic.
The amount of space leased to flex office operators more than doubled across the US in the roughly three to four years prior to 2020, and that was not limited to WeWork.
Moody’s tracked roughly 300 other operators in the US, ranging from one-off locations to small specialty flex offices supporting specific industries or groups of people, to larger operators doing enterprise solutions like Industrious and IWG.
“Given the increased need for flexibility to support hybrid working, we expect the growth trend to continue,” Fagan said.
“From a commercial real estate risk perspective, this can be positive or negative. On one hand, more volatility is introduced by the much shorter lease terms common for users of flex office space (small single offices are often month-to-month, while even larger enterprise leases will only be roughly three-year maximum, as compared to the average traditional lease of roughly nine years).
“On the other hand, a flex office can raise the value of a property. For example, going back to the mid-2000s in London, having a well-curated flex office operator in your building is typically seen as an amenity by your tenants because it offers them very functional common area space for their workers and guests, and it serves as a mechanism for companies to grow or shrink their workforce without having to go through the expensive process of adjusting the amount of traditional, longer-term lease space they occupy.”
Better Lease Terms, Room to Grow
Regan Donoghue, senior principal strategy at Unispace, tells GlobeSt.com that the demand for flexibility started a few years before the pandemic when tech firms were refusing to sign leases longer than two years.
“They did this because they were experiencing rapid growth, and we’re constantly evolving into new ways of working,” Donoghue said. “While most firms returning to the workplace are not going through rapid growth, they are most certainly faced with constant change.
Looking at a future that is ambiguous and uncertain, the best approach any firm can do is to plan for the imminent change. A hybrid solution only solves for when an employee would come in and possibly where they might use a shared seating arrangement.
“A work environment needs to be more; it needs to be responsive and agile to best support the needs of the workers.”
Donoghue said that humans are wired for survival and thrive in environments where they are given the ability to design how they wish to implement the task at hand.
“For so long, the workplace has been a static and stale space that has drained the creativity of many (hello isolated offices, sad cubes and noisy benches). It’s time we let our work environment become an adaptable and flexible space that will spark brilliance in the minds of many.”
Flex Options and Desirable Locations Key
Beth Moore, head of strategic growth at Raise Commercial Real Estate, tells GlobeSt.com, “Given the high-growth nature of many of our clients, flex has become a key pillar in their portfolio strategy whether they are launching a new market, incubating a new idea, or exploring options at specific locations.
“As companies plan for the future, our clients are using flex and on-demand spaces to test fit and assess what work arrangements are resonating with their employees and business needs.”
Moore added that one thing is certain, “the amount of flex options, desirable locations, and cost-effective solutions means flex will be an integral part of our clients’ strategies for the foreseeable future.”
Flexibility is Worth Paying For
Alex Snyder, Portfolio Manager, Real Estate Securities, CenterSquare Investment Management, tells GlobeSt.com that “in a land of uncertainty, flexible space is king. The more companies need to be able to pivot and move in an ever-changing world, the more they value flexibility, and the more they’ll pay for it.”
Snyder said that providers of flexible space, both in terms of sizing and time, stand to benefit from this need.
“It’s a way to recruit talent,” he said. “Providing great flex space is selling pickaxes into the gold rush. Employees don’t hate the office, but they hate the commute. By and large, they like socializing, enjoy collaborating, and take joy in nice spaces.
“If small satellite offices can offer time to come together and collaborate, build culture, it will be desired by both employers and employees.”
WFH vs. Flex Work Varies by Location
Serge Vishmid, managing principal, Atlas Capital Advisors, tells GlobeSt.com that preferences for flex space vary by geography, even for the same clients.
For example, Vishmid tells GlobeSt.com, in Northern California (the Bay Area), “the model is very much remote work at this point, whereas in Florida and Chicago virtually everyone is back in the office full time.”
In Orange County, Calif., he is seeing more of a “flex” type of approach with more and more employees starting to actually come back to the office. Overall, the expectation from the C-Suite is that most employees will be back in the office full-time over the next 18 to 30 months.
Seeking Space That is Inspiring
Katie Pace, director of launch communications and media relations at Steelcase, tells GlobeSt.com, “We don’t necessarily have data showing whether workers are choosing flex spaces or not. However, we know workers prefer spaces that are more inspiring and offer more choices to accomplish different types of work — places where they can both collaborate and focus.
“This presents an opportunity for organizations to rethink their workplace to create a place people want to work from and earn their commute. The workplace, whether a traditional office or a flex space, needs to be more enticing than remote work setups.”
Source: GlobeSt.
Rental Market Expected To Surge As Ian Exiles Move To Palm Beach, Broward
While local housing sales are hitting headwinds, the rental markets in Palm Beach and Broward Counties are expected to surge as Hurricane Ian exiles look for temporary homes while theirs are rebuilt. And in some price points and locations, those seeking new homes may end up relocating completely to South Florida — preventing the housing market from completely crashing.
Zev Freidus, founder of ZFC Real Estate in Boca Raton, told BocaNewsNow.com that Ian’s impact on South Florida real estate will be wide-ranging.
Source: Boca News Now
Delray Beach Is Moving Forward With A Shipping Container Plaza On Atlantic Avenue
Delray Beach’s “out-of-the-box” plan to drastically transform a barren lot along Atlantic Avenue into a lively destination plaza comprised of shipping containers could soon become a reality.
City officials gave the green light on moving forward with the project, which would result in a new outdoor venue with restaurants, shops, a park, a play area for kids and a stage for musical events. CPZ Architects, a local firm handling the project, unveiled new design photos highlighting the plaza.
The project, which would be built at 800 W. Atlantic Ave. just east of Interstate 95, will be made up entirely of colorful 20- and 40-foot shipping container boxes.
Shipping container plazas have become trendy design choices over the past decade, popping up in places such as Las Vegas, Wynwood and Orlando, due to their unique designs and quick construction timelines.
The next step will be for the city to seek out bids from shipping container companies, Delray Beach Community Redevelopment Agency Executive Director Renee Jadusingh said. No timeline has been set for the project, she said.
Once the project receives final approval, it would take between 60 and 82 weeks to complete, according to a report from CPZ Architects. A plaza like the one being presented is estimated to cost about $6.7 million, according to the same report. That number, however, is not final. The actual construction costs could vary based on different bids.
Delray Beach officials have long attempted to revitalize the stretch of Atlantic Avenue between I-95 and Swinton Avenue, which has paled in comparison to the section west of Swinton, which is lined with dozens of popular bars and restaurants.
The plaza is a “forward-thinking and out-of-the-box” way to revitalize the area, CRA Board Member Angie Gray said.
The plaza will also have a parking lot with 39 spaces.
Orlando has a similar venue, Boxi Park, which launched in 2018. Delray Beach officials suggested it be used as a template, according to city documents.
Source: Sun Sentinel
A New Car Dealership Was Denied In Delray Beach. The Developer Is Hoping The Courts Will Save The Project
A developer spent $10 million on a piece of land in Delray Beach with big plans of opening a brand new car dealership along Federal Highway.
Those plans are on life support, though, after the City Commission quashed the proposal in September. Now, the developer is hoping the courts will step in and keep the proposal alive.
The developer, ABC JC Auto Imports LLC, has filed a petition for a circuit court to review the decision, claiming its due process rights were violated by the commission. Filed by Fort Lauderdale law firm Greenspoon Marder LLP, the petition asks for a court to review the decision of a lower court, or in this case, a government body.
During a September meeting, the City Commission narrowly denied a rezoning application that would have allowed the proposed 4.3-acre Hyundai dealership to operate at 2419 N. Federal Highway.
The proposed Hyundai dealership would be built on a vacant lot that has remained undeveloped for more than a decade and an adjacent pottery store. The land was purchased for $10 million in January, according to Palm Beach County Property Appraiser records.
As a result, Delray Hyundai would move from its current location just south of George Bush Boulevard into the new property, which is twice as large. Nearby businesses include Gunther Volkswagen and Gunther Volvo dealerships, a car wash, a home furnishing store, and bicycle shop.
If a circuit court judge determines the plaintiffs were not afforded due process rights, the case will be sent back to the City Commission and be reheard. The court cannot uniformly overrule the commission’s decision and grant the zoning application.
The petition claims the proposal “satisfied all of the applicable requirements of the city of Delray Beach and Florida” and that commissioners made a “faulty and unsupported determination.”
Delray Beach City Attorney Lynn Gelin said the city can’t comment on current litigation.
During the Aug. 16 meeting, city commissioners voted 3-2 against the proposal. Among the concerns were the dealership directly abutting a residential neighborhood to the east and concerns about allocating more of the city’s scarce available land to car dealerships when Delray Beach already has more than 20 dealerships in business.
Additionally, a new AutoNation Land Rover Jaguar dealership is being planned for 1001 W. Linton Blvd., adjacent to a Mercedes-Benz dealership.
More than 98% of the city is already built out, making it difficult for developers to find large pieces of land to build on. While much of the city’s recent development has centered around the downtown, Congress Avenue and the southern portion of Federal Highway, the northern part of Federal could become a new hot spot for development.
Across the street from the proposed car dealership, a luxury home developer purchased Ellie’s 50′s Diner, which operated for 32 years, for $5 million in July. In the short term, the plan is for the site to remain a dining establishment with new operators and a new theme, but the long term plan will likely see it transformed into condominiums or townhomes.
Source: SunSentinel
Federal EV Charging Funds Could Boost Overlooked Property Type
When Bertha Benz made the world’s first road trip in an automobile 134 years ago, one of the tricky points of the voyage was finding a place to refuel. Luckily, chemists at the pharmacy carried ligroin, a lab solvent made of petroleum, which propelled Benz and her children on their 110-mile trip in Carl Benz’s grand invention.
Electric vehicle proponents hope the rollout of the $5B National Electric Vehicle Infrastructure program will make it a little easier for EV drivers in the U.S. to charge than it was for Benz to refuel in 1888 Germany.
And like during the Benz road trip, EV drivers should soon get an assist from an existing property type — this time, gas stations, which experts said could get a boost in business with the installation of chargers.
Decades ago, gas stations simply sold gas before eventually incorporating convenience offerings, car washes, food, ATMs and lottery sales, said NRC Realty & Capital Advisors Executive Managing Director Evan Gladstone, whose company represents sellers of convenience stores and gas stations.
All of those additions have made the properties more appealing as an investment, and the added amenity of EV chargers could similarly boost owners of filling stations.
It takes generally 20 to 30 minutes to charge a vehicle up to an 80% full battery with fast charging, four to six times as long as a five-minute gas tank fill-up.
Gas stations have been a popular niche commercial real estate asset class for years because of their diversified revenue streams, with more than $2B in annual transaction in the years leading up to the pandemic, according to a CCIM report. EV charging figures to boost the appeal.
The Federal Highway Administration earlier this month approved 35 states’ NEVI proposals, which are expected to result in EV charging access across 53,000 miles of U.S. highways. As the FHWA finalizes the remaining states’ proposals by the end of the month, service station operators are eager to offer what for many is a new way to refuel.
Source: Bisnow
Flex Space Gains Momentum In A Hybrid Work World
People who use flexible office spaces want to increase their usage there to comprise half of their workweek – an increase of 19% from current levels – while decreasing their remote working time by the same percentage, according to a report issued this week by Cushman & Wakefield in conjunction with WeWork.
With sentiments such as these, the argument for companies contemplating using flex office space has perhaps never been stronger.
Companies and workers are finding flex space working arrangements to allow for valuable collaboration, a better balance of office and remote work, and more options overall, and businesses appreciate the opportunity to avoid lengthy lease terms.
Avoiding ‘Too Much’ WFH
Rob Lowe, executive managing director and partner at Stream Realty Partners, tells GlobeSt.com that one of the main lessons learned from the pandemic is that workers enjoy the flexibility of working from home – no commute, less unwarranted supervision, more comfortable work attire, etc.
Flex Office Use Strong Well Before Pandemic
Kevin Fagan, Moody’s Analytics’ Head of CRE Economic Analysis, tells GlobeSt.com that flex office usage has been very strong, even before the pandemic.
The amount of space leased to flex office operators more than doubled across the US in the roughly three to four years prior to 2020, and that was not limited to WeWork.
Moody’s tracked roughly 300 other operators in the US, ranging from one-off locations to small specialty flex offices supporting specific industries or groups of people, to larger operators doing enterprise solutions like Industrious and IWG.
Better Lease Terms, Room to Grow
Regan Donoghue, senior principal strategy at Unispace, tells GlobeSt.com that the demand for flexibility started a few years before the pandemic when tech firms were refusing to sign leases longer than two years.
Donoghue said that humans are wired for survival and thrive in environments where they are given the ability to design how they wish to implement the task at hand.
Flex Options and Desirable Locations Key
Flexibility is Worth Paying For
Snyder said that providers of flexible space, both in terms of sizing and time, stand to benefit from this need.
WFH vs. Flex Work Varies by Location
Serge Vishmid, managing principal, Atlas Capital Advisors, tells GlobeSt.com that preferences for flex space vary by geography, even for the same clients.
In Orange County, Calif., he is seeing more of a “flex” type of approach with more and more employees starting to actually come back to the office. Overall, the expectation from the C-Suite is that most employees will be back in the office full-time over the next 18 to 30 months.
Seeking Space That is Inspiring
Source: GlobeSt.
Sperry Commercial Global Affiliates | RJ Realty’s Ron Osborne Reps The Strachman Family In The Purchase Of Fort Lauderdale Retail Property
Ron Osborne, Managing Director/Broker of SperryCGA | RJ Realty, represented The Strachman Family in the purchase of a 8,864-square-foot retail property located at 702-706 NE 1 Ave. in Ft. Lauderdale, Florida.
The deal closed September 12.
The buyer, Judith Strachman Rev. Living Trust, purchased the property from Barkan Investments for $4,250,000
The property is currently occupied by Chops & Hops Axe Throwing Lodge, a one-of-a-kind bar that pairs the ultra-fun activity of axe throwing with world-class cocktails and live music, Ft. Liquordale Entertainment, and Crossed Keys Society, a quirky, feel-good tattoo studio and creative space.
Judith Strachman Rev. Living Trust purchased the property to complete the exchange of the sale of the Boulevard Center, a retail plaza located at 1504-1538 E Commercial Blvd. in Oakland Park, Florida, earlier this year. Osborne represented Judith Strachman Rev. Living Trust in that transaction. After an extensive search for a single tenant, NNN leased property that would offer a strong return, the trust elected to purchase the subject property which has two tenants, Chops & Hops and Ft. Liquordale, on the main floor and Crossed Keys Society on the second floor.
The Buyer was interested in the property due to its location within Flagler Village in Ft. Lauderdale. With the redevelopment of the old SearsTown property only a short distance from the subject property’s location, the Buyer believes that the area is only going to increase in value over time.
Osborne has represented The Strachman Family as trust advisor over the last 20+ years and, in the last 5 years, helped in repositioning its portfolio of management-intense multi-tenant retail properties. The family is repositioning its portfolio for the future.
The property was listed by Native Realty.
Here’s What CRE Investors Are Thinking As Inflation Ticks Up
A recent investor survey by Marcus & Millichap reveals that while CRE transactions may level out this year, investor sentiment remains strong.
The mid-year survey’s headline index value of 159 is “somewhat reminiscent of the trend we saw in 2016,”in which sentiment declined a bit as higher interest rates bit into the market, says Marcus & Millichap’s John Chang.
In 2016, the index declined 12 points and the number of CRE transactions flattened. This year, the index has declined 11 points and that could deliver relatively similar results, in what Chang calls a “relatively modest softening.”
According to the survey, the top two investor concerns are interest rates and inflation. About two-thirds said interest rate increases aren’t affecting their investment plans, and almost 9% said they’d buy more commercial real estate because of rising interest rates. On the sell side, 77% said the rate increases haven’t caused them to change plans and 11% said they plan to sell more.
Respondents were even more dismissive of inflation, according to the survey. Twenty-four percent of respondents said they’d buy less CRE but almost 12% said they’d buy more. The buying intentions with respect to more inflation-resistant property types like apartments, hotels and self-storage indexed higher, with about 14.4% of investors overall saying they’d buy more of those assets because of elevated inflation.
Cap rates are expected to rise as a result of rising interest rates as well, with 14% of investors surveyed saying they think cap rates will rise by 50 basis points or more over the next year. About 35% think they’ll go up by less than that, and 27% expect no change. And Chang says since there’s still a lot of capital coming into CRE, yields and stability look compelling.
Source: GlobeSt.
How Commercial Real Estate Can Hedge Against Inflation
Whether inflation first entered your adult life in the 1980s, the late 2000s or the first few years of the 2020s, the aftermath is more or less the same: emptied wallets and angry consumers.
And while some inflation is good (like the Federal Reserve’s annual target of 2%), too much is obviously not.
Amidst all the commentary that usually accompanies inflated economies, you may hear the word “hedge” thrown around quite a few times. And while many asset classes can help you provide a hedge against inflation, how can you utilize commercial real estate specifically as a hedge?
How Inflation Degrades National Currencies
In inflated economies, your average consumer ends up having to pay more for everyday items and conveniences than what may be considered average due to decreased purchasing power. Purchasing power, in this regard, refers to how much value of something you can extract with a single unit of currency (such as a single US dollar). In inflated economies, this decreases, and vice versa for deflation.
Illustrating Decreased Purchasing Power
This fall in purchasing power can be simply illustrated with a simplified example. Let’s say John Doe usually pays $100 a month for groceries in a regular economy. And let’s say that a large-scale financial crisis has just crippled that economy. As a result, consumers, now driven by fear of the unknown, start spending less and saving more.
Businesses in John Doe’s country, however, still need to make a profit, but this decrease in consumer demand is ultimately shrinking profit margins. So, these businesses start raising their prices to compensate. And these price increases accelerate even more when those businesses start paying more for raw materials and labor as a result of this financial crisis, creating a domino effect.
All of this creates an inflation rate of, say, 9%. This means that, if something cost $1 last year, it now costs $1.09 today. Each unit of that economy’s currency has lost 9% of its purchasing power, and John Doe will now pay $109 a month for groceries for the very same things.
What Does Inflation Leave Behind?
Ultimately, what inflation leaves behind is your average consumer having to pay more for everyday goods and services at no fault of their own. And while inflation can come about as a direct result of high employment and strong economic growth, there are a myriad of things to factor in a large, complex economy like price gouging or consumers getting higher-paying jobs. More impactfully are the consequences of macroeconomic factors such as global conflicts, financial crises and large-scale natural disasters.
Hedging Against Inflation
To hedge against inflation, you store your money in assets that appreciate in value over a certain period of time. Store here is a synonym for purchase. Gold is probably the most popular example of a hedge against inflation. As the purchasing power of the U.S. dollar falls, an ounce of gold tends to become more expensive as more investors buy it.
As such, the owner of that gold has successfully hedged against inflation. They can sell off that asset and receive more dollars in compensation than they originally invested, compensating for the drop in that currency’s purchasing power.
How Commercial Real Estate Can Hedge Against Inflation
Commercial real estate operates in a similar way to gold in inflationary environments. As the purchasing power of a currency drops, average property values tend to increase alongside new and existing commercial rentals as lease renewal rates increase. This is largely the case with properties that are already developed and have been around for some time. It’s likely that the interest rates on any loans taken out to purchase those properties were lower before inflation hit.
Once the Federal Reserve begins raising interest rates to combat inflation, the cost of owning the property for the owner stays the same while its value grows. This is not so much so, however, for properties currently or planning to be under development. Inflation often leads to increased costs for labor and materials, slowing down property development as a result. This means that demand for existing properties rises while demand for new ones falls, placing the odds all the more in favor of existing commercial real estate property owners.
Timing Matters
Commercial real estate as a short-term hedge against inflation usually doesn’t bode as well as its long-term alternative. Your investment needs time to mature, and purchasing CRE when it’s too late will not protect your portfolio in the same way.
This is largely due to the rising costs of goods, services and labor that come with inflation, most especially when it rapidly accelerates. By the time you start considering putting some cash in CRE in an inflated economy, not only will it be more expensive, it’s usually too late.
Instead, you should approach investing in CRE as a long-term hedge. As we get out of these inflationary times, now is a good time, as soon as you’re able to, to look into investment strategies and talk to the right professionals to help you get started; the last thing you want to do is wait too long.
Selecting The Best Property Type
Selecting the best commercial property types as a hedge is where market specifics really come into account. Take the Covid-19 pandemic, for example; the virus put many retail outlets out of business but led to a flaming hot housing market. Those invested in retail felt the aftershocks of the pandemic as retail values plummeted, while those invested in multifamily and industrial real estate saw quite the opposite.
This is extraordinarily important information to keep in mind moving forward into a post-pandemic economy. The retail market has forever changed, and while consumers still enjoy shopping in person, there is no denying the cold lessons the pandemic taught us about e-commerce. In the end, do your research and stay diligent when investing in CRE.
Source: Forbes
The State Of Multifamily Investing In South Florida
South Florida’s apartment buildings have traded at record prices as rents continue to climb.
However, there will likely be fewer apartment building transactions this year compared to last year, according to a recent report from Cushman & Wakefield.
The report; authored by Calum Weaver, director of Cushman & Wakefield’s multifamily group in Florida; stated that sales volumes slowed this summer “and will likely be 20 to 30% lower than in 2021.”
That’s because higher interest rates have impacted the profitability of multifamily deals.
Despite the headwinds, multifamily sales activity remains strong as foreign and domestic buyers continue to “pour into South Florida,” Weaver said.
South Florida’s apartment buildings traded at record highs in the first half of 2022, for an average of $345,000 a unit in Miami-Dade, $300,000 a unit in Broward, and $379,000 in Palm Beach County.
The deals add up to $4.96 billion in multifamily transactions, in “the second-highest six-month sales total in history.”
Forty-two percent of South Florida’s 367 multifamily transactions between January and July took place in Miami-Dade, while 34% were in Broward, and 24% were in Palm Beach County.
First-time investors made many of those purchases in a trend that’s expected to continue, according to the report.
Landlords’ net rental income, or effective rent, isn’t rising much as it did in 2021. But their profits continue to increase, the report stated. Over six months, rents increased 7.5% to $2,186 a month in Miami-Dade. In Broward, rent rose 5.3% to $2,326 a month during the same time.
In Palm Beach County, the rent increase was flat, with an increase of less than 1% to $2,326 a month.
It’s the first time average rents in all three counties exceeded $2,000 a month, Weaver wrote.
South Florida has led the nation in rent hikes since the pandemic as well-paid remote workers and executives moved to the region from other parts of the United States, brokers and developers have told the Business Journal.
There are signs, however, that rent increases are slowing down.
Ken H. Johnson, an economist at Florida Atlantic University, has theorized that asking rents will drop as some remote workers return to their points of origin due to employers’ demands that they spend more time in the office.
There is some anticipation that rent increases will stabilize as more apartment units are built in South Florida. A recent report from property technology company Yardi projected that 19,000 apartment units will be finished by year-end.
Weaver’s report noted that year-to-year vacancies increased in Broward to 4.4% from 3.5%. Vacancies also went up in Palm Beach County, to 6.4% from 4.5%.
However, vacancies remain “at historic lows” in Miami-Dade County, at 3%, the report stated.
As more multifamily units are built, vacancies are expected to marginally increase in South Florida.
There are now 39,216 units being constructed in South Florida, including 9,192 apartments that recently broke ground in Miami’s Brickell Financial District and downtown areas, 3,657 units in Hialeah and Miami Lakes, as well as 3,611 units in West Palm Beach, Weaver wrote.
There could be a decrease in new projects as it becomes more difficult for developers to obtain construction loans, the report noted.
But demand for rentals is expected to remain high as home prices rise in tandem with rents.
The median price for a single-family home in South Florida rose to about 13% to $542,878, the report stated, adding that “average home values are increasing at a greater rate than rents, making ownership for many even tougher.”
Meanwhile, South Florida’s population grew by 47,000 people year to date.
South Florida’s population is expected to continue to grow, according to Cushman & Wakefield.
If half of these new households are renters, “that represents over 18,500 new renters a year in South Florida.”
Rising rents may be a boon for landlords, but they could dissuade some professionals and companies from moving to South Florida, some experts have warned.
Their costs are rising, too, as insurance cost hikes “continue to be a challenge” with premiums per unit ranging from $1,000 to $1,800 a unit, the report stated.
However, Weaver’s report noted that South Florida is home to a strong job market, with unemployment at 3% or lower and salaries increasing by 6% over the last 12 months.
Source: SFBJ
RE Investment Activity Is Already Rebounding From Interest Rate Hikes
For more than a decade, the commercial real estate industry has enjoyed a zero or near zero Federal Funds Rate, and with it, a historically low cost of debt. That unprecedented run has officially come to an end, as the Federal Reserve increased its Fed Funds Rate four times in response to inflation. Fed Chair Jerome Powell has signaled more increases to come later this year.
The Fed’s action caused the commercial real estate industry to pause and assess the new market conditions. According to Cliff Carnes, EVP at Matthews Real Estate Investment Services, that pause lasted a mere six weeks.
In this interview, Carnes explains why investment appetite has completely returned, what’s driving the price stabilization in spite of higher rates, and how the near-term outlook is even more promising, with predictions of strong real estate returns and an upward trend in pricing.
Click here and press play to hear all of Carnes’ insights on investment activity, interest rates and inflation, as well as advice for investors pursuing acquisitions in this market.
Source: GlobeSt.