SE Florida Real Estate Market 2020

SE Florida Real Estate Market 2020
RESIDENTIAL Real Estate Market in SE Florida
The luxury category is expected to remain extremely soft and could decline as much as 15%. Strong decline in foreign buyers puts pressure on the sale of higher end homes, especially condominiums. The trend: Buyers from the Northeast U.S. continue to show interest thanks to our great climate and the state and local tax deductions. The SALT deduction allows you to deduct up to $10,000 of your state and local property taxes in addition to state income or state sales tax. The domestic demand won’t be strong enough to replace foreign buyers. Domestic buyers NE and CA are concerned about sea level rise and focus instead on new construction with higher elevations. We expect a considerable pull back in pricing in the first six months and possibly continue throughout the rest of the year in Sunny Isles, Downtown Miami and Brickell, with a decline about 15%. What sells: lower-priced homes under $500,000. There is a big demand for more affordable housing in the tri-county area. What sells better in Broward, is the $1 million- to $2 million market. Homes that are over 20 years old, decline in pricing, with an oversupply of big houses. The millennial buyers, representing the biggest buyer pool, are not likely to favor bigger homes because of student debt and because they are deciding to have families later in life.
Commercial Real Estate trends in SE Florida
Office market: The office market is expected to remain healthy. Vacancy rates are at about 12%, expected more leasing activity in Downtown Fort Lauderdale, Brickell and Downtown Miami. Wynwood will emerge as a strong office market in 2020.
Retail
The retail real estate sector is expected to decline 15% with higher vacancy rates as ecommerce continues to take a bite out of brick-and-mortar sales. There were close to 900,000 square feet that were delivered in 2019, plus another 2.6 million square feet planned or under construction.
Industrial Real estate
The industrial market out-performed expectations in 2019 as the absorption of existing big-box warehouses and new construction were stronger than anticipated. The demand continues to be fueled by e-commerce, which now represents about a quarter of all industrial tenants in the market. Vacancy is less than 4 percent and rental rates are expected to increase another 8 percent, continuing the strong momentum into 2020. New warehouse spaces are under construction that total over 2.5 million sq.ft. in Broward, which has the biggest share of new construction out of the 3 counties. Meanwhile in Miami-Dade, demand in some of the county’s most sought-after sub-markets is beginning to cool down.
Multifamily residential apartments
The demand for multi-family apartment buildings continues to be very strong, apartment landlords continue to be in a position to command high rents and enjoy super low vacancy. The challenges are: older and smaller buildings are frequently found to be in violation of city and county new codes, which causes tremendous stress to the owners as they are facing expensive modifications and conversions or, hefty fines if they do not comply. On the other hand, building a new Class A rental property is expected to slow down due to high land acquisition and construction cost, as it will then require pushing rents to unaffordable levels. If rents got too high, the landlords would lose this segment to home sales.

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