Miami

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Up 7 Places

2012 Rank: 14

2011 Rank: 21

Miami

Vacancy Down, Rents Up; Investors Angle to Get a Piece of Recovery
Year-over-Year Change

L

Employment vs. Retail Sales
10% 5% 0% -5% -10%
Employment Retail Sales

ast year’s modest recovery in space demand will spread to additional areas of Miami-Dade during 2012, fueling a marketwide reduction in vacancy and a slight rise in rents. Driven by resurgent housing sales and the likelihood of a new round of condominium construction, retail properties in the greater downtown area and Miami Beach continue to recover. Space demand in these areas has grown somewhat faster than the rest of the county, and vacancy plunged about 100 basis points last year to 5 percent. A projected increase in demand this year will enable many property owners in the area to raise rents by more than the market average. Elsewhere, vacancy remains around 5 percent in Coral Gables and Kendall and will fall further in 2012 due to tenant demand generated by the area’s relatively high incomes. The expected improvement in property operations and bright long-term growth prospects for the county will provide additional traction in the investment market. Greater access to financing modestly accelerated deal velocity last year and intense demand for single-tenant properties persists. Few drugstores have been built in Miami-Dade in the past few years, and those properties with long remaining lease terms trade at cap rates in the 6 percent range. Newly leased single-tenant concepts that might become available in 2012 include bank branches, as Chase Bank is opening new locations in the market. Many single-tenant property investors will also venture into the multi-tenant segment to target small strip centers with two or three national tenants. Cap rates for these properties are estimated to start at around 7 percent.

08

09

10

11*

12**

Retail Completions
2.4
Square Feet (millions)

1.8 1.2 0.6 0.0

08

09

10

11

12**

Asking Rent and Vacancy Trends
Asking Rent Vacancy

$26

9% 8%
Vacancy Rate

2012 Market Outlook


Asking Rent per Square Foot

$25 $24 $23 $22

2012 NRI Rank: 14, Up 7 Places. Miami gained seven spots this year due to a strong vacancy improvement and top-10 overall vacancy rate. Employment Forecast: Payrolls will expand 2.1 percent, or by 20,600 jobs, in 2012, marking a slight increase from last year. The potential construction of two casinos would provide the county with a major new source of jobs. Construction Forecast: In 2012, 240,000 square feet of retail space will come online, a slight rise from the 192,000 square feet delivered last year.

7% 6% 5%



08

09

10

11

12**



Sales Trends
Single-Tenant Multi-Tenant



Median Price per Square Foot

Vacancy Forecast: Net absorption of approximately 800,000 square feet will reduce vacancy 70 basis points in 2012 to 6.2 percent, the lowest yearend level in four years. Rent Forecast: Following a 1.0 percent uptick in 2011, asking rents will rise 1.5 percent this year to $23.65 per square foot. Effective rents will gain 2.0 percent to $20.08 per square foot, up from a 1.1 percent rise last year. Investment Forecast: The county’s high-traffic trade areas remain attractive to investors in single-tenant, net-leased assets. Properties with seasoned leases will receive greater attention due to limited new construction, a result of the decline in home building.
Market Forecast Employment: 2.1% s Construction: 240K s

$400 $300 $200 $100 $0





07

08

09

10

11*
** Forecast

* Estimate

Sources: Marcus & Millichap Research Services, CoStar Group, Inc., RCA

Vacancy: 70 bps t

Effective Rents: 2.0% s
page 31

2012 Annual Report

BLACK TEXT VERSION

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