The surge in demand for South Florida real estate continues to rise as it seems the recent influx of property buyers isn’t letting up anytime soon. While South Florida has been hit by waves of homebuyers, people are starting to buy and or rent more office buildings as well, especially in Miami. Here’s what you should know about the property boom in South Florida and how it’s affecting local residents and businesses.
Why the Increase in Demand for Miami Office Space Is Significant
It’s important to understand that the sudden interest in Miami office space isn’t just another real estate boom, there’s more to it. When you consider the fact that most office buildings across the country are languishing due to disturbingly low demand, the sudden boom in Miami is quite significant indeed.
The boom could have happened anywhere in the nation, but it hit Miami and it’s just getting started. Countless businesses are diving straight into Miami and buying up office buildings at a shockingly rapid rate. Buildings on 41st Street have become especially popular as a number of high-stakes property deals were recently finalized.
What’s Driving the Demand for Office Space in Miami?
The current demand for Miami office buildings is driving the local real estate market to new heights. So why Miami and why now? Most of the businesses that are presently interested in office buildings throughout Miami are in tech or finance.
The city of Miami has become a vibrant and profitable hub for tech and finance businesses. A recent influx of large, well-known firms moving operations to Miami has attracted a vast number of smaller businesses hoping to benefit from the massive injection of capital.
The smaller businesses are moving in to provide services that cater to the large corporations that have been establishing operations in the area. According to the managing director of brokerage firm, Cushman & Wakefield, the large businesses moving into the area were strongly opposed to operating in Miami before the onset of the pandemic of COVID-19.
Things are different now and conditions have changed. The change in conditions has made Miami extremely attractive to businesses of all sizes. Keep in mind, however, the larger firms are driving the rest of the demand as smaller businesses will be depending on them for growth and survival.
How Is the Demand for Office Buildings Affecting the City of Miami?
On the surface, it would appear that the massive amount of money businesses are currently investing in office buildings as they start operating in Miami would benefit local residents. While many residents will certainly benefit from the incoming businesses, there will be some less flattering developments as well.
For example, more office buildings mean more parking lots in a city that’s been short on space for years. Miami was once voted as the fifth most crowded city in the United States. With more businesses coming to the area, more people will come with them which will come with certain complications.
Miami residents who had set their sights on local retail property might find it difficult to afford as the recent demand for property has driven rents up through the roof. The price of rent for retail spaces has risen sharply in response to an extremely limited supply of property as the spaces continue to fill up.
Although the addition of more businesses in the area provides enough money to go around to make it all worth it for local residents remains to be seen, there will certainly be plenty of opportunities.
Investors Compete with Aspiring Homeowners in a Fevered Battle for South Florida Homes
People have been moving down to South Florida in droves ever since the early days of the pandemic when people from crowded and heavily regulated states in the northeast. Now, however, investors have thrown themselves into the mix as they buy up single-family homes throughout South Florida as fast as they can get their hands on them.
With so many investors competing with aspiring homeowners, the real estate market in South Florida has intensified. The investors aren’t just competing with people looking to move into the area from out of state. They’re also competing with people who have lived in South Florida for their entire lives and want to buy a home.
Well-heeled investors have been pitted against working-class Florida natives who are coming of age and want to buy homes and start families. Some figures have estimated that over 20% of single-family homes sold in the area were purchased by investors.
With investors gathering and holding onto so many properties, prices are going up at alarming rates. With prices for single-family homes going up, it’s becoming increasingly difficult for local working-class people to afford a home in their own area.
The ongoing housing shortage in South Florida is expected to continue for some time. This means that while prices for single-family homes are already exceptionally high, there’s still room for growth. Many investors are betting on the idea that property prices in the area will continue to rise.
Some investors are intending to flip the houses they’re buying, others are choosing to hold onto them and rent them out instead. For the most part, the investors that have been exploring the South Florida real estate market have the upper hand against working-class and middle-class locals due to a massive disparity in available capital and financing options.
What it All Means
So what does it all mean? Overall, the businesses that are snatching up office buildings in Miami will benefit the area commercially. Investors buying single-family homes throughout South Florida to flip or rent out will continue to drive property prices up for the foreseeable future.
All in all, the recent increase in demand for South Florida property will drive a lot of growth that could enrich the local economy. The area has seen plenty of ups and downs in terms of property prices and demand. Current market conditions make will make for exciting times in the South Florida real estate market of 2022.