Why South Florida Research Report
INSIGHT INTO CURRENT TRENDS DRIVING GROWTH A Cushman & Wakefield Research Report December 2022
South Florida is one of the most culturally diverse areas in the country with nearly half of the population speaking a language other than English.
Population The area is known for its tropical climate, strong international ties, most notably with Latin America, and friendly business environment due to less regulation and lower taxes. The Miami-Fort Lauderdale-Pompano Beach Metropolitan Statistical Area (South Florida MSA) is the seventh largest metro area in the United States with over 6.1 million residents.
The area contains a younger population with 25-34 year olds making up the largest percentage of the population by age. South Florida has recently seen an increase in new capital, companies, and people moving to the area due to its superior quality of life.
*Wall Street of the South - South Florida Business Journal
POPULATION 2,701,767 Miami-Dade County 1,944,375 Broward County 1,492,191 Palm Beach County 6,138,333 Total MSA
FOREIGN-BORN POPULATION 1,448,147 Miami-Dade County 692,198 Broward County 407,368 Palm Beach County 2,547,713 Total 57% 27% 16%
SOUTH FLORIDA Foreign-Born % by County
SOUTH FLORIDA Population % by County
FINANCIAL SERVICES 213,500 Miami-Dade County 177,600 Broward County 83,200 Palm Beach County 474,300 Total 45% 37% 18%
MULTINATIONALS 1,000 Miami-Dade County 230 Broward County 70 Palm Beach County 1,300 Total 77% 18% 5%
SOUTH FLORIDA Financial Services % by County
SOUTH FLORIDA Multinationals % by County
“Wall Street of the South”- South Florida Business Journal
A SKILLED AND GROWING WORKFORCE
With a labor force of more than 3.6 million, South Florida has a reliable talent pipeline with employees drawn frommore than 100 countries.
of adults have a bachelors or graduate/ professional degree.
of the total population is comprised of 25-54 year olds
businesses resides in South Florida
South Florida’s labor force is unique as nearly half of the college graduates are multilingual.
AIRPORTS South Florida has three international airports with over 2,000 daily flights including over 190 international destinations, making it one of the top international hubs in the country. All three airports serviced over 67.9 million passengers in 2021, an increase of more than 2.5 million passengers from 2020.
Palm Beach Gardens
86.1 Mi 73 Min
West Palm Beach
71 Mi 1 Hr 18 Min
#1 International Freight #1 International Passengers
Passenger traffic increased by 11.6 million during 2021 from the previous year.
PORTS Known as the cruise capital of the world, South Florida has three significant ports that handle a large amount of passengers and cargo. All three ports are crucial economic drivers for the region and handled over 2.5 million TEU’s in 2021, a 13.6% increase from the 2.2 million seen during 2020. The area’s most significant trade partner were with Latin America/Caribbean followed by Asia.
#1 Cruise Port in the World - Contributes over $43 Billion to local economy
#3 Cruise Port in the World - Contributes over $30 Billion to local economy
#4 Busiest container port among Florida’s 15 deepwater ports. -Contributes more than $14 Billion to local economy
27Mi 31 Min
BRIGHTLINE Brightline is a high-speed passenger rail that currently connects Miami, Ft. Lauderdale andWest PalmBeach. Additional stations are planned for Aventura, Boca Raton, Orlando, Tampa, Disney, and PortMiami. The Orlando station along with the Boca Raton and Aventura stops are projected to deliver in early 2023. The Tampa and Disney stations are expected to be completed over the next
28.7 Mi 35 Min
8 Mi 18 Min
• Aventura • Boca Raton • PortMiami • Orlando
Distance / Driving Time to Brightline Station
Distance / Driving Time to Airports
THE GREAT MIGRATION TO SOUTH FLORIDA Florida’s population growth held for the 11th consecutive year, increasing 1.6% in 2021 and is projected to surpass over 22.0 million residents during 2023. South Florida’s population grew 4.8% over the last five years, or by 287,000 residents. Since 2020, the regions population grew by 2.0%, or by 115,000 residents. The increase in population led to residential home sales spiking in South Florida through 2021 as well as keeping high demand for multifamily investments throughout the region . South Florida saw more than $4.2 billion in sales volume through September 2022. Although this was down by 20.0% from this time last year as a result from increasing interest rates, the median sale price of $570,000 was still a 13.0% year-over-year increase. The area has benefited from many wealthy residents moving particularly from the northeast.
The South Florida MSA is projected to grow by 4.8% through 2025, or by approximately 300,000 residents.
POPULATION GROWTH BY MSA
Philadelphia New York
Moody’s Projected Population Growth 2021-2025
SURGING MULTIFAMILY DYNAMICS
South Florida’s multifamily market has remained strong during 2022, despite the economic context. In the first half of 2022, there was almost $5 billion in multifamily sales. This is the second-highest six-month sales total in South Florida history (only behind the second half of 2021). Domesticand foreigncapital continues topour intoSouthFloridamultifamily real estate, as investors view it as a safe, stable, and strong asset class. In the first half of 2022, all three South Florida counties (Miami-Dade, Broward, and Palm Beach) experienced record average per unit sales of $345,000, $300,000 and $379,000 respectively. Year-to-date, effective rents increased by 7.5% in Miami-Dade and 5.3% in Broward. Rents in Palm Beach are basically flat, but they did increase by 32% last year. Cap rates increased in the first half of 2022 due to higher interest rates.
MULTIFAMILY INVESTMENT SALES ANALYSIS | SOUTH FLORIDA
MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM
GRAPH 1 :: SOUTH FLORIDA HISTORICAL PRICE/UNIT VERSUS PRICE/SF
$200 Vacancies remain at historic lows inMiami-Dade – around 3%. $250 $300 $350 MIAMI-DADE BROWARD PALM BEACH
$200,000 Price per Unit
Price Per SF
Average per Unit
Average Per SF
* $1MM+ multifamily sales
Source: Cushman & Wakefield
GRAPH 2 :: SOUTH FLORIDA HISTORICAL TRANSACTION VOLUME VERSUS NUMBER OF TRANSACTIONS SOUTH FLORIDA HISTORICAL TRANSACTION VOLUME VS. NUMBER OF TRANSACTIONS
• Private capital continues to be extremely active. Many are first-time buyers in South Florida
MIAMI-DADE BROWARD PALM BEACH
Number of Transac � ons
• Out of state private capital investors will continue to dominate the market.
• New foreign capital inflows slowed down over the summer. This may be due to a strong US Dollar
Dollar Volume Billions
2013 (1st Half) 2014 (1st Half) 2015 (1st Half) 2016 (1st Half) 2017 (1st Half) 2018 (1st Half) 2019 (1st Half) 2020 (1st Half) 2021 (1st Half) 2022 (1st Half)
Number of Transac � ons
* $1MM+ multifamily sales
Source: Cushman & Wakefield
• Rental demand is strong. However, absorption levels are likely to be below the 10,743 units scheduled for delivery in remainder of 2022, which will likely marginally increase vacancies. • Only submarkets in Miami-Dade have less than 2% vacancies including: Kendall, Hialeah/Miami Lakes, Miami Spring/Doral and Westchester Tamiami.
• Lending sources vary. Agency loans remain attractive on stabilized product. Bridge financing still works for value add deals, but they have become more prohibitive with rising floating rates and rate cap costs. Local banks have become more competitive for the right borrower/specific deal. • More transactions are occurring with lower leverage
REGIONAL COMPETITIVE ADVANTAGES
“Florda is a Top 5 state in Overall Tax Burden ”
Florida ranks as a top state in terms of tax policy with no state personal income taxes and low corporate income tax. South Florida has seen an inf lux of wealth as new residents have migrated for the tax friendly benefits. Within the South Florida MSA, there are incentives to businesses and corporations relocating and expanding. Incentives include: Follow the Sun Campaign- Miami Downtown Development Authority (DDA) Programoffers companieswith at least 10 employees a one-time payment of $500 per person who relocates – up to $50,000 per business annually and $150,000 over a three-year period. Miamidda.com Job Growth Incentive- Broward County The incentive is a direct cash incentive paid to companies creating jobs in excess of the 115% of the County’s average annual wage, up to $2,000 per new job or $200,000 per company. Broward.org Job Growth Incentive Grant Program- Palm Beach County Incentives are paid on the number of new jobs created as well as residents relocating to the county. Eligiblility and size of grant based on number of jobs created over a specified time period. Discover.pbcgov.org
COST OF LIVING COMPARISON
National Average is 100
New York (Manhattan)
San Francisco Washington D.C.
The amount of capital into South Florida has increased substantially over the last couple of years, particularly from venture capitalists and hedge fund managers. Florida gained 15 Fund managers and over $74 billion in assets over the last year, the most of any state. Elliott Management, with over $70 Billion in assets, was the largest fund in the U.S. to relocate when it moved to West Palm Beach from New York. Point72 Asset Management, with $117 Billion in assets, and Founders Fund, with Co-founder Peter Thiel who also founded PayPal, were among other notable companies to expand into the region. Japanese multinational conglomerate, SoftBank, also announced plans to invest $100 million into Miami-based start ups. No state income tax, friendly weather, and a business friendly environment were some of the main drivers for more capital coming into South Florida. CAPITAL INFLOWS IN SOUTH FLORIDA
States That Gained Fund Managers
Cities That Gained Fund Managers
No. of Incoming Managers
Incoming Gross AUM ($Mil.)
No. of Incoming Managers
Incoming Gross AUM ($Mil.)
West Palm Beach, FL
White Plains, NY
New York, NY
Miami Beach, FL
South Florida Venture Funding
South Florida had 3 of the top 8 cities that gained fund managers over the last year.
Number of Deals
SOUTH FLORIDA - EMERGING TECH HUB FOR INVESTMENT
South Florida Tech Employment Trend
Technological talent and tech‑business fundingsourcesaregrowing in South Florida, as it quickly expanded its technology presence hosting the most startup activity in the U.S. according to the Kauffman Index in 2021. Major tech giants are opening local offices, including Microsoft and Spotify and various technology firms such as Wix, Citrix, Blockchain, Tyco, Sykes Enterprises and Greyson Technologies are based in South Florida. Francis Suarez, the Mayor of Miami, has been very active in recruiting tech firms to the area beginning with his “How Can I help?”, in response to a venture capitalist mentioning moving Silicon Valley to Miami. The area’s international access to Central and South America, young population, and friendly taxes make South Florida an ideal location for technology and start up firms. Tech occupations in South Florida were expected to grow by 13.9% through 2028. Specifically, software developers were expected to see the highest growth at 18.3%. “To give you an idea of what’s
35% 10-Year Jog Growth
2.0x More Diverse than U.S. Tech Industry Overall
Software/IT Workers Migration
going on in the Miami tech scene: every day, sometimes multiple times a day, a big, massive deal is announced,”
Shapiro - The Tag Experience (Owner. Represents several tech companies and venture capitalists).
YEAR-OVER-YEAR % CHANGE
Miami / Fort Lauderdale
Dallas / Forth Worth
Metros with largest migration changes for Software/IT Workers: March 2020-February 2021
ACCELERATED NEW-TO-MARKET TENANT DEMAND
Since the COVID-19 Pandemic shocked the economy inMarch of 2020, South Florida has seen heightened demand from New-To-Market (NTM) tenants. NTM interest has reached an all time high with companies primarily from the Northeast and California expanding and relocating to the region. Over 40 companies accounting for over 400,000 square feet (SF) already signed since the beginning of 2020. There was at least another 20 companies currently in the market. Notable companies such as Blackstone, ThomaBravo, Subway, Elliott Management, and Point72 Asset Management have all expanded into the region. Blackstone also purchased two office buildings in Downtown Miami, 2 and 3 MiamiCentral, for $230 million, it’s first major office investment in the region. The recovery in South Florida was elevated at a faster pace due, in part, to the increase in interest from new companies.
West Palm Beach
40+ Companies relocated or expanded over the past 15 months.
CURRENT & FUTURE DEVELOPMENTS
830 Brickell 830 Brickell brings a premium commercial offering to the heart of Miami’s financial center — as the area’s first Class A+ freestanding office building to be built in over a decade.
Miami Worldcenter Miami Worldcenter, featuring 600,000 sf of office space, is a world-class urban destination with a compelling and unique blend of exceptional entertainment, retail, residential and commercial offerings.
One Brickell City Centre Supertower The ±1,000,000 square foot Class A office building would be over 1,000 ft tall and become the largest building in Florida. The tower would add to the over 500,000 square feet of shopping, culinary, and entertainment offerings at Brickell City Centre.
Banyan and Olive Banyan and Olive comprises two buildings- 300 Banyan and 111 Olive- creating over 130,000 square feet of class A space in the heart of downtown West Palm Beach.
Radius at Sawgrass Radius at Sawgrass is a unique 32 acre campus-style development, combining over 750,000 square feet of office space, 50,000 square feet of commercial, and 750 residential units.
One West Palm One West Palm is a luxury mixed-use development containing a ±200,000 square foot Class A+ office space located in West Palm Beach, Florida.
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CONNOR STEELE Research Analyst Florida Research firstname.lastname@example.org
Miami, FL 33131 | USA cushmanwakefield.com
©2022 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.
SOURCES: - Cushman and Wakefield Research - Axios - Broward County - Brightline - C2ER: The Council for Community and Economic Research - CoStar Group - Crunchbase - Draper Hero Institute
- Enterprise Florida - Environmental Systems Research Institute (ESRI) - Florida Ports Council - Florida Realtors - Florida Department of Economic Opportunities - Fort Lauderdale International Airport - Greenstreet Advisors - LinkedIn - Miami-Dade County
- Miami-Dade Beacon Council - Miami Downtown Development Authority (Miami DDA) - Miami International Airport - Moody’s Analytics - Palm Beach County Business Development Board - Palm Beach International Airport - The Greater Fort Lauderdale Alliance - The South Florida TechGateway
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