Why South Florida Research Report

INSIGHT INTO CURRENT TRENDS DRIVING GROWTH A Cushman & Wakefield Research Report December 2022

TRI-COUNTY BREAKDOWNS

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.

Population

Foreign-Born Population

For

*Wall Street of the South - South Florida Business Journal

Population

Population

Foreign-Born Population

For

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%

44%

32%

SOUTH FLORIDA Foreign-Born % by County

SOUTH FLORIDA Population % by County

24%

Financial Services

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%

Financial Services

Multinationals

Mu

Financial Services

Financial Services

Multinationals

Mu

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.

35%

of adults have a bachelors or graduate/ professional degree.

of the total population is comprised of 25-54 year olds

39% Nearly

438,000

businesses resides in South Florida

South Florida’s labor force is unique as nearly half of the college graduates are multilingual.

Rood

Jupiter

INTERNATIONAL DESTINATION

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

Riviera Beach

86.1 Mi 73 Min

PALM BEACH

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.

Lake Worth

Boynton Beach

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.

Delray Beach

BROWARD COUNTY

Boca Raton

Deerfield Beach

Coral Springs

Pompano Beach

#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

Oakland Park

Sunrise

27Mi 31 Min

Fort Lauderdale

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

Lauderhill

28.7 Mi 35 Min

Davie

Pembroke Pines

Miramar

Miami Gardens

MIAMI-DADE

County Transportation

Brightline Station

Coming soon

8 Mi 18 Min

Miami

County Airport

Coral Gables

• Aventura • Boca Raton • PortMiami • Orlando

Bimini

Distance / Driving Time to Brightline Station

Distance / Driving Time to Airports

Kendall

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

600,000

512,000

494,000

472,000

451,000

500,000

417,000

400,000

240,000

300,000

200,000

147,000

100,000

23,000

13,000

-7,140

0

Miami

Phoenix

Los Angeles

Dallas

Houston

Atlanta

Washington D.C.

Chicago

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

$400

$400,000

$200 Vacancies remain at historic lows inMiami-Dade – around 3%. $250 $300 $350 MIAMI-DADE BROWARD PALM BEACH

$350,000

$300,000

$250,000

$200,000 Price per Unit

Price Per SF

$150

$150,000

$100

$100,000

$50

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022 YTD

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

WHO’S BUYING?

200

$6.0

• Private capital continues to be extremely active. Many are first-time buyers in South Florida

MIAMI-DADE BROWARD PALM BEACH

$5.0

150

Number of Transac � ons

$4.0

• Out of state private capital investors will continue to dominate the market.

100

$3.0

• New foreign capital inflows slowed down over the summer. This may be due to a strong US Dollar

$2.0

Dollar Volume Billions

50

$1.0

0

$0.0

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)

Dollar Volume

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

300

National Average is 100

250

200

150

100

50

0

New York (Manhattan)

San Francisco Washington D.C.

Boston

Los Angeles

Chicago

Fort Lauderdale

Miami

Palm Beach

Atlanta

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.)

Florida

15

$74,911.20

Stamford, CT

6

$2,414.40

Connecticut

12

$10,574.00

Greenwich, CT

5

$9,189.00

New York

4

$3,632.90

West Palm Beach, FL

3

$70,643.10

New Jersey

3

$4,756.90

Miami, FL

3

$720.80

Illinois

2

$952.30

White Plains, NY

3

$432.10

Nevada

2

$313.60

Rye, NY

3

$111.10

Arizona

2

$46.50

New York, NY

2

$3,584.10

Tennessee

1

$7,451.50

Miami Beach, FL

2

$2,695.50

South Florida Venture Funding

400

425

South Florida had 3 of the top 8 cities that gained fund managers over the last year.

314

310

305

299

222

$1.4B

$3.5B

$4.6B

$0.9B

$2.5B

$2.0B

$1.4B

2016

2017

2018

2019

2020

2021

2022 YTD

Total Invested

Number of Deals

SOUTH FLORIDA - EMERGING TECH HUB FOR INVESTMENT

South Florida Tech Employment Trend

86,295

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

86,000

84,000

82,000

80,000

35% 10-Year Jog Growth

78,000

76,000

74,000

72,000

70,000

2.0x More Diverse than U.S. Tech Industry Overall

68,000

66,000

64,000

2011

2012

2013

2014

2015

201

2017

2018

2019

2020 2021

Software/IT Workers Migration

15.40%

going on in the Miami tech scene: every day, sometimes multiple times a day, a big, massive deal is announced,”

10.40%

8.60%

8.10%

6.50%

2.90%

Shapiro - The Tag Experience (Owner. Represents several tech companies and venture capitalists).

YEAR-OVER-YEAR % CHANGE

Miami / Fort Lauderdale

Houston

Dallas / Forth Worth

Philadelphia

Los Angeles

Atlanta

Metros with largest migration changes for Software/IT Workers: March 2020-February 2021

https://aventuramagazine.com/inside-miamis-trillion-dollar-tech-industry/

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.

Jupiter

West Palm Beach

Boca Raton

Fort Lauderdale

Hollywood

40+ Companies relocated or expanded over the past 15 months.

Miami

Miami Beach

Downtown

Brickell

Coconut Grove

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.

830brickell.com

miamiworldcenter.com

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.

onebrickellcitycentre.com

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.

banyanandolive.com

onewestpalm.com

radiusatsawgrass.com

For more information, please contact:

CUSHMAN & WAKEFIELD 333 SE 2nd Avenue. Suite 3900

ERIC MESSER Senior Research Manager Florida Research eric.messer@cushwake.com

ANDREA DUQUE Sr. Research Analyst Florida Research andrea.duque@cushwake.com

CONNOR SALZMAN Research Analyst Florida Research connor.salzman@cushwake.com

CONNOR STEELE Research Analyst Florida Research connor.steele@cushwake.com

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