CRE in South Florida experiences gradual improvements in first quarter

Commercial conditions improved in Florida to start the year.

Property management companies in the southern section of Florida experienced continued strengthening conditions in the commercial real estate market during the first three months of this year.

The industrial sector saw a decline in vacancies in Palm Beach County and Broward County, according to a report from Newmark Grubb Knight Frank. The sector did not do as well regarding vacancy drops in Miami, but this was because the area experienced a significant amount of new space. This was chiefly due to to the Miami International Distribution Center, which was 335,000 square feet. The area saw flat growth due to the addition.

Office sector vacancies had a slight decline during the first quarter compared to the previous three months, the report noted. Broward County showed the best performance, as its level fell to slightly more than 16 percent, the lowest in the area.

"Across South Florida, over 1.1 million square feet of office leasing activity was tracked in the first quarter," said Jon Bourbeau, vice chairman in NGKF's Miami office. "The majority of deals came from tenants already in the market in the form of expansions, renewals, relocations and, in some cases, contractions, but the pendulum appears to have swung with demand outpacing supply."

Another aspect of the South Florida market that has improved commercial conditions is the growth of residential conditions, explained Robert Bach, national director of market analytics for NGKF. This is because of the continued gains in not only home purchases, but consumer purchases and the increase in employment in the area.

Fourth quarter shows notable CRE market gains
The first quarter in South Florida may have picked up from a strong fourth quarter nationwide, as commercial real estate conditions continued to ameliorate during the winter.

The average vacancy rate for office properties was 17.1 percent during the fourth quarter, according to a report from the Mortgage Bankers Association. This was slightly lower than the previous quarter's 17.2 percent. The retail vacancy rate during the fourth quarter declined to 10.7 percent from the previous three-month period's figure of 10.8 percent.

Multifamily vacancies had the lowest figure to end 2012, as the fourth quarter's figure was 4.5 percent, the MBA's 2012 Commercial Real Estate/Multifamily Finance Quarterly Data Book added. This was a drop from the previous quarter's 4.7 percent.

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