South Florida Commercial Office Market (Third Quarter 2020)

COVID-19 continues to weigh on the commercial real estate market in South Florida.  While there are some positive signs in specific markets and sectors, overall the market has been adversely impacted by the pandemic. 

Following are the latest statistics for the commercial office market in South Florida (Palm Beach, Broward and Miami-Dade counties).

Click here to see more third quarter 2020 stats for all sectors of the commercial real estate market in South Florida.

The Red Hot Housing Market

Existing home sales NATIONWIDE (which include single-family homes, townhomes, condominiums and co-ops) rose 10.5% year-over-year during the month of August.  Median existing-home prices across all housing types increased by 11.4% to $310,600, marking 102 straight months of year-over-year gains.

According to Lawrence Yun who is the chief economist for the National Association of Realtors, “Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market”.  He continues “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.”

Real Estate – Where is it Heading?

The COVID-19 pandemic has led to significant changes in the real estate market, both for the good and for the bad.  Over the past few months we have witnessed strong demand in certain sectors like luxury residential homes (outside of dense urban cities) as well as significant weakness in the retail and hospitality sectors. 

Where things progress from here is challenging to forecast due to uncertainties with the economy and the political climate as well as the impact from the pandemic.  However, certain markets (South Florida being one of them) are starting to see signs of a recovery in most sectors.

Is the Real Estate Market Recovering?

Since the onset of the COVID-19 pandemic the commercial and residential real estate markets in Miami-Dade, Broward and Palm Beach counties have experienced significant volatility.  In the past 30 to 60 days as businesses reopened and residents went back to work, the number of real estate transactions experienced considerable improvement from their recent lows in April and May but still are far behind prior year levels. 

With the resurgence in the number of positive cases which is causing a delay in reopening, not only the real estate market but also the economy is on unstable footing.

Commercial Office Lease Disposition

Our team assisted a corporate client with the disposition of a 6,634 square foot branch office which was no longer being used and was a drain on the company’s financial resources since the cost of the lease payments were significant.

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How the Coronavirus is Impacting Commercial & Business Real Estate

After years of robust growth in commercial property rental rates, occupancy levels and price appreciation, the landscape in South Florida has plunged into widespread uncertainty due to the impact from the coronavirus.

Property owners face significant challenges with respect to receiving monthly rental payments as commercial tenants with “non-essential” businesses have ceased operations without knowing when, or if, they will reopen. This has affected not only local-based small businesses but also national companies as evidenced by the Cheesecake Factory putting landlords on notice that they will not be able to make rent payments as of April 1st.

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