Real estate: the outlook for 2003 - South Florida's real estate market

South Florida CEO, Feb, 2003 by Richard Westlund

Land prices for industrial space are soaring, especially in western Broward. Also, with today's low rates, everyone wants to buy and own their building, and we've seen a boom in the development of condo warehouses for small-space tenants. At the same time, there's only a small amount of new construction right now in both counties so there's no risk of overbuilding. Because industrial space services the residential market, the continuing population growth strengthens demand. As South Florida's population grows, the need for distribution facilities will grow, too.

Beth Azor

President, Terranova, Miami

The capital markets will continue to be very strong, and grocery-anchored shopping centers will continue to be the darlings of the real estate industry, going for unheard-of prices. Can it be sustained? If interest rates rise, there will be an impact on the capital markets, but it doesn't look like a rise in the near future.

Demand for retail space today is lukewarm. We're not seeing an onslaught of new or expanding retailers. Even in hot markets, the deals are just not getting closed. The national retailers are being very conservative.

Miami-Dade is still under-retailed, and tenant sales continue to outperform Broward and Palm Beach. There is no land for further construction, so the next boom will come in infill sites. Right now, there's not a lot of retail between Brickell and Aventura, and the Performing Arts Center district presents a huge revitalization opportunity.

In Broward and Palm Beach, construction is still occurring on the western fringes, but you can only slice the consumer pie so much. As suburban retailers face greater competition, they must provide excellent service at a good price or the consumer will go elsewhere to spend their dollars.

Barry Ross

President

Ross Realty Investments, Davie

In South Florida, retail growth is still primarily out west, where the residential growth is occurring. There are some new projects and renovations in eastern areas like Brickell Avenue, Las Olas Boulevard and Federal Highway.

At the same time, main retail thoroughfares like Kendall Drive [Miami-Dade], University Drive [Browardi and U.S. 441 [Palm Beach County] are fully developed. The surrounding residential neighborhoods have continued to grow, but there is little room for more commercial growth. Many communities have been strict about the amount of retail they will allow, and these markets are approaching full capacity.

Many national companies are just entering the South Florida market, and want multiple locations. We've been doing deals with Kinko's, Moe's Southwest Grill, and Baja Fresh that are going into high-growth, high-income markets. We feel that South Florida has escaped the national downturn in the economy, and we don't see any problems here. We are at all-time high occupancy rates in our own portfolio. As long as interest rates stay low and the residential boom continues, we expect to maintain high occupancy rates.

Chaim Katzrnan

Chairman and CEO

EquityOne, North Miami Beach