The Florida property market ranks among the hottest in the country with ever-rising prices and rock-bottom supply. According to a recent report, the Sunshine State is home to half of the top 10 commercial real estate markets in the US, with solid apartment sectors in most metro areas.
Florida dominates the top 10
The National Association of Realtors (NAR) commercial market report for Q2 this year reveals that Florida stands out in the US when it comes to commercial real estate. The research that looked at 390 metro areas ranked Las Vegas as the best market with five Florida locations in second, third, fifth, sixth and seventh places. In all, the Sunshine State dominated the top 10.
The NAR report examined the apartment, office, industrial, retail and hotel sectors as part of the commercial real estate markets in the US. Final rankings were based on economic and demographic factors in a metro area and commercial market conditions. These include vacancy rates, rents, inventory and transaction price.
Top for migration and affordability
Demographics and house prices are the two main factors that lie behind the success of Florida metros in the rankings for commercial real estate markets in the US. The Sunshine State saw the highest net migration in the country in 2020 with an influx of 174,645 new residents. The figure was over 12,000 more than Texas, the state with the second-highest net migration.
Florida property also offers affordability compared to other popular relocation spots in the US. According to Realtor.com, in August this year, the average house price in Florida stood at US$395,000, slightly higher than Texas (US$349,900) but way below states such as Arizona and Colorado.
Southwest Florida has the best commercial real estate markets in the US
The area of the state performed exceptionally well in the NAR report with three metros in the top 10.
Cape Coral
This metro took second place for the best market. The report highlighted the strong demographics in the area, which had the highest population growth after the nearby Bradenton-Sarasota.
According to NAR, rental rates went up by 20% in the year to Q2 against a national average of 10%. Office vacancies dropped and Cape Coral has high demand for industrial space. The retail sector performed particularly well in Q2.
North Port-Bradenton-Sarasota
Cape Coral’s neighbour also ranked well in the NAR Index. It found that also with high net migration, the apartment sector had a high absorbency rate and, like Cape Coral, a rent rise of 20% in the year to Q2.
Punta Gorda
Still in Southwest Florida and sandwiched between Cape Coral and Bradenton-Sarasota, Punta Gorda also ranked in the top 10 commercial real estate markets in the US. Highlights in this metro area were the high demand for rental apartments in the area. Rental rates rose by 24% between Q2 2020 and Q2 2021.
Outlook for commercial real estate in Florida
Like the rest of the property sector, commercial real estate has a bright outlook, according to Realtor.com, because of the state’s strong population growth. In addition, the increase in e-commerce is another factor driving the market, particularly the demand for industrial space on the east and west coasts of Florida.
Job creation continues its upward trend in the state. After a dip of 6.7% in 2020, new employment is forecast to grow by 1.6% this year with a hike of 7.2% in 2022. Job opportunities plus year-round sunshine and affordable property prices will attract more new residents as Florida consolidates its position as one of the best places to live in the US.
(Sources: NAR, Realtor.com)
