The Coral Gables market remains a destination for multinational companies searching for space. With approximately 200 multinational companies currently calling it home, Coral Gables truly is an international community.
Retail
The metro Miami area retail vacancy rate now sits at a healthy 3.4% with a 7.6% annual growth rate, outpacing the national average as owners capitalize on a strengthening market. Most of the 3.2 million SF underway is pre-leased, so new supply should not have much of an impact on rent growth in the near term. Future performance is contingent on the recovery of Miami’s tourism sector.
The Coral Gables retail market still has 661,000 SF currently under construction over two buildings, with 83.1% pre-leased, which ranks as the seventh submarket in the metro-Miami pipeline. Market rents average $41.15 per SF at the end of Q1 2022, which is an increase of 7.6% rent growth. Miami ranks as one of the priciest retail markets in the country, with Miami Beach average asking rents exceeding $80/SF triple net.
The average market sales pricing of $420/SF is above the metro’s pre-pandemic peak. Even older, well-leased buildings are seeing significant price appreciation. The 12-month sales volume for the Miami retail market is $ 2,373,047,070 at a 181.6% 12-month sale volume growth and a 5.4% market cap rate. Well leased assets are selling for a premium compared to the metro’s average.
Office
Office property owners are capitalizing on strengthening fundamentals and raising rents at above average clip. Net absorption in Miami has been positive the past four quarters and is at 1M SF for the 12-month net absorption. The vacancy rate has remained steady.
In the office sector, vacancy dipped to 10% with 109,517,455 SF available at Q1 2022, with the average market rent at $41.46 per SF. There is 3,331,136 SF of office space under construction, which is less than what was under construction in mid-2020 but elevated compared to prior decade norms. Current space under construction represents about 3% of the metro’s current inventory. The strength of Miami’s current office sector recovery could incentivize developers to start on new projects in the coming quarters.
Miami ranks as one of the top metros in the country for year-over-year rent gains, with 12-month growth of 5.4%. Office demand in Miami is benefiting from recent growth in the area’s office-using employment sectors. Annual rent growth in 4- & 5-Star assets is 6.1% and driving recent gains, though asking rents are up in all building quality sectors.
Over the past few quarters, office sales activity has increased, with few deals trading for a discount in Miami. This is driven by national and institutional investors acquiring high-end assets. The current market sales price is $360/SF with a 12-month sales volume of $2,440,953,757. The 12-month sales volume growth is 174.4% at a 5.9% market cap rate.
Despite a dip in overall economic activity, the office sector has done quite well. Employment is well above pre-pandemic levels in both the professional and business services and financial activities sectors, meaning that more companies may be looking for space in the coming months. Leisure and hospitality sectors continue to struggle, and employment is still about 8% below the peak as of February 2022 in those sectors.