Jobs Are Up, Vacancies Are Down — Now’s the Time to Invest
Every day, the news reports remind us that it’s still winter in most of the U.S. But the forecast for commercial real estate investment in Central Florida is hot! Investor sentiment is overall positive now that we’ve moved out of the doldrums and are starting to see the benefits of returned economic growth.
Economic recovery is coming to Florida in many forms, from an increase in tourism to the much-anticipated completion of the Panama Canal expansion scheduled for early next year. That overall positive upswing is bringing strength to several of the most popular investment property types in our market.
One of the main reasons that investors are eyeing Central Florida is our strong employment level. We’ve been ranked No. 1 in the country in terms of job growth, which is a factor that positively affects every asset class, according to Forbes magazine.
Employment is climbing higher than the pre-recession levels. In 2005-2006, we were adding upwards of 23,000 jobs annually. But in 2014, we added approximately 37,000 jobs — the highest job creation rate we’ve had in eight years.
As companies add workers to the marketplace, that influx of people builds demand for housing, office space, and other asset types.
Strong retail sector
Florida is also benefiting from stronger economic growth around the country. Tourism is healthy and local retailers are enjoying brisk trade, especially since the average price of gas has fallen. Investors are showing tremendous interest in adding retail space assets. We are seeing particularly high interest from foreign investors, including buyers from both South America and Canada. Now that Marcus & Millichap has opened three offices in Canada, we’re able to service those northern clients even better with our full range of broker and financial offerings.
Inventory — challenge and opportunity
One challenge we are actively confronting is that we have more buyers than property. Construction starts are up, but demand seems to be keeping pace with supply according to several of our developer clients.
What does that mean? Very low vacancies — and they are continuing to decrease. When vacancies go down, rents go up. A lot of investors looking for inventory, and we’re working hard to provide it. For owners, this environment provides the opportunity to realize the best price for many properties. So the result is positive for both parties.
Even though prices are strong, and the Orlando to Tampa market is hot, investors will still get amazing value in this market. In addition, financing is widely available, especially for investors who have a strong track record and know their business. Marcus & Millichap Capital Corporation experts provide seamless and efficient access to a broad range of finance products — and the expertise to guide you to the option that best fits your financial goals.
[cta]Need help buying or selling a property? Contact Justin West at Justin.West@marcusmillichap.com for experienced, personalized help with your commercial real estate investment needs.[/cta]