We’re almost at the end of the first month of 2025, but it still feels in many ways like 2024.
We took a temperature check to see what commercial brokers and developers expect this year. (Tune in next week for our residential outlook.) It wasn’t all bad news, though. Here’s the rundown:
Industrial market faces a reality check: One of the largest institutional owners of South Florida warehouses took a step back at the end of last year. Blackstone’s Link Logistics sold 35 warehouses in Miami-Dade, Broward and Palm Beach counties in three separate sales totaling $697 million.
Link could redeploy capital to other Florida submarkets and shore up its portfolio with newer, larger warehouses that attract tenants seeking 100,000 square feet or more, said industrial broker Matthew Rotolante.
Overall, South Florida’s industrial market is experiencing a slowdown in the momentum created by the pandemic that led to record asking rents in recent years. And industrial rents are coming down.
“We are not seeing the crazy increases that we saw in 2021, 2022 and even in 2023 when landlords were increasing the rent by 20, 50 and 100 percent,” says Com Real Miami’s Edison Vasquez. The normalization in rent growth last year has “created some balanced negotiations between landlords and tenants.”
Will South Florida’s office fortunes hold? Maybe: After South Florida emerged as the nation’s darling office market — propelled by an influx of out-of-state companies that leased big blocks of space at record rents — the tri-county region is in for a test this year.
The ultimate question: Will billion-dollar hedge funds, financial service and law firms, techies and others continue to lease this year?
“It’s not a never-ending supply of those types of folks,” said John Bell of Transwestern. “There’s only so much gold in the hills, as they say, and a lot of it has been mined already.”
While some brokers have said a repeat of recent years’ leasing frenzy is unlikely, others counter that the issue lies in the lack of available trophy space that new-to-market firms demand.
For one, Brian Gale of Cushman & Wakefield isn’t worried about filling the 75,000 square feet of office space at the One Kane Concourse building, where asking rates are $150 a square foot, triple net, in Bay Harbor Islands. He says pent-up demand for top offices in the area remains. The building’s selling point? Boat slips, literally allowing tenants to get to work by boat.
In Brickell, the test will be whether the 1 million-plus square feet of offices planned (this excludes Ken Griffin’s Citadel HQ tower and Santander Bank’s tower, both of which will largely be owner occupied) will get enough preleasing or fill up once completed.
This year, a counterintuitive dynamic is expected to play out: Rents will continue to climb, with new Class A-plus buildings pulling up the average, while vacancies inch up, Bell said.
On financing and investment sales, South Florida’s office market hasn’t been spared from woes. Interest rates remain elevated, despite the Federal Reserve’s rate cuts late last year, while owners and investors also face skyrocketing insurance and construction costs that have made tenant improvements more expensive. This equates to higher cap rates.
Bell also expects to see more distress, including for suburban properties. The one sure bright spot in the market is medical offices.
“They command much higher rents and longer leases. When leases expire, they tend to renew and are completely immune to the work-from-home dynamic,” Bell said.
Optimism for multifamily: Record apartment completions last year in South Florida coupled with a slowdown of out-of-staters in-migration led to a slowdown of lease-ups and a flatlining of rents. Rates dropped in some submarkets.
Construction is slowing down with fewer deliveries projected in 2025 and 2026, said Juan Arias, director of market analytics for South Florida for CoStar Group. The exception to this? Areas like downtown Miami and Wynwood, where many developers are focusing on luxury projects.
Fourteen thousand apartments are expected to be completed by the end of this year, according to CoStar data. In 2026, the number of finished units is expected to drop to 9,400.
Developers’ continued wager on the tri-county region is partly rooted in the fact that they expect demand to continue. Although nearly 21,000 people in Miami-Dade exchanged their out-of-state driver’s license for a Florida one last year, that’s a 3 percent drop from 2023, according to a Miami Association of Realtors report, reported by the Highest & Best real estate newsletter.
The demand instead is expected to come from tenants priced out of the homebuying market, as mortgage rates remain elevated. The wildfires in Los Angeles also are expected to fuel some South Florida apartment demand.
Berkadia’s forecast for this year shows demand will catch up and rent growth continue.
On the lending side, Charles Foschini of Berkadia expects that short-term, floating-rate lending will pick up this year, especially if the Fed continues to drop rates.
“If you are a floating rate lender, after two years of sitting on the sidelines, that market is expected to be extremely competitive this year if the short end of the curve continues to come down to be competitive with or even more competitive than fixed rate,” he said.
What we’re thinking about: The residential “Trump bump” seems to be most pronounced in Palm Beach County, which makes sense. I’m hearing from brokers elsewhere that resi sales haven’t really picked up since the election. What about you? Send me a note at kk@therealdeal.com.
CLOSING TIME
Residential: Billionaire Jamie Salter, the founder, chairman and CEO of Authentic Brands Group, sold the recently completed estate at 5970 North Bay Road for $40 million. Anand Khubani, founder and CEO of based consumer brands company Ideavillage, acquired the 14,520-square-foot mansion.
Commercial: AEW Capital Management paid just over $100 million for the 424-unit senior living rental complex at 2590 Wellington Bay Drive in Wellington. Ares Management sold Wellington Bay.
NEW TO THE MARKET
A group of property owners on Palm Island are banding together to list their homes for sale for $150 million. The compound includes the three waterfront homes at 190, 198 and 210 Palm Avenue in Miami Beach. They returned to the market with Douglas Elliman broker Fredrik Eklund of the Eklund-Gomes team. The properties total more than 2 acres with 300 feet of water frontage, three pools, docks, 21 bedrooms and 25 full bathrooms.
A thing we’ve learned
Private equity billionaire Ramzi Musallam, managing partner of Veritas Capital Management LLC, is the secret buyer who paid $33 million in 2020 for a penthouse at Arte, a luxury condo building. A company owned by Musallam is suing the developer, an affiliate of Alex Sapir’s firm, and the contractor, alleging construction defects at the oceanfront property.
Elsewhere in Florida
- President Donald Trump proposed overhauling or eliminating the Federal Emergency Management Agency while he was visiting North Carolina, which was devastated by Hurricane Helene last year. Trump said he would sign an executive order to reform or “maybe [get] rid of FEMA,” NBC News reports.
- In case you missed it, it snowed in Pensacola. So much so that last week’s snowfall broke the state’s 130-year-old record with at least 7.5 inches reported in the area, according to the Pensacola News Journal.
- Florida Gov. Ron DeSantis is pushing Republican state lawmakers to crack down on illegal immigration. DeSantis warned that it would be “very, very hazardous politically” if they don’t oblige during the special session that begins this week, according to Fox News. President Trump’s immigration policies are already spreading widespread fear among undocumented immigrants in South Florida, CBS News reports.