MIAMI—Miami continues to rank among the strongest hotel markets in the nation, according to a year-end report published CBRE Research. The report ranks Miami’s hotel market fourth in the nation. Only New York, Oahu, and San Francisco rank higher. What’s more, the Miami Beach submarket is second only to New York.
To find out why, GlobeSt.com caught up with CBRE Hotels‘ Christian Charre, whose Miami-based team focuses on serving owners and investors in Florida, the Caribbean and Latin America. The team is currently marketing several properties on Miami Beach and in The Bahamas.
GlobeSt.com: How is the Miami hotel market performing?
Charre: The lodging market in Miami is one of the strongest in the nation. RevPar, or the revenue per available room, for the greater Miami area increased by an impressive 10.1% over 2012. Occupancy is also up slightly in 2013 over 2012, to 77.9%. And that’s really a result of limited supply combined with record-breaking tourism. Hotel operators are also reporting that the Miami market is becoming less affected by seasonality as European and Latin American visitors fill rooms during what was considered the “off season” and the city establishes itself as a business, not just a leisure, destination.
GlobeSt.com: How are investors viewing Miami?
Charre: Miami is attracting a whole different breed of investor. Up a couple of years ago, most sales involved private ownership. Today, we’re seeing an influx of institutional money—like The Witkoff Group, which purchased the Helmsley Park Lane Hotel in Manhattan for $660 million, along with The Carlyle Group, Rockpoint Group, and Rockwood Capital. That translates into higher prices.
To give you an example, the Miami Beach Resort in 2011 would have traded for around $85 million. A year later, the same asset traded for $117 million, or about 40% more. That’s the impact of having quality institutional investors in the market.
GlobeSt.com: What’s happened to attract institutional investors to Miami?
Charre: There are a couple of watershed moments, like Genting‘s Resorts World Miami mixed-use project. That put Miami on the world map and is driving other investors here. Miami also has the second-largest concentration of banks after New York, and our resilience following the housing market crash was also important.
Latin American capital made that possible, and people paid attention to that. In short, until about three or four years ago, Miami was considered a second-tier city by institutional investors. Today, it’s considered a first-tier city, in the same category as New York or San Francisco.
Be sure to come back this afternoon for part two of this exclusive interview.