Three Predictions for South Florida CRE in '15

MIAMI—What does 2015 have in store for South Florida's commercial real estate market? Most industry watchers are pointing to growth, but what does that look like in our region?

GlobeSt.com caught up with Ken Krasnow, managing director for CBRE in South Florida, to get his perspective on defining trends for 2015's local commercial real estate market in part one of this exclusive interview. Check out the rest of the interview in this afternoon's Miami edition.

First, Krasnow tells GlobeSt.com, Florida is poised for more growth in 2015.  As 2014 draws to a close, he says, Florida's GDP remains at an all-time high, it is one of the fastest growing states in the country in terms of GDP, and it has surpassed New York as the third most-populous state in the nation.

“Statewide, retail sales are above the national average, and 2014 was another record-setting year for tourism,” Krasnow says. “Strong fundamentals position Florida—and particularly South Florida—for another year of strong performance across all sectors, particularly multifamily and retail.”

Next, Krasnow predicts, South Florida Office and industrial rents will continue to climb. With steady demand for space, and little-to-no development on the horizon, he expects industrial and office rents will inch up further.

“South Florida has the fourth-highest job growth rate in the nation, at an average of 33,000 annually over the last five years,” Krasnow says. “Projections over the next five years put South Florida's population growth at over 100,000 people annually and job growth at over 45,000 annually. Approximately 42% of these new jobs are for office-using tenants.”

Third, Krasnow is betting the financing markets will remain active, with some construction lenders entering the market. As he sees it, strong market fundamentals fit well with the sound underwriting principals that continue to be required of most lenders in both the permanent and transitional bridge lending areas.  He says, “With little-to-no vacancy in the more mature office markets—both suburban and urban—office rates will likely rise to the point where construction lenders may enter the market selectively on at least a few spec buildings in 2015.”