Will Capital Keep Flowing Into Miami?

MIAMI—With Miami recognized as one of the major international cities today, it's no great surprise that there is a lot of equity is flowing into the market. Ed Easton, founder, chairman and CEO of The Easton Group, tells GlobeSt.com that availability of equity and debt, overall, is abundant—but …

"The criteria to obtain debt is harder than it has been because of the regulations," Easton says. "The equity is coming more from big players than small players, which was not the case in the recent past."

Easton sees an upside in multifamily rentals for developers that can deliver them for less than $2 per square foot a month. The luxury housing market in Miami will be weak, he says, but anything under $400,000 will be very strong.

"The working people in Miami can afford to pay for single-family residences at $400,000 or less, with interest rates where they are now," Easton says. "Anything over $1 million is very vulnerable because the currencies of the international players have been devalued.

That, Easton says, will turn those people into sellers. Foreign buyers, he predicts, will be out of the market in 2016 until the currency situation plays out.

"There's upside in industrial if owners can figure out a way to bring in all costs at $120 per square foot," Easton says. "There will be a strong upward movement of rents in the industrial market."

Easton doesn't see any downside with the industrial market, especially with the Panama Canal expansion. If the embargo with Cuba is lifted, he says, that will service 13 million people out of Miami. As he sees it, no one will store in Cuba until the nation gets democratized.

"Interest rates will remain relatively low," Easton predicts. "Obviously we had one increase from the Fed, but my guess is we won't get more than two in 2016. That would bring the total increase to 75 basis points. On a historical basis interest rates are still very low."