Miami’s unemployment rate rose to 14% before declining again
Miami’s economic growth in recent years has been sustained by high demand for workers, pushing Miami-Dade’s unemployment rate down to 1.5% in January. Miami’s November unemployment rate of 7.4% is significantly lower than its July peak of 14%. This is encouraging for the long term, but the next 12-24 months will be challenged by the effects of COVID-19 on the economy and business planning.
Miami will likely feel these effects for the next two years, particularly in the hospitality, housing, and convention and tourism sectors, but the labor market is expected to continue rebounding at a moderate pace.
Investors and landlords remain confident in the face of challenges
The fourth quarter vacancy rate is up from recent quarters due largely to the ripple effects from COVID-19. The market had seen steady vacancy rates throughout 2019 and even into early 2020, and this consistency will help the market to recover from the effects of COVID, aided by relatively limited speculative construction.
The Downtown submarket still has one of the area’s highest vacancy rates, while Brickell’s vacancy rate is much lower.
The rise in interest on the part of tech and finance companies bodes well for demand in Miami over the coming months. Rents continued to rise across the market during the fourth quarter, with Class A asking rates in the Brickell submarket now averaging more than $58.00 PSF - the highest rate among Miami submarkets.
Office investment paused in 2020
Investment sales volume has declined over the past several quarters, coming to a halt during the second quarter due to concerns related to the pandemic before regaining a modicum of momentum later in the year. Sale pricing held relatively steady for those assets that did trade with an average of $276 PSF at the end of 2020, up from $266 PSF in 2019. Miami continues to attract a variety of investor profiles, but institutional buyers have been the most prominent over the past three years.