Miami’s recovery is gaining momentum in most sectors
Miami’s economic growth in recent years has been sustained by high demand for workers. Since 2020, circumstances have changed, but May's encouraging unemployment rate of 6.7% continues the steady pace of improvement seen since mid-2020. Over the next 12 months some industries will still be challenged by the effects of COVID-19 on their planning, hiring, and growth strategies.
Miami’s economy will be hampered in the short term until international travel regains momentum. While the area’s retail, cruise and tourism industries may be impacted for another year or so, higher-wage office-using jobs are already recovering at an above-average clip, and financial services and international trade sectors are already expanding.
Rise in vacancy slows as market prepares to pivot back to normal
The second quarter 2021 vacancy rate was 16.8%. Although up from the first quarter, the rate of increase has slowed significantly. This consistency will help the market to recover from the effects of COVID, aided by 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 second quarter, with Class A asking rates in the Brickell submarket now averaging $62.50 PSF - the highest rate among Miami submarkets.
Office investment resumes after 2020 pause
Investment sales volume slowed significantly in 2020 due to concerns related to the pandemic, before regaining momentum during the first half of 2021. Sale pricing rose for those assets that did trade, with an average of $311 PSF during the second quarter 2021, up from $272 PSF at the end of 2020.
Miami continues to attract a variety of investor profiles, but institutional buyers have been the most prominent over the past few years.