Despite Challenges, Investors Hungry for Miami’s Suburban Offices
Despite a lack of inventory, investors are not abandoning their fierce search for suburban offices with upside potential in sizzling suburban markets. According to Marcus & Millichap’s second quarter office market report, investors were most active in the Kendall and Northeast Dade submarkets. Doral, which has experienced explosive growth in the last decade, is another market where I notice an increasing demand for commercial investment properties suitable for repositioning. Case in point: We recently sold a Doral office building for $3.875 million to a seasoned investor looking to increase the 63 percent occupancy rate and boost cash-flow. The property, known as the 25th Street Executive Building at 9300 NW 25th Street in Doral, has 26,300 rentable square feet occupied by a mix of professional tenants. The City of Doral has witnessed a demographic explosion in the last decade and demand for office space today is greater than most office submarkets in South Florida. But deals like this are becoming scarce as desirable listings continue to shrink. Consequently, Marcus & Millichap’s report showed that deal flow in Miami has slowed 13 percent in the past 12 months.
Foreign investors continue to drive the demand for desirable suburban offices. For example, we recently sold a Class A office building in Kendall, the two-story Tamiami Metro office building with 39,069 square feet of rentable space, for $7.9 million to a private equity group from South America.
Strong tenant demand and rent growth above the market rate are motivating investors to acquire offices in suburban destinations within Miami-Dade County.
Read the Marcus & Millichap’s 2Q17 South Florida Office Market Report here