Reflecting on the 10 Year Anniversary of the Unfolding of the Recession
This December marks the 10th anniversary of the Great Recession, which brought shock, pain and a surprising recovery to the South Florida real estate market — one of the hardest hit markets in the USA. South Florida – ground zero for foreclosures that devastated homeowners, CRE owners, developers and lenders – has risen from the ashes and emerged as a world-class city and cultural destination.
In the last decade, South Florida learned many lessons. As a result, our real estate market is less leveraged, investors and developers are more cautious and Miami has evolved as a global destination for direct foreign investment. In just a few years, South Florida has established itself as a true gateway city with the ability to quickly recover from a market correction, regardless of the depth. Market values, which dropped to unimaginable lows during the dark years, have reached new heights. Unlike past cycles, foreign capital has played a significant role in fueling commercial real estate values. For example, this year, transactions involving foreign capital have reached over $1 billion in Miami, up from $468 million in 2014, according to Real Capital Analytics. In 2015, foreign investment in the Miami CRE market soared beyond $2 billion.
Looking back, no one imagined that South Florida could recover so quickly and so well. It is fair to say that Miami’s international appeal helped land us where we are today. During the critical years, when banks were reluctant to lend to domestic buyers and developers, it was the foreign investors ‘buying cash’ who reactivated Miami’s real estate market and gave us the push we needed to regain confidence. Now, as the real estate cycle comes to an end, a soft landing is ahead of us following the implementation of new post-Recession ‘best practices.’