Two of South Florida’s Submarkets Become 2018 Top Market Performers in USA
As the real estate industry heads towards a “long glide path to a soft landing,” the real estate industry is changing the way it evaluates expected market performance, according to a recent report by PwC and the Urban Land Institute. The report, named Emerging Trends in Real Estate®, is the result of a survey conducted with top industry leaders across the United States. For example, a national office investor note: “Traditional gateway markets have gotten so competitive that we are looking at adjacent submarkets and the top secondary markets.” This sentiment may explain why Miami, which is considered a top secondary market, jumped from the 25th spot last year to the 11th spot on the current ‘Markets to Watch’ list. Florida markets overall were very popular with survey respondents this year, according to the report. The Miami-adjacent Fort Lauderdale market experienced the largest upward increase in this year’s survey, improving 29 spots to rank number six this year. Orlando and Tampa Bay/St. Petersburg joined the two southeast Florida markets in the top 20 for 2018.
As the real estate recovery moves into its eighth year, market opinions may become more diverse. Investors no longer perceive primary markets as the only destination for their investments. Take this portfolio manager’s comment: “Investors may want to take a harder look at some of the top secondary markets, particularly those with the top-performing submarkets.”
Some of South Florida’s submarkets, including Miami, Fort Lauderdale, and West Palm Beach, are again enjoying strong population growth. The rise in population is driving employment growth, which has now recovered the jobs lost during the global financial crisis in each metro area. While employment growth has recovered, the market is comparatively more affordable than at the last peak. Despite showing good gains, existing-home prices remain below their cyclical peaks. Also, according to this report, many Latin American countries are enjoying improved economic growth, which should lead to a renewed boost in international capital flowing into southeast Florida.
The report’s editorial board draws this optimistic conclusion: “We are in a long cycle, not in boom/bust. The key to the next few years is to expand horizons, market by market, property type by property type.”
See below Emerging Trends in Real Estate® chart showing all the top markets
