By Jeremy Larkin
Source: Biz Journals
Florida is one of the fastest-growing states in the country – population growth, along with tourism, are two of the biggest drivers of our economy. Miami-Dade County alone has over 2.75 million residents, making it the seventh largest county in the U.S. A recent Wall Street Journal articlereported on a study it conducted on population change by state from July 2016 to July 2017, and Florida ranked the fifth fastest growing state by percentage of one-year population growth, at 1.59 percent. For that 12-month period, 327,811 net new residents were added including births and in-migration. Nevada was second fastest, adding 2.0 percent of its population (58,275) while Idaho was the fastest growing state, at 2.2 percent (36,917).
Strip away the growth-by-percentage and Florida was the second fastest growing state while Texas was the fastest growing state, adding 399,734 people in that one year.
We expect this trend to continue, and not just because of Florida’s weather and business-friendly climate. The recently passed federal legislation placing a $10,000 limit on SALT taxes (state and local taxes, and specifically, property taxes) that can be deducted from personal income taxes is driving more people out of high-tax states like Connecticut, New Jersey and New York.
Florida has always attracted relocations from those states and expect the new tax code will spur even greater migration to the state. With no personal income tax, inheritance tax or estate tax, investors come here to reduce their potential tax burdens. In 2019, Chief Executive Magazine ranked Florida No. 2 by state for business climate. According to the Tax Foundation, the Southeast region of the country was ranked No. 1 for most favorable personal income tax laws.
Which brings us to real estate and real estate investing. In 2017, Florida was the No.1 state where foreigners bought and sold commercial property. The state is perennially in the top 10 for foreign direct investment (FDI), and has nearly 1 million jobs supported directly by FDI.
More recently, Buildium.com, a RealPage company that provides property management software and related accounting tools, ranked the top 50 U.S. real estate markets for residents and investors and Florida was mentioned seven times.
This latter point serves as a reminder, and we advise clients along these lines frequently, not all Florida markets are alike, and every region has its own nuances. Investing in South Florida, which alone has no fewer than four distinct submarkets, is vastly different than Orlando, Pensacola, Tampa or Jacksonville, the latter of which is booming in large part because of its port and the June 2016 opening of an expanded Panama Canal (which allowed Neopanamax container ships to come to East Coast markets instead of West Coast markets).
For these reasons, when choosing a market to expand or invest into, work with a local expert, like the 12 NAI global offices in Florida that serve every primary, secondary and tertiary market in the state. Last year, eight transactions closed that were referrals between NAI Florida offices covering the spectrum of real estate sectors. Although one person may be an expert in their market, they do seek out the help of another expert when their client chooses to expand to a different market.
Looking ahead, we expect robust commercial real estate activity for the following reasons:
- There will be an enormous amount of transit-oriented development built around the game-changing Brightline rail service linking Miami and Orlando, and eventually Tampa as evidenced by Brightline’s major projects in Miami, Fort Lauderdale and West Palm Beach. Along the Metrorail in Miami, there are existing, and under development, mixed-use projects of 10 to 20 stories at nearly every rail station.
- In Miami, there are three more cruise terminals being added to accommodate more cruise ship traffic. The influx of cruise passengers will drive demand for hotel, retail, food and beverage and industrial space for years to come. Plus, the influx of new residents to the state will create thousands of new jobs.
- In Palm Beach County, 125,000 new housing units have been recently approved. In addition to construction jobs, new homes will drive demand for professional services, which in turn will drive demand for more offices, warehouse/distribution product and retail real estate.