Tag Archive for: capital investment

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Florida Land Sales Show No Sign Of Cooling Down

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Over the last few years, Florida has benefitted from tremendous in-migration, which equates to approximately 1,000 people per day moving to the state.

The trend includes not only the movement of individuals, but also employers, capital sources and developers who are expanding into the Florida market. For the first time in 65 years, Florida leads the nation in population growth.

This recent growth has been a catalyst for development, particularly in South Florida, Orlando and Tampa, which are some of the most active development markets in the U.S. In the last few years, development was primarily limited to residential and industrial, but there is renewed interest in office, hotel and retail projects. New residential developments extend beyond traditional multi-housing to build-for-rent communities, senior housing, student housing, affordable housing and manufactured housing.

As a result of the robust development pipeline, developable land is in high demand and selling at record prices. JLL’s Capital Markets team has sold more than $6 billion in land sites over the past 25 years in South Florida, $1.6 billion of which was sold in the last three years alone, demonstrating the sharp uptick in demand. In addition, compared to the broader U.S. market, South Florida / Miami land sales totaled $3.2 billion in 2022, up 49% year-over-year, while the U.S. land sale volume equaled $28 billion, down 10% year-over-year.

Some of the record setting JLL sales include the $363 million sale of 1201 Brickell Bay Dr., which is slated for Citadel’s new headquarters and 700 North Miami Avenue, a 4.7-acre site that sold for $94 million.

“We’ve really seen an uptick in non-traditional real estate owners monetizing their land holdings as well – groups such as schools, religious institutions and non-profits,” said Maurice Habif, Managing Director, JLL Capital Markets. “They see the record setting prices others are getting for their properties and realize they can fund more of their goals and missions by monetizing their land holdings. It’s been really fulfilling working on behalf of the non-profit organizations, and we look forward to seeing this trend continue in the near term. Land is only becoming more and more coveted throughout Florida and that demand should continue for the foreseeable future.”

“Florida really is experiencing phenomenal growth on all fronts,” added Simon Banke, Senior Director, JLL Capital Markets. “With more than 1,000 new residents moving to Florida every day, the state currently leads the country in population growth. Now, for the first time in forty years, Florida boasts more jobs than New York. Investors are acutely aware of these trends and hyper focused on investing in our market. In addition to a wealth of developers and capital providers that are already active in the state, we are speaking with new investors that want to be in Florida on a daily basis.”

 

Source: MarketScreener

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Industrial Cap Rates Expected To Rise But Outlook For Seasoned Investors Remains Strong

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Industrial has been on quite a tear over the past few years, as changes in consumer behavior have driven demand for more logistics and fulfillment facilities in key markets.

And according to one industry expert, the sector should stay a favored asset class for experienced investors, despite rising capital costs.

“Post-pandemic consumer behavior has changed and the rate of growth in ecommerce has slowed which has already led to pullbacks by some companies,” says Greg Burns, Managing Director at Stonebriar Commercial Finance, noting Amazon’s recent announcements regarding its industrial portfolio. “Demand for industrial though was driven by other factors as well including a move toward onshoring and the disruption of just in time supply chains.”

With that said, however, Burns said “depending on the what and the where, I would not be surprised to see cap rates widen another 50 to 100 basis points.”

“The cost of debt and equity capital have increased and cap rate hurdles have increased for institutional buyers,” Burns says, adding that he recently saw an increase of 100 basis points in an appraisal for a property in a market where his firm closed a deal six months ago.

Burns will discuss what’s happening in the capital markets in a session at next month’s GlobeSt Industrial conference in Scottsdale, Ariz. He says Stonebriar’s definition of industrial includes not just warehouse and distribution facilities, but manufacturing, life sciences, cold storage and data centers as well, and notes that “each of those sub-categories have their own dynamic and, broadly, all are growing.”

“We prefer properties with multi-modal access, especially those near ports, with most opportunities we’ve seen recently being to the southeast of a line drawn from Baltimore to Phoenix,” Burns says. “We also pay attention to outdoor storage capacity as that has become a greater consideration for tenants. There have been several announcements of new manufacturing sites relating to microchip and electric vehicles which should lead to demand for new logistics properties nearby.”

As the costs of debt capital rise, Burns says Stonebriar’s underwriting will continue to focus on the sponsor, asset and market and “that won’t change.”

“We do few spec development deals and will likely be more granular on understanding the demand/supply side of a respective market,” Burns says.

Ultimately, a recession seems likely and Burns says the changing economic landscape will have “varying impacts” on investors and individual markets alike.

“From our perspective, there will be a premium on a sponsor’s experience and capacity,” Burns says. “I anticipate industrial will remain a favored asset class for investors although those with less experience in the sector could pull back until the economy recovers.”

 

Source: GlobeSt.