South Florida's popularity has been growing over the past several years, and COVID did little to change that.1 In fact, throughout the first year of the pandemic, with offices remote and numerous cities under tight restrictions, many people flocked to South Florida.6 The weather was warm, the restaurants were open, and the cost of living often was less than in many of the cities they had fled.11
People may have thought it would be a temporary move, yet the area’s population has continued to grow.1 In fact, Census estimates show Florida was the fastest-growing state in the country in 2022.1
Attracting corporate relocations
Since the beginning of the pandemic, a wide range of corporations have opted to either relocate entirely or build out their presence in the Miami area. In the financial services sector, Elliott Capital Management was one of the first to move its headquarters to Miami following the COVID shutdowns.4
Likewise, Citadel, Ken Griffin’s hedge fund, moved its headquarters and about 500 jobs to Miami from Chicago in June 2022.2 Meanwhile, asset managers Blackstone and Point 72 boosted their Miami footprint.3 Earlier this year, Rothschild & Co., a Paris-based financial services firm, announced that it was opening a Miami office, noting South Florida’s “fast-growing international business and finance hub” and “the region’s diverse talent pool.”4
And it’s not just financial firms heading to Miami. Law firms Sidley Austin, Winston & Strawn and King & Spalding have established or expanded their South Florida footprints,9,10 and both Viking Cruises and Crystal Cruises moved their headquarters from Seattle and the Chicago area, respectively.7,8
Even some tech firms are choosing the Miami area over traditional home bases such as Silicon Valley. The Wall Street Journal noted that 10 “unicorns” – those that reach a valuation of $1 billion without being listed on the stock market and are the dream of any tech startup – were located in the region in 2022, with venture-capital funding growing to more than $4.6 billion.3
New residents hunting for housing
Employees of these companies are still arriving and looking for a place to live.3,5 The influx of new residents contributed to a 12% increase in housing prices in the year ended January 2023, per the Black Knight Home Price Index. And apartment rents, while not expected to continue growing at the pace seen in 2021 and 2022, are up about 12% in 2023 compared to the previous year.1
A RentCafe survey pegged Miami-Dade County as 2022’s most competitive rental market in the U.S. last year, when occupancy rates hovered near 98% and apartment vacancies averaged 25 days.6 The area’s geography and topography makes it a challenge to keep expanding. The Atlantic Ocean is to the east and the Florida Everglades’ 1.5 million acres of tropical wetlands border to the south and west, limiting opportunities for development.
So what does this mean for investors? With its generally business-friendly environment, lack of state income tax, and generally desirable weather, CrowdStreet expects demand for housing in the Miami area to potentially continue, creating opportunities for commercial real estate developers and investors.
The CrowdStreet team is actively speaking to sponsors about opportunities in the Miami area and is striving to bring new deals to our Marketplace this year. We look forward to presenting these opportunities to the CrowdStreet investor community.
Sources:
1https://cre.moodysanalytics.com/insights/market-insights/q4-2022-housing-affordability-update/
5https://www.wsj.com/articles/home-prices-housing-market-trends-east-west-83c9eb56
9 https://www.miamiherald.com/news/business/real-estate-news/article263403473.html
11https://247wallst.com/state/how-the-cost-of-living-in-florida-compares-to-the-nation/
