In most cities in America, commercial real estate has been known to be one of the most valuable property investments. Recently, there has been a significant surge in Chinese nationals purchasing both commercial and residential real estate. Last year alone, the buying had taken their five-year investment total to more than $110bn, according to the study from the Asia Society and Rosen Consulting Group.
The consulting firm also reported that that total has helped the real estate market recover from the crash that began in 2006 and precipitated the 2008 economic crisis. And the figure for the second half of this decade is likely to double to $218bn, the study revealed. It just goes to prove how important businesses are to purchasing in commercial real estate. Cities today are even putting out offers such as deals and incentives to encourage businesses to purchase commercial real estate.
Commercial real estate values have also reached a low across many markets. With the economies overseas and strong dollar presently being challenged, this has taken a toll on the Miami area with real estate, tourism, and also retail which may experience downturn. In Miami-Dade, the unemployment rate fell flat in 2015 after it fell for years. Today, we have a buyer’s market for the real estate industry. Thanks to the rise in market saturation and foreclosures, buyers are able to find great values in commercial property.
However, businesses which may rely on foreigners spending money in South Florida, may not see a tremendous return on investment for 2016. According to a recent report by the International Monetary Fund, growth in Latin America and the Caribbean will be negative in 2016 — the first time the region has seen two straight years of losses since a disastrous debt crisis in 1982 and the subsequent “lost decade” of economic stagnation.
For commercial real estate, big money deals continue to roll in by businesses and foreign buyers. The entire block located on Lincoln Road was purchased for $370 million by a Spanish billionaire. In South Miami, a Maryland-based investment group also had purchased two local malls which were struggling. The firm purchased the commercial properties for $87.5 million on CocoWalk in Coconut Grove and $110 million on the Shops at Sunset Place in South Miami. Alan Kleber, managing director at brokerage JLL, stated, “Investors chase yields and because of what’s happening on the residential side, those yields are going to be in commercial.” Kleber said to the Miami Herald that increased commercial building could help pick up some, but not all, of the slack left behind by the residential downturn.