For South Florida, REITs had come into the picture about 15 years ago, changing the local commercial real estate market. According to Wayne Ramoski of Cushman & Wakefield, REITs invest across a broad array of sectors, from office buildings to shopping malls and hotels. Ramoski said there also are health care, timber and infrastructure REITs during the RCA Midyear Update. In Miami, low interest rates and improved employment have boosted REITS.
“The way REITs develop and hold is very different than a local developer would expect,” Ramoski said. “It’s brought in an institutional class of developer. They are here because the Miami market is not going away. There are certain factors about Miami that are going to keep it alive for a long time. The REITs are also cross selling other clients they have in different markets into this market.”
According to the Greater Miami Convention & Visitors Bureau, developers are buying and building new malls because of South Florida’s population growth and increased tourism. Miami-Dade, the most populous county in Florida, added 7.8 percent more residents in the last five years and has a population of 2.69 million, according to U.S. Census Bureau data. A record 15.5 million visitors visited Miami in 2015.
Just last June, a public REIT paid more than $180 million for a portfolio of self storage properties, which were mostly located in Florida. Self Storage Trust II had acquired 10 properties in Florida. The other properties were purchased in Baltimore, Maryland, from affiliates of the Mindful Capital Group, an investment and management company headquartered in Delray Beach. The Real Deal wrote that altogether, the deals come out to nearly $182 million in South Florida alone. One of the Florida properties is located in Port St. Lucie and another in Naples, so they aren’t included in the roundup.
“We like the diversity of these assets across the southern half of Florida,” Wayne Johnson, chief information officer for Self Storage Trust II, wrote in a company announcement. “There are 10 stores spread amongst five counties, each in dense and established markets.”
Investors just love REITs. REITs are one of the few investments that have escaped scrutiny with investors today. In the beginning, REITs were developed by Congress in 1960 for the smaller investor and they of course, offer plenty of opportunity for investors. With low interest rates, REITs currently pay yields in excess of 4 percent.