Just last year, South Florida saw more than a dozen commercial real estate deals of more than $100 million dollars, according to the story by WLRN on commercial real estate this year. “ Billions of dollars of office buildings, condo buildings, shopping malls and warehouses were bought and sold throughout the region,” the article noted. The Sunshine Economy interviewed with three veteran players in commercial real estate this year. Here’s is a highlight on how they describe the market in 2016:
The Banker — Bank United Chairman and CEO John Kanas
We’ve seen the condominium construction boom continuing and beginning to spill over into some of the other commercial real estate areas — the office [market], retail, industrial and warehousing out near the airports, for instance.
There’s a lot written about the South Florida market slowing down. We have not seen any anecdotal evidence of that. I’m not saying that it’s not. It may be, but we don’t see it yet. There’s no evidence finding its way to us that would indicate that. What we’ve seen is that other sections of Florida are catching on. We’re doing very well in Tampa and Orlando and more recently established a footprint in Jacksonville.
It is not a fait accompli that interest rates will continue to rise [in 2016]. They will continue to rise if this economy continues to be robust. But I believe that at any sign that this economy is faltering we could very well give up [the recent Federal Reserve rate hike] and possibly even go the other way. I don’t think people are making investment decisions around that issue right now. I think if we get to May or June and the Fed has moved two more times since now that will start to get into people’s decision-making.
I’ve been through four or five [real estate busts] since 1976 when I started running a bank. They’re all driven by the same thing: that is over exuberance, over zealousness and people forgetting that there’s two sides to this story [and] beginning to believe values can’t correct themselves. We see that in stocks and we see that in real estate; we see that other assets. So we’re watchful. But what’s happening this time is there are a lot of a long-term bells that are already ringing. The regulators are cautiously advising banks to be careful about this. Economists are already starting to warn that straight up may not be forever. I view that positively because it’s a sobering experience.
We are seeing a lot of money coming from China. We are seeing a lot of investors coming from China. We’re seeing Chinese developers. We’ve already seen Chinese developers in New York and Chinese banks also in New York. [More and more] they’re coming to Florida. We haven’t seen Chinese buyers. I think Chinese buyers will come. The main issue is the [lack of] direct flights from China (to South Florida]. The moment that we have direct flights, I think we are going to see Chinese buyers.
*The Sunshine Economy