Commercial Real Estate in Some Areas in Florida Bucked National Trend

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Real Estate, Shout Outs

Commercial real estate in some Florida cities like Miami, Sarasota and Pensacola beat the odds in the first months this year and bucked the nationwide trend of decline in the commercial property sector.

Commercial rents and occupancy rates increased in these cities while most commercial properties nationwide struggled from vacant spaces and decreased rents. Default rates on commercial mortgage loans also surged across the nation in the first four months this year.

Based on data from the Florida Department of Revenue, the total of rents collected by commercial property owners for the four-month period ended April increased substantially from the rent total collected during the same period last year.

In Sarasota County, commercial real estate owners collected a total of $55 million in rents, the highest monthly total since May 2005. It was also 14-percent higher than total commercial rents collected in March 2009. While rents in Sarasota in the months of January, February and April this year were still lower compared to the same months last year, the total collected in March was so large that it closed the differences and even made total collections for the four-month period higher than the same period last year.

In Miami, commercial rental revenues also surged by 0.3 percent in the four-month period ended April. Although the increase was small, it was a significant increase as commercial real estate revenues in Miami-Dade County plunged by 15 percent in the first half of last year. The situation of the Miami-Dade commercial property sector has a huge influence on statewide commercial activities, as it accounts for almost one-fifth of Florida’s commercial real estate market.

Pensacola was also bucking the national downward trend in commercial property revenues until the city was affected by the BP oil spill. Local analysts contend that commercial landlords in the city are currently collecting more rental fees because BP has been leasing plenty of rental spaces in and around the city. Landlords, however, are concerned about the long-term effects of the oil spill on commercial spaces.

Nationwide, economists studying commercial trends said that about $1.4 trillion of commercial mortgage loans would become due in the next four years and that about half are currently underwater. They also said these mortgages could prolong the crisis if not rescued.

In Florida, however, the commercial sector did not plunge as deeply as what was predicted by analysts in the past. Although total landlord revenue statewide was flat last year and fell by three percent in the first months of this year, landlord revenues statewide increased by 7 percent compared to revenues in the years 2004 through 2007. They even grew by higher percentages in the counties of Lee, Orange, Charlotte and Broward.

These landlord revenue increases in Florida indicate that the state is still a great destination for commercial real estate investors.

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