Up 1 Place

2012 Rank: 20

2011 Rank: 21

Miami

Low Vacancy Supports Rising Rents, but Casino Gambling May Be a Game Changer
Total Nonfarm Jobs (thousands)

Employment Trends
Absolute Change Y-O-Y % Change

trong tenant demand in Miami-Dade County in 2012 will push down the vacancy rate and create additional opportunities for property owners to raise rents and withdraw concessions. While the transition to greater rent-driven improvements in property operations and incomes unfolds during 2012, new economic development initiatives will also emerge that will affect the market in the coming years. A new source of long-term tenant demand may materialize as pending statewide legislation will permit the construction of two casinos in Miami-Dade. In addition to the construction jobs that will be created, permanent positions at the properties will significantly boost leisure and hospitality employment. A resurgent local economy and wider availability of low-rate acquisition financing are generating considerable interest in Miami-Dade. The county also benefits from a sizable buyer pool, including European and Latin American investors that continue to exploit favorable currency valuations. Overall, investors will find that cap rates in the market generally start at approximately 6 percent for Class A investments and in the low-7-percent range for most Class B properties. Properties eligible for agency financing may trade at slightly lower firstyear returns. Assets near the beaches, Coconut Grove, Coral Gables or Kendall remain primary investment targets and will attract multiple bids when listed for sale. Distressed properties present an opportunity for investors to purchase at low cost and execute turnaround strategies. Operations at these properties can be restored quickly due to healthy renter demand and the return of many former homeowners to apartments. 2012 Market Outlook

50 25 0 -25 -50

6%
Year-over-Year Change

3% 0% -3% -6%

08

09

10

11*

12**

Supply and Demand

2.0
Units (thousands) Completions Vacancy

7% 6%
Vacancy Rate

1.5 1.0 0.5 0.0

5% 4% 3%

08

09

10

11*

12**

Rent Trends
Asking Rents Year-over-Year Change Effective Rents

8% 4% 0% -4% -8%

2012 NAI Rank: 20, Up 1 Place. Miami ranked highest among Floridas metros in this years index after improving one position due to healthy payroll growth and an above-average vacancy decline. Employment Forecast: Strong international trade will support a gain of 20,600 jobs in Miami-Dade this year. In 2011, 20,000 jobs were added. Construction Forecast: Nearly 1,300 rentals will be completed in 2012, up from about 300 units last year. Projects slated for completion in 2012 will restore rental stock to 83 percent of its peak level before conversions. Vacancy Forecast: Solid rental housing demand will reduce the vacancy rate 50 basis points to 4.4 percent. An 80-basis-point drop was recorded last year. Rent Forecast: Low vacancy will support a 3.6 percent jump in asking rents to $1,124 per month, while effective rents will advance 4.2 percent to $1,081 per month, the most significant rent growth in years. Investment Forecast: Conditions for improving property cash flows remain highly favorable and will encourage additional transactions. A second consecutive year of job growth will spur rental household formation, while tighter residential mortgage requirements will extend residents stays in rentals.
Market Forecast Employment: 2.1% s Construction: 1,030 s

08

09

10

11*

12**

Median Price per Unit (thousands)

Sales Trends
$100 $80 $60 $40 $20 07 08 09 10 11*
** Forecast

* Estimate

Sources: Marcus & Millichap Research Services, CoStar Group, Inc., RCA

Vacancy: 50 bps t

Effective Rents: 4.2% s

page 29

2012 Annual Report

BLACK TEXT VERSION