Decelerating leasing activity and slowing rent growth are signaling a shift in South Florida’s commercial real estate market, according to experts who spoke at the CCIM Institute Florida Chapter’s annual outlook conference. While pandemic-driven momentum appears to be fading, analysts predict that overall commercial real estate activity will remain healthy throughout the year.
Retail properties, particularly grocery-anchored shopping centers, continue to outperform other U.S. markets. Carrie Smith of Franklin Street said that retail sector fundamentals are strong and landlords have experienced rent growth since the pandemic. “If you are a well-positioned asset, you’re probably feeling pretty good,” Smith said.
Grocery-anchored centers maintain high occupancy rates—between 95 and 96 percent—compared with lower rates for unanchored properties. Seven of last year’s largest retail transactions involved outdoor shopping centers, which together sold for $636 million and accounted for more than half of the $1.2 billion total from the top 11 deals, based on an analysis by The Real Deal. Half of these major outdoor shopping centers were anchored by grocery stores.
Smith attributed much of retail’s momentum to population growth and business expansion in Florida. She also noted that eliminating sales tax on commercial leases in 2024 was a significant benefit for retailers and restaurants. Miami retail rents rank among the highest nationally: “Miami market rents compared to the country are almost double,” Smith said. “You’re seeing rents in the mid-to-high $40s per square foot triple-net, and some topping triple digits. Supply is low for the demand we’re seeing — not only in this market, but throughout the Southeast.”
The office market has faced challenges since 2024 after a surge in tenant demand during previous years, according to Grant Killingsworth from CBRE. “The spigot of new tenants from the Northeast quickly dried out,” Killingsworth said. “We had landlords with debt coming due turning the keys back to the bank.” Some property owners encountered further difficulties; for example, Rockpoint sold One Clearlake office tower at a significant discount compared with its 2021 price, while R&B Realty lost Gateway at Wynwood through bankruptcy auction.
Despite setbacks, certain submarkets saw substantial rent increases: “Brickell went from $65 a foot to $150 a foot,” Killingsworth said. He cited notable deals such as Amancio Ortega’s purchase of Sabadell Financial Center for $275 million and a $630 million refinancing for 830 Brickell as evidence that Brickell remains attractive.
Other areas like Coral Gables have benefited from tenant migration due to shorter commutes and lower costs relative to Brickell: “Financial companies that normally never went there are moving because commute times are less and it’s half the cost” of Brickell.
Looking forward, Killingsworth expects stability: “We’re out of the challenging debt cycle,” he said. “There’s not a lot of new construction planned in the next three years. I don’t foresee any major disruption in rents.”
South Florida’s industrial sector has slowed following several years of rapid growth, Edison Vasquez from CommReal reported. Vacancy increased slightly from five percent to six percent—a shift toward balance favoring tenants—and landlords began offering incentives such as improvement allowances or moving expenses: “We saw incentives from anywhere between six to twelve months of improvement allowances and moving expenses,” Vasquez said.
Sales remain robust; end users typically pay more than investors do per square foot, with user sales averaging around $275 per square foot—and sometimes reaching $300—according to Vasquez. Blackstone divested approximately $1.9 billion worth of warehouse portfolios last year.
Land pricing remains contentious as sellers seek higher prices than developers can afford—a gap expected to be addressed this year amid stable values supported by limited inventory: “People are waiting for prices to collapse,” Vasquez said. “We don’t see that happening.”
In multifamily housing within Miami-Dade County, Mitash Kripalani from Cushman & Wakefield described stabilization after extreme rent increases driven by pandemic-era migration patterns: “Rising interest rates slowed down transaction activity, but pricing per unit has remained stable because of strong demand and disciplined investors,” he said.
Development continues rapidly with about 50,000 units under construction across South Florida—over 30,000 located within Miami-Dade County alone—mainly concentrated in dense urban areas favored by developers seeking walkable locations near employment hubs.
Some developers postponed projects or sold entitled sites last year due partly to borrowing costs; however Kripalani anticipates renewed investment if financing becomes easier: “Stable occupancy, stable rents, and improving liquidity is setting the stage for a gradual recovery,” he said.
