South Florida’s commercial real estate market has experienced a slowdown in deal activity this year, with first quarter volumes dropping as investors and sellers wait out an uncertain economic and geopolitical environment, according to an April 9 report.
The shift matters because South Florida has long been seen as a resilient hub for investment, drawing interest due to its tax-friendly climate and business growth. However, the recent chill in deal flow shows even strong markets are not immune to broader global pressures.
Ben Mandell of Tricera Capital said his firm is holding off on acquisitions for now. “As far as acquisitions are concerned, we are on the sidelines but looking at when we should get back on the court,” Mandell said. Alex Horn of BridgeInvest added that rising operating costs and uncertainty have made investors hesitant: “Because of this uncertainty, it creates hesitance from investors from leaning in on the investment. We are seeing that across the board.” According to CoStar Group data cited in the report, first quarter commercial deal volume was down 23 percent from last year and 11 percent below the average since 2017.
Market participants point to factors such as ongoing conflict in Iran, higher oil prices, unclear tariff policies, elevated interest rates and cap rates as contributors to stalled transactions. Douglas Mandel of Marcus & Millichap argued that some areas remain active: “Times of uncertainty may make people pause. I don’t think that Florida is feeling that… There’s a lot of capital still pouring into Florida.” Still, others like Mandell say only exceptional deals make sense right now: “Right now, it is still difficult to get acquisitions over the finish line even in Miami unless there is a splash to it, which is few and far between.”
The decline has been most pronounced in multifamily properties—first quarter volume fell by 26 percent compared with last year—due largely to oversupply following heavy development after the pandemic began. Office sales dropped by 10 percent compared with last year but remained above longer-term averages; industrial sales were up by double digits both over last year and historical averages.
Sellers have generally resisted lowering prices despite fewer buyers willing or able to pay previous highs—a dynamic known as a bid-ask gap—while some asset classes like industrial continue attracting interest due to favorable lease structures for landlords.
Looking ahead, many industry figures believe further clarity around interest rates or geopolitical developments could determine whether activity rebounds later this year. Gregory Matus of Franklin Street summed up future hopes: “When housing recovers fully, South Florida will be guns blazing… We need to get past this war, and we need the interest rates to come down.”
