Sun Belt States Florida and Georgia Heating Up Commercial Real Estate
Last year commercial real estate (CRE) investment volume reached a record $746 billion. The industry is on track to achieve record volume again this year. What type of commercial real estate is the best investment? In the current climate of economic and political uncertainty, investors are narrowing their focus to key property types, including industrial/logistics (60%) and multifamily (27%). Healthcare, self-storage and cold storage are emerging as alternative areas in which to invest.1
In addition to specific sectors, CRE investors are targeting select markets in the “Sun Belt,” which are increasingly attractive for a host of reasons. These include two metropolitan areas in Florida and Georgia – Miami and Atlanta.
What makes these areas so attractive and what opportunities might you find there?
The Sunshine state looks bright for commercial real estate.
They don’t call Florida the “Sunshine State” for nothing. With its temperate climate, Florida is among the most appealing states to live and work. Florida ranked second in population expansion in 2021, second only to Texas. Between July 2020 and July 2021, its population grew by 211,196 to almost 22 million residents.2
The sun is also shining on Florida’s economy. In 2021, Florida’s GDP was $1,226,298 — the fourth highest in the U.S.3 The state’s unemployment rate is just above three percent (3.2%), and between March 2021 and March 2022 its labor force grew by the same rate, which is faster than the U.S. average.4
A rising population, industry growth, and positive market dynamics present exciting opportunities for commercial property. Miami and the surrounding metro are of particular interest to investors.
Miami metro population spurs housing and industrial growth.
With people migrating to Florida, Miami-Dade, Broward, and Palm Beach counties are the state’s most populous. Economically, the metro area is faring well after cutting its unemployment rate in half (3%) since last year. Total non-farm jobs rose by six percent, led by an 18.4% increase in hospitality and 12.5% in mining and logging.5
Population and industry growth is boding well for industrial and multifamily CRE investors. With a year-over-year jump of 57.2%, the Miami area outpaced the rest of the nation for rising housing rental rates in March.6 Ninety-two percent of developers, owners, and investors think buying (69%) or holding (23%) multifamily property in Miami’s Ft. Lauderdale suburb is a smart idea.7
High relocation and rental rates are fueling the need to store household items and driving up storage costs. As of March, the average price for a 10x10 self-storage unit in Miami had risen to $183 per month, a 26.2% increase year-over-year. Within a 50-mile radius, prices ranged from $135 to $266 per month.8
Available industrial space in Miami, including warehouses and logistics facilities, is shrinking and companies are struggling to find accommodations. The industrial vacancy rate in Miami is less than three percent (2.6%).9 And where space is available, rent is high.
Industrial rentals are $11 per sf in Miami-Dade County and around $10 per sf in Broward County. Palm Beach County isn’t experiencing the space shortages seen in
Miami-Dade and Broward but, at just under $10 sf ($9.94), rent is high.10 Low inventory and rising rental rates are igniting new construction in these metro areas.
Miami commercial real estate will continue to benefit from a population that is attracted to Florida’s tourism and vibrant business economy. Multifamily housing, storage and warehousing will be needed to meet the demands of this thriving area for the next several years.
The economy is peachy in Georgia.
A temperate climate, Southern hospitality, and friendly business environment make the “Peach State” Georgia a top destination for people and corporations alike. It is seventh among states people relocate to12 and sixth among the country’s top states for businesses in 2021.13
The state’s economy is humming. Businesses favor its economy, infrastructure, cost of living, access to capital, and workforce.14 The services industry is the main contributor to Georgia’s GDP, which rose by almost nine percent (8.8%) in 2021. Public administration, agriculture, manufacturing, and transportation are also among Georgia’s top industries.15
Commercial real estate gives "Hotlanta" new meaning.
Locals may not like the term “Hotlanta,” but it is a fitting description when it comes to CRE development. Although growth has slowed, the Atlanta metro is still very popular and has a high concentration of residents. As a “hipsturbia" — a mixed-use suburban area that's accessible to pedestrians — the Atlanta metro is especially appealing for commercial real estate investing.16
Multifamily communities surrounded by walkable access to restaurants, retail establishments, movie theaters, banks, and other amenities continue to dominate CRE construction in the area. Seventy-two percent of CRE developers, owners, and investors recommended buying (48%) or holding (23%) multifamily property in the area.17
It’s no wonder the Atlanta metro is drawing industrial developers. Retailers and wholesalers lease almost 35% of warehouse space in Atlanta, making it the sixth largest big-box industrial market in the U.S. in 2021.18 With its proximity to the Savannah port, an extensive rail system and busy airport, Atlanta is also a major logistics hub. Third-party logistics companies, account for 27.5% of lessees.19
There are multiple incentives for businesses and developers, which makes the Atlanta metro area even more attractive. Developers are aggressively building to meet warehouse demand, but space is expected to go quickly.
Atlanta and Miami metros are key markets for medical office building development.
Medical Office Building (MOB) investments totaled a record $17.4 billion last year, and MOB sales volume dwarfing hospitals and other medical commercial property.20 This trend is expected to continue at an accelerated pace as MOB vacancy rates drop and rents rise. Atlanta and Miami are among the leading markets for medical campus construction, as well as for most active in sales, but for different reasons.
Overall, Florida is home to a significant retirement population, many of whom are aging. Miami is facing lower MOB vacancy rates and rental rates that are above the national average of $22.61 sf.21 Additional construction investments would relieve vacancy shortages.
Conversely, Atlanta’s MOB vacancy rate is higher than the national average (8.3%) and its rental rate is lower.22 So, there’s still time to get in and build out capacity.
As people migrate to the Sun Belt in search of warm weather, remote work, and business opportunities, multifamily housing and industrial space needs will increase.
Synovus helps commercial real estate developers in the Southeast secure capital for large projects. Contact Synovus Commercial Real Estate Lending or your Relationship Manager for more information.
Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
CBRE, “2022 U.S. Investor Intention Survey,” April 2022
Bloomberg, “Entrepreneurs Thrive in Pandemic That Was Supposed to Crush Them,” April 6, 2022
CountryEconomy.com, “Country’s Data: Demographic and Economy,”
Governor Ron DeSantis, “Florida’s Economy Continues to Thrive,” April 18, 2022
U.S. Bureau of Labor Statistics, “Miami, FL, Area Economic Summary,” April 11, 2022
Realtor.com, “March Rental Report: Rents for Smaller Units in San Francisco Bay Area Have Not Returned to Pre-Pandemic Levels,” April 14, 2022
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