Real Estate Forum - December 2011

NEWS FRONT
Miami Beach Hotel Market Sees Renaissance

MIAMI BEACH—Could a Hyatt hotel be coming to Miami Beach? Possibly, since Hersha Hospitality Trust bought the 263- room Marriott Courtyard and has ties with the Hyatt brand.

How about a hotel-casino in South Beach? Wynn Resorts chairman Steve Wynn told the local press recently that he liked the Miami Beach Convention Center site to develop such a property.

The point is this: Whether trading, renovating or developing, Miami Beach’s hotel market is on fire. According to the Aztec Group, 11 hotels have traded in Miami-Dade County this year, and seven of those assets were in Miami Beach. The total transaction price on the 1,676 rooms was about $345 million. Miami Beach saw $255 million, or 74%, of that total.

What’s more, Gregory Rumpel, man-
aging director for Jones Lang LaSalle
Hotels, who brokered the Marriott
Courtyard deal and several others on
Miami Beach this year, says he has
another $350 million in transactions due
to close in the next 30 to 60 days.

Miami’s Industrial Market Gets Port Happy

US imports from Asian markets continue to grow as the economy slowly recovers. And this seems to be just the beginning. Imports from China, especially, are anticipated to increase over the next several years. The increased traffic from Asia has created a funnel effect, moving cargo from the Far East to the These and several other factors are driving major investments in ports. Currently, growing need to move more cargo through the most expedient routes to eastern US markets, the creation of a new lock system in addition to the current one is necessary. This will then allow much larger ships to cross the oceans via the Panama Canal.

The canal expansion is a big game changer for the ports and, by association, the industrial markets that are connected to them. We predict that no market in Florida is likely to be as affected as much as Miami when the long-awaited expansion is completed in 2014.

The State of Florida funded a $77-million dredging project for the Port of Miami in March, and it’s on track to be com-

By John Vaught

pleted in time to receive the largest of the new ships coming through the canal in 2014. These larger ships require up to 50 feet of depth to navigate fully loaded through the channels. Currently, Norfolk, VA is the southernmost city that can accommodate the post-Panamax cargo ships.

With the Port of Miami proceeding with dredging, other capital improvements will make moving cargo through the port even more attractive for logistic firms. Infrastructure improvements include a tunnel that will allow traffic to bypass Downtown Miami and go directly onto Interstate highways. Further, investment into on-dock rail systems inside the port as well as rail lines that run out to the western portion of Miami-Dade County, where the prime industrial properties are located, will aid in moving cargo.

The investment into the port from state and private funding is spurring optimism in the Miami industrial market. Companies, especially those that likely will see increased business from port activity, are taking action by signing new leases and purchasing properties. Additionally, development of new distribution space is anticipated to begin within the next six months. The primary focus of the new construction is on warehouses in close proximity to rail lines that run to the port and will be actively carrying cargo.

John Vaught is the Miami-based first vice president for CBRE. He may be contacted at john.vaught@cbre.com. The views expressed here are the author’s own.