Following the enactment of New York’s latest rent regulations, many multifamily investors have begun reevaluating their options. One of the most common destinations they’re choosing is Florida, particularly its southern part. Not only does the Sunshine State offer a favorable climate, an abundance of luxury properties and substantial tax savings, but it also seems to be far from adopting rent control laws. Moreover, multifamily players are now interested in diversifying their portfolios by investing in office space in markets with low vacancy rates and strong demand.
Brown Harris Stevens Miami President Phil Gutman is currently spearheading sales for Ofizzina, a recently completed office condo building in Miami’s Coral Gables. The project has drawn immense interest from New York investors who are recalibrating their strategies. In a short interview, Gutman explains why investors’ appetite for Miami’s commercial real estate industry has been increasing since the adoption of rent control laws in the Northeast.
Gutman: The recently passed rent regulations have put investors and owners in a place where they are carefully reevaluating which assets are going to continue to be worthwhile. We are already seeing an influx of interest for investment opportunities in South Florida from New York buyers. That increased competition for the existing inventory combined with rents that are already high is driving new interest in other categories, like commercial property and office space.
What does South Florida have to offer investors who are shying away from NYC?
Gutman: South Florida has always attracted investors from other states. The main factors that draw them are the climate, many lifestyle perks and a lack of state income tax. As taxes rise and new regulations are implemented in other states, these benefits become harder for investors to ignore. Miami has already proven itself as an urban core, which helps investors feel more comfortable when entering a new region.
How are sales for Ofizzina going?
Gutman: Ofizzina sales are strong, the building is nearly sold out. Because multifamily rent prices remain high throughout South Florida, many sellers are interested in parting with their properties. That’s driving prices up, but also forcing investors to look at other options that will have a better yield. We also see interest from buyers who have moved to South Florida from New York and other high tax states needing to relocate offices near their new homes.
Apart from South Florida, are there any other metros or regions that investors are more willing to explore following the changes in New York’s rental laws?
Gutman: No other market really stacks up to what South Florida has to offer overall. We have climate that’s desirable year-round, endless lifestyle benefits like top restaurants and cultural attractions and no rent control or state income tax. We’re also the gateway to Latin America and all of its business. Investors will always be on the lookout for opportunities in new markets, but right now we don’t see a lot of regions giving South Florida competition.