Impending Panama Canal Expansion to Increase Need for Miami Multifamily Housing–Maybe
- Feb 22, 2011
Miami–Expansion of the Panama Canal is on track to reach completion in 2014 and Miami, with its port being the closest U.S. port to the Canal, could benefit from thousands of new jobs that would need to be created due to the rise in shipping activity, and those added jobs would spur an increase in demand for multifamily housing.
However, while the Panama Canal project is a sure thing, its indirect effect on the city’s multifamily housing market is not. The Port of Miami has to be dredged to accommodate the large container vessels that would come to the port with the extension of the Panama Canal, but such a project requires funding, funding that local and state officials are still campaigning to secure from the federal government.
Completing the dredging to prepare the Port of Miami would position the port as one of only three in the U.S. on the Eastern seaboard that would be able to accommodate the world’s largest container vessels, according to Miami-Dade County. “It will create a lot more jobs, which will attract a lot more people to the area,” Arcelio Gerardo, general manager of FTZ World Services, the licensed operator of the Miami Free Trade Zone, tells MHN. Approximately 30,000 new trade-related jobs would materialize, as per Miami-Dade County statistics.
“We’ll see an increase in activity in Miami’s infrastructure,” Gerardo adds. “There will be an increase in cargo transit, airport, road and rail usage and increased activity in foreign trade in the Miami Free Zone.”
Local and state officials in Florida had been hopeful that President Obama’s recently revealed 2012 budget proposal would include $75 million in funds to help finance the requisite dredging, but their hopes were dashed. The officials continue to seek government assistance and if all goes as planned, dredging will move forward and create a domino effect that will positively impact the local multifamily market.
Miami’s apartment market is already well on the road to recovery and conditions are in line to continue to improve. As Marcus & Millichap Real Estate Investment Services notes in a recent report, the release of pent-up demand pushed vacancies down 40 basis points in 2010, and this year, job growth will prompt a 110-basis-point decline, to 4.6 percent. If the trend continues, Miami’s apartment market will be hard-pressed to accommodate the demand that will come with the added jobs produced by the Panama Canal expansion in 2014.
However, without financing in place for the dredging of the Port of Miami, the future of the city’s apartment market is up in the air to a certain extent. “We see an opportunity and right now, Miami officials are saying we will be ready,” Gerardo says. “We must be ready. How can we let that opportunity pass by?”