Miami is by far one of the best places to vacation, and it seems to be becoming one of the best places to work as well. It seems as though the recent trends across the nation suggest that the real estate market is cooling off and not as many people are buying that are selling. As far as the residential market, this statement rings true for Miami. But when it comes to commercial real estate, Miami is on fire. The residential market for condos and houses has definitely cooled off but this has left a wide open space for the commercial sector to heat up. Big buildings that were originally developed as space for condos are now being sold for office or retail space. In an article entitled, “Still-hot market in South Florida,” by Maura Webber Sadovi, featured in the July 19, 2006 edition of the Wall Street Journal, Sadovi explains this “hot-market” in Miami.

“The dollar volume for property sales in the industrial, office and retail sector is expected to top last year’s level as larger institutional investors snap up properties from smaller private investors, according to Mark Gilbert, executive director of the capital markets group for Cushman &Wakefield. Mr. Gilbert is based in Miami. Only the apartment sector has seen the pace of deals drop off, as slowing demand for condominiums has damped interest from would-be condominium converters, Mr. Gilbert says.”

The rising price of commercial space is contributing to what is going on in Miami. “Average sale prices fetched by retail properties rose to $221 a square foot this year through June 29 from $156 last year, well above the national average of $154, according to Real Capital Analytics Inc., a New York-based real estate research firm. Meanwhile, the average price for office properties rose to $213 a square foot this year from $164 last year, about in line with the national average of $211.”

“About $2.1 million square feet of retail space is expected to be completed this year, up 74% from last year, and some office projects are also in the works, Property & Portfolio Research Inc., says. Alan Ojeda of Rilea Group is in negotiations with potential anchor tenants for a proposed 580,000 square-foot office building at 1450 Brickell Avenue in Miami’s financial district. The project was originally proposed as residential units.”

But everything does not appear to be perfect. Although, the commercial market is booming, there are still a lot of problems. The nation’s economy appears to be slowing right now and insurance in Miami has skyrocketed due to the hurricanes last year. And to make matters worse, hurricane season is fast approaching.

“But the economy’s pace appears to be downshifting, slowed in part by a cost of living that is 11% higher than the national average, according to PPR. Job growth for the year from May 2005 stood at about 2.7% from May 2004 to May 2005, according to the Bureau of Labor Statistics.”

“Insurance premiums have soared and some commercial building owners have had trouble getting coverage at all, but they hope the region can make it through this hurricane season unscathed so rate will come down.”