NAR's Commercial Real Estate Metro Market Conditions Index for the first quarter of 2022 shows that Florida held the top five hottest commercial real estate metro markets: Orlando, Miami, Palm Beach, Fort Lauderdale, and Fort Myers. The South region is the hottest commercial real estate region, accounting for 11 of the top 16 commercial real estate markets, including the Florida markets (Savannah, Austin, Atlanta, Asheville, Charleston, Nashville) followed by the West region with four markets (Riverside, Las Vegas, Bend, Provo), and the Northeast with one market (Boston).
NAR's Commercial Real Estate Market Conditions Index is calculated using 25 variables pertaining to the metro area's economic conditions (job growth, unemployment rate, wage growth), demographic conditions (net domestic migration, population growth), commercial market conditions for multifamily, office, industrial, and retail property sectors (vacancy rate, absorption, rent growth, cap rate, professional/business services, and retail trade job growth) and employment conditions in the hotel/lodging industry (job growth, share of leisure and hospitality workers to total employment).
The index is calculated using the ratio of the number of variables where a metro area's condition is stronger compared nationally to the total number of indicators used in calculating the index (25 if all are available). An index above 50 means market conditions are stronger than nationally, and an index below 50 means local market conditions are weaker than nationally. An index of 80 means that the metro area is outperforming the U.S. indicators on 20 of the 25 indicators. Commercial market data is from CoStar and economic and demographic data are from the U.S. Census Bureau and the U.S. Bureau of Labor Statistics. Some CoStar metro area delineations could be submarkets or may not exactly match the U.S. Census Bureau or Bureau of Labor Statistics delineation1.
Top Commercial Real Estate Markets
Orlando-Kissimmee-Sanford, Florida
Orlando's economic and commercial market conditions are all stronger than national levels, garnering an index of 84 (meaning Orlando is outpacing the U.S. on 21 out of 25 indicators). Wages are rising 9% in Orlando compared to 4% nationally. In 2020, 10,000 people migrated to Orlando from other states. The multifamily asking rents are up 26% compared to 11.4% nationally. The office vacancy rate is just 8% compared to 12.2% nationally. The industrial vacancy rate is 3.6% compared to 4.1% nationally. The retail vacancy rate is at 3.8% compared to 4.5% nationally. Orlando is a vacation destination, with 19% of the workforce employed in hotel/lodging compared to 10% nationally.
The main risk area in Orlando's commercial market is the hotel/lodging sector, as rising airfare and gasoline prices make travel costlier.
Miami-Miami Beach-Kendall, Florida
The Miami metro area's economic and commercial market conditions are stronger than national levels and about the same as national levels regarding the hotel/lodging market. It garnered a score of 76 (so it outperformed the U.S. on 19 indicators). Wages are rising at par nationally, at 4.7%. In 2020, the combined Miami-Fort Lauderdale-West Palm Beach metro area (based on U.S. Census Bureau delineation) experienced net domestic outmigration, with 46,000 people leaving the area for other states. Still, the commercial market is performing well. Multifamily asking rents are up 19% compared to 11.4% nationally. The office vacancy rate is at 10% compared to 12.2% nationally. The industrial vacancy rate is 2.7% compared to 4.1% nationally. The retail vacancy rate is at 3.3% compared to 4.5%. It has a higher share of the workforce in retail/lodging, at 11.3% compared to 10% nationally.
The main risk area in the multifamily sector, given the area's high asking rent of $2,120, compared to $1,587 nationally, equivalent to 24.3% of a 2-earner household income, compared to 16.5% nationally.
West Palm Beach-Boca Raton-Delray Beach, Florida
The Palm Beach metro area's economic and commercial market conditions are stronger than national levels except for the hotel/lodging industry, garnering an index of 76 (so it outperformed the U.S. on 19 indicators), like the Miami area. Wages are growing faster, at 8.4% compared to 4.7% nationally. In 2020, the combined Miami-Fort Lauderdale-West Palm Beach metro area (based on U.S. Census Bureau delineation) experienced net domestic outmigration, with 46,000 people leaving the area for other states. Still, the commercial market is performing well. Multifamily asking rents are up 26.8% compared to 11.4% nationally. The office vacancy rate is at 8.9% compared to 12.2% nationally. The industrial vacancy rate is 2.8% compared to 4.1% nationally. The retail vacancy rate is at 3.9% compared to 4.5%. It has a higher share of the workforce in retail/lodging, at 13.8% compared to 10% nationally.
The main risk area is in the multifamily market, given the area's high asking rent of $2,317, compared to $1,587 nationally, equivalent to 26.3% of a 2-earner household income, compared to 16.5% nationally.
Fort Lauderdale-Pompano Beach-Deerfield Beach, Florida
The Fort Lauderdale metro area's economic and commercial market conditions are stronger than nationally except for the hotel/lodging industry which is at par with national conditions, garnering an index of 72 (so it outperformed the U.S. on 18 indicators). Wages are growing faster, at 9.1% compared to 4.7% nationally. In 2020, the combined Miami-Fort Lauderdale-West Palm Beach metro area (based on U.S. Census Bureau delineation) experienced net domestic outmigration, with 46,000 people leaving the area for other states. Still, the commercial market is performing well. Multifamily asking rents are up 22.9% compared to 11.4% nationally. The office vacancy rate is at 10.5% compared to 12.2% nationally. The industrial vacancy rate is 3.8% compared to 4.1% nationally, but industrial rents rose 16.4%. The retail vacancy rate is at 3.9% compared to 4.5%. It has a slightly higher share of the workforce in retail/lodging, at 10.5% compared to 10% nationally.
The main risk area is in the multifamily market, given the area's high asking rent of $2,182, compared to $1,587 nationally, equivalent to 23.5% of a 2-earner household income, compared to 16.5% nationally.
Fort Myers, Florida
The Fort Myers metro area's economic and commercial market conditions are stronger than nationally except for the hotel/lodging industry, which is at par with national conditions, garnering an index of 72 (so it outperformed the U.S. on 18 indicators). Wages are growing faster, at 12% compared to 4.7% nationally. In 2020, 18,500 people moved into the area from other states. Multifamily asking rents are up 29.6% compared to 11.4% nationally. The office vacancy rate is a low 4.7% compared to 12.2% nationally. The industrial vacancy rate is at 2.4% compared to 4.1% nationally, with industrial rents up 11.5%. The retail vacancy rate is at 3.7% compared to 4.5%. It is a vacation destination, with a slightly higher share of the workforce in retail/lodging, at 15% compared to 10% nationally.
The main risk area is in the hotel/lodging sector, as rising airfare and gasoline prices make travel costlier.
