South Florida has weathered a storm that has wreaked havoc in San Francisco, Chicago and New York. The value of some office buildings in those central business districts has plummeted in recent years as companies made hybrid work permanent, vacancies increased and higher interest rates made refinancing mortgages more expensive.
But Miami, Fort Lauderdale and West Palm Beach have not experienced those same challenges. Instead, the migration of companies and workers to the region, new firms being founded and no significant new supply helped insulate much of the South Florida commercial real estate market.
Yet, market conditions are changing — rapidly in some cases — to new challenges, namely uncertainty stemming from presidential policies. Immigration enforcement, trade wars and interest rate uncertainty are testing the resiliency of the regional commercial real estate market.
" In the near term there are challenges definitely coming up," said CoStar Director of Market Analysis Juan Arias recently during an interview with WLRN from his Fort Lauderdale office. " That uncertainty tends to freeze up investment dollars."
The year did not start out cold for buying and selling of commercial buildings. Almost $3 billion of deals were closed in the first three months of 2025, according to data from the Miami Association of Realtors. Sales of building across the four major commercial real estate sectors — multifamily, office, industrial and retail — throughout the three major counties of South Florida were up 32% compared to a year earlier.
However, the market was held up by just two of the four sectors. Sales volume of industrial and retail properties fell in the first quarter. Only office and apartment building sales were higher from a year earlier.
A sign that property values remain strong is that there were fewer properties trading hands but the transacted amount still rose. It also indicates an appetite for bigger and newer buildings. "Larger trades are indicative of a continuing shift towards high quality, low risk investments in a period of rising economic uncertainty," the realtors association wrote in a report.
A survey by real estate services firm CRBE also found investor interest high for South Florida buildings. Miami was rated the second highest attractive market for investment in the firm's U.S. Investor Intentions Survey. It is the second consecutive year Miami came in at the number two slot.
In its quarterly market reports, CBRE describes rent for industrial properties as "cool," "stable" and "slow." The reports noted, "The reality of material trade conflicts this year is now paired with realized softer economic data."
" We're beginning to see price cuts here and there for certain property types," Arias said. "There's been a significant moderation in the demand and the activity here."
Population problems
The foundation of Florida's strong property market is a growing population. However, some of the source of that population growth is threatened by the immigration enforcement crackdown launched by President Donald Trump and supported by new laws passed by Florida Republican lawmakers and signed into law this spring by Gov. Ron DeSantis.
Florida's natural population doesn't change much in any given year. There are roughly the same amount of births and deaths, with births having a slight edge. Instead, it is people moving in and out of the region that drives population changes. And it has been foreign-born people becoming South Floridians who have fueled the pandemic era population growth spurt.
Between 2020 and 2024, the region would have lost almost a quarter of a million people if not for international migration. Tens of thousands of people who had called South Florida home left the region. Some may have relocated to other parts of Florida. Others may have moved out of state.
That out-migration was more than made up for thanks to foreign-born people moving to the area. More than a half million flocked to South Florida in the four years since 2020, according to Census Bureau data.
The result is a total population growing by 320,000 people. That's an average of 219 new people in South Florida per day for four years straight.
" If we don't continue to see population growth from that international side then we'll have an increasingly tougher time filling up the brand new real estate that we've built up here," Arias said.
The cancellation of Temporary Protected Status and student visas, along with reports of Immigration and Customs Enforcement raids, have sent fears through immigrant communities and all but stopped illegal border crossings. The impact of a significant slowdown in international migration to South Florida will be felt broadly in the real estate market. Arias is looking for the first effects to be in the apartment building and industrial building markets.
READ MORE: 'Real pain' in the South Florida condo market while home prices hold steady
The region was one of the fastest growing markets for new apartment buildings in recent years to meet the demand from new residents. As migration has slowed, the supply of new apartments looking for renters threatens to slow the multifamily sector, especially for higher priced luxury units, which make-up a large slice of the newly built apartments. Arias called that a "big divergence" with the median renter income under $60,000.
More moderately priced apartments remain in high demand with limited supply. RentCafe ranks Miami has the most competitive market for renters in the country with 96% of units occupied.
Low unemployment, low growth
South Florida continues to boast one of the lowest unemployment rates among large metropolitan areas in the nation. The regional jobless rate has remained around or below 3% for three years indicating an incredible demand for workers.
However, the supply of workers has been drying up. The number of people interested and available to work was growing by an average of 1.4% in the year before the pandemic. It has slowed to just half that rate in the previous 12 months ending in April.
The reduced growth rate of the regional pool of workers mimics what the state of Florida is experiencing and is somewhat worse than the slowdown in the national labor force.
The health of the job market and a steady infusion of new workers are vital for economies. They are a cornerstone of supporting growth, particularly real estate.
"Labor force growth feeds into how much employment growth you can have in a market. If we don't have office-using employment growth, then offices don't get occupied. If we don't have blue collar workers, then we can't fill up warehouse and distribution properties. Same goes for apartments and retail. [If] you don't have the consumers, then there's no retail demand," said Arias.
