New Construction on the Rise in South Florida
New construction has been on the rise in South Florida with many projects being proposed over the past few years. Specifically, the South Florida tri-county region had experienced at 52% increase in construction contracts in 2014 which was a significant gain which then leveled out in the second half of 2015 back to normal levels.
Dodge Data reported $10.34 billion in construction contracts were awarded in South Florida in 2015, up from $10.04 billion in 2014.
The 2014 levels had seen unusually large gains at 62% growth in the residential sector. The slight decrease of only 2% to $6.55 billion is nothing to be alarmed about seeing as 2014’s surge was so great. In fact, South Florida had ranked second behind New York City in annual multifamily construction starts last year.
The nonresidential sector (commercial real estate, hotels, education, government and public works) had construction contracts up 12 percent to $3.79 billion. Increases in this sector again were skewed very greatly as 2014 had spiked substantially by the start of the $478 million renovation and expansion of the Miami Beach Convention Center. Meanwhile, David Beckham’s soccer stadium does have the potential to begin construction this year and should this go as planned in Miami, we could see construction numbers have yet another boost in the near future.
It is anticipated that where construction costs had soared over the past handful of years, they may see some decline soon as we had experienced such a burst. The level in costs may assist the projects that were placed on hold due to lower profit margins and encourage them to now move forward.
This leaves us asking one question remaining. How are things in the rental market? Reports are showing that there are many projects in the pipeline that will be on the rental market. Specifically, there are 12,400 rental units under construction in South Florida where there continues to be a strong demand from tenants for quality rental spaces. The retail, office, industrial and hospitality sectors all have significant projects under construction and in the planning stages.