Doral’s commercial real estate market continues to expand as the city welcomes new tenants and office spaces are repurposed.
“On the industrial side, which in Doral is referred to as Miami Airport West, asking rates on market rents are up when comparing December 2023 to December 2022,” said Carlos Villanueva, a managing broker with The Keyes Company. “The average asking rent is $22.72 a foot. We’ve seen that rent growth for industrial is at 8.4% up year over year.”
Doral’s market is strong as demand is constant in the city.
“Doral, when you look at industrial pricing, it’s definitely top of the market, in Southeast Florida, top of the market in Florida and probably top of the market in the entire Southeast,” said David Wigoda, senior vice president at CBRE. “Sales in Doral would include anything from a couple-thousand-square-foot condominiums all the way to large-scale business parks. If someone owns a property in Doral, and they have a need to sell, it’s a market where there’s always liquidity, because whether it’s a user buyer or an investor buyer, there’s always demand for product in Doral.”
The office market rents in Doral have increased year over year in December 2023, said Mr. Villanueva. Asking rents are at around $40.72 a foot, showcasing a rent growth of 5% year over year.
“We have seen a vacancy rate that’s been dropping, so offices across the nation were heavily affected during the pandemic,” said Mr. Villanueva. “As employees bit into the forbidden fruit of working from home … you saw vacancy rates rise, However, Doral is reversing that trend. They are down in vacancy rate, still high, relatively speaking at 11.4% of the space vacant, but we are seeing that the net absorption, which means the number of square feet that we’re actually absorbed over the last six to 12 months, basically leased space was 145,000 square feet in that general area. The asset value of that market is around $6 billion. That extends a little bit outside the core of Doral, but generally mostly concentrated in Doral, and inventory is around 21.9 million square feet of office space.”
Other professionals in the field have noticed the impact working from home has had on office space demand. The work-from-home mandate has lowered the demand for big office space. This has resulted in the land being more valuable with different uses in certain instances, said Andrew Easton, Easton Group vice president of office.
“Doral as a whole is demolishing a lot of offices, which we think long term will create more demand, simply because of the supply and demand factor,” Mr. Easton said. “We think the Doral market is strong.”
Over the last five or 10 years, there has been increased demand for commercial real estate in Doral, said Mr. Wigoda.
“One of the factors that drives this demand is the residential market,” said Mr. Wigoda. “Doral has seen a disproportionately high amount of home starts, meaning that developers are building, whether it’s single family homes, townhouses or multifamily complexes in Doral specifically. Over the last handful of years, there’s been a number of office buildings that have been purchased with a business plan of knocking them down and developing more residential. Residential is really what’s needed to support the commercial markets.”
This trend of turning office space into housing has resulted due to the idea of finding the best use of the land.
“What we are seeing is: on buildings that are in certain strategic locations where the vacancy factors are high, repurposing the building doesn’t make sense. Being able to look at the highest and best use of the land comes across as multifamily,” said Mr. Villanueva. “There’s a big project that is just to the west of 87th Avenue that used to be office space for a pharmaceutical company. They have since vacated that area. They’ve now redeveloped it, and it’s a great multifamily complex.”
Commercial real estate also consists of the retail market. The asking rent for the retail market in Doral in December 2023 was on average $45.13 triple net, said Mr. Villanueva.
“We’re seeing vacancy rates in retail in Doral, and Doral is a very attractive market for retail,” Mr. Villanueva said. “It has its daytime population that comes into work. It also has its existing long-term population as well who live in Doral, so they live, work and play there.”
Due to Doral having destination locations or being near such locations, low vacancy at 3.1% have been created and are declining, said Mr. Villanueva.
“We are seeing that there’s under construction approximately 17,000 square feet,” said Mr. Villanueva. “Not very much construction, because land is becoming very scarce in Doral However, this past year, 225,000 square feet of retail space was absorbed or leased out in Doral, which makes it a very strong retail market or submarket, and the total inventory in the area for retail is 14 million square feet. It’s very substantial, and asset value is around $6.3 billion.”
Doral has many aspects that attract investors, said Mr. Wigoda.
“One is, I think, quality of life,” said Mr. Wigoda. “Doral has really established itself as a place that people want to move to work, live and play. Over the last 10 or 15 years, Doral has created more retail, more restaurants, more lifestyle-type amenities that have attracted more residents, and I think the fact that Doral keeps growing, I think it’s a snowball effect. As people are moving there and amenities are growing, more developers are building … and attracting more people there.”
Additionally, CBRE arranged a $17.5 million sale for an industrial property in Doral.
“The property that we sold was originally built as a manufacturing building,” said Mr. Wigoda. “A number of years later another building was developed on the same site as another manufacturing building, and a couple of years later the buildings were actually connected. Fast forward … our client, who was the seller, bought what was once an older manufacturing facility about 20 years ago and he recognized that in the Doral market, that market has grown and has evolved into a very sophisticated, diverse market that attracts all sorts of users and he recognized that in this market there were different users that would pay more rent if the property was improved.”
During the tenure of the seller, it was decided to add new storefront glass, upgrade the landscaping, add parking, upgrade power, and overall convert it into a 21st century modern distribution center or modern industrial center, said Mr. Wigoda.
“When we brought the property to market, there are about 10 tenants in the building and they ranged from everything from a company that was doing logistics, which is a very common use in Doral, to there was a pharmacy, there was a full-service blood laboratory, as well as some kind of non-traditional industrial uses, such as call center, and then there was actually a church in the end of the buildings as well,” Mr. Wigoda said. “The building is definitely a great representation of cross section of tenants and uses that are attracted to being in Doral.”
The location of the building also played a role.
“The building is right off of 25th Street just North of the 836,” said Mr. Wigoda. “From this location, you can really get north, south, east or west throughout both Miami-Dade County and Broward County in no time at all. Your access to turnpike, your access to 95 … is all within minutes. When tenants look to see where they want to plant their business, logistics traffic patterns, access to freeways is all taken into consideration and built around this property.”
The City of Doral is expected to continue growing.
“Doral is an exceptional market,” said Mr. Villanueva. “It’s a great place to live, to work and to play. I believe the future’s bright for the City of Doral and the Doral market.”
Source: Miami Today