For Ed Easton, It’s The Best Of Times, It’s The Worst Of Times
After nearly 40 years in the business, when Ed Easton says something about real estate, people ought to listen. And what Ed said about high-end residential in Florida ought to be setting off alarm bells.
Ed told attendees at Bisnow’s South Florida 2016 Industrial & E-Commerce Revolution event last week the high-end residential market has a good chance of busting here in the next 24 months, mainly because of the value of the dollar.
Ed said investors who flooded the condo market in recent years were mainly from Canada, Central and South America, and the dollar’s recent rebound means they’ve seen values drop by as much as half when converted to foreign currencies.
“I think that’s a very vulnerable part of this market in the next 24 months,” Ed says.
Ed was part of an all-star panel of industrial real estate vets, including Butters Construction and Development’s Malcolm Butters; McCraney Property Co’s Steven McCraney; Bilzin Sumberg’s Howard Nelson (who moderated); Fairchild Partners’ Jose Juncadella; Sunbeam Properties‘ leasing VP Maridee Bell; and Flagler Global Logistics’ Chris Sutton.
Of course, the panel’s main focus was on the industrial market in South Florida, but Ed—who built his first warehouse in 1978—has been in the industry long enough to see a segment in trouble. But his views on industrial were the polar opposite of condo towers along Miami Beach.
“The industrial market is the best I’ve ever seen it since I’ve been in the business,” Ed said, adding Easton is releasing emptied warehouse space at 95% versus 85% in the past. “Anything under 25k SF we rent in three days. I mean, it’s crazy.”
Easton also is creating its own new industrial plot, filling in a portion of a 49-acre lake in Pembroke Park for a $55M industrial development that will encompass more than 600k SF of industrial property to expand Seneca Commerce Park.
Other panelists say the industrial market will be strongest with infill and redevelopment in South Florida over the next five years, especially since so much virgin industrial land has been converted to residential uses.
“It’s not uncommon to hear golf courses to be developed [as industrial] or lakes being filled in,” Chris said.
He said the planned Miami Dream mega-mall development could spur industrial development in Northwest Miami, where Flagler has 500 acres.
“The 30′ to 32′ clears are being what’s required and what’s expected in the marketplace,” Maridee said.
And that’s prompting developers to buy outdated warehouse and distribution facilities, raze them and rebuild more modern distribution centers. Ed, though, said rents need to rise quickly to justify new construction given land costs.
“The wild card in the room is what’s going to happen with Cuba,” Ed said. “If the embargo’s lifted by the US, Cuba becomes a 13 million-person market for American retailers. And since nobody in their right mind would store their goods in Cuba because it would be stolen, Miami will be the storehouse of choice. That would put unbelievable upward pressure on the industrial market.”