MIAMI: Federal regulations may slow the flow

Miami owners, developers, lawyers, accountants, property and capital market brokers all are heads up and paying close attention to the tea leaves. No disasters, no screeching halt, just slowing down and being deliberate with every aspect of deals. The exception to the slow-down thinking is the industrial sector that is seeing 8-10% annual rent growth and sub 5% vacancy…They literally just can’t build enough new space fast enough.

Deal velocity continues to be strong but some economic indicators may be signaling time to ease up. Wall Street and Washington, DC are big contributors to the concerns. Federal regulations may slow the flow, in particular one new regulation will soon require senior executives at CMBS lenders to personally sign off on deals. Another requires off shore cash purchasers of high profile Miami residential real estate to disclose the principals of ownership entities. Capital markets brokers are beginning to hear banks talk about reaching the regulatory lending limits for construction loans which contrasts with south Florida property and casualty insurance brokers who are bonding general contractors’ new projects at a brisk pace as these clients are very busy. Add to all this the challenges associated with the Wall Street equities market shaking consumer confidence and it becomes clear why real estate market players are wary.

While Miami continues to bolster itself as the capital of South America by attracting more and more South American capital investment, the overall sentient from senior level Miami real estate professionals is that 2016 will be a cautious and transitional year.