New Commercial Construction Increased In South Florida during 2017
Commercial and Residential construction were at opposite ends of the spectrum in South Florida during 2017. Commercial construction showed at the high end of the scale, with developers quickly starting and completing projects. South Florida saw over $5.7 billion in new commercial construction. According to the Dodge Data and Analytics’ year-end report, that number is a 27 percent increase from the previous year.
South Florida’s commercial growth is continuing to thrive as general contractors in the area are shifting their focus to the commercial sector, including multifamily apartment buildings and industrial properties. There’s a heavy focus on seaport and airport facilities, apartment buildings, and warehouses.
The residential side of South Florida construction was a completely different story. A large portion of this result being attributed to South Florida’s condo market decrease. “At the end of November 2017, we have five years worth of condo inventory over $1 million in the market,” advised Ron Shuffield, CEO of EWM Realty International. “This is the highest total in one month since the recession in 2008.” The surge of condos on the market not only affected the prices sellers are getting for their properties but also put a hold on adding new condo construction to an already overfilled market. Shuffield elaborated, “We won’t see a number of new projects starting that we were anticipating a year ago for 2018,” he said. “Many developers have pulled back the new product because presales have been weak.”
Some people are eager to see the silver lining in the slowdown, like Noah Breakstone, managing partner of Fort Lauderdale based BTI Partners, “We do believe that a number of sites in Miami-Dade and Broward that came to an abrupt stop in terms of sales pose opportunities for us,” he said. “We are looking at those sites that won’t be developed until the next cycle.”
While the commercial sector had an increase of 27 percent, the residential market showed a loss of 33 percent from the previous year, landing at only $5 billion in new residential construction. According to a newly completed Douglas Elliman Report, major metros in South Florida such as Miami-Dade, Palm Beach Counties, and Broward Counties have reported decreasing residential home sales over the past several years.
The decrease in residential project starts pulled down the overall total in 2017. The $10.7 billion new construction starts for the year fell below the previous year of 2016, which, according to Dodge Data, was $12 billion.
December 2017 was an overall slow month. Residential new construction starts declined a significant 53% to only 306 million, while commercial construction starts also showed a decrease of 20% to $253 million.
Will the trend continue into 2018 or will things take a turn in a new direction?