Tuesday, September 24, 2013

How Will the Panama Canal Expansion Affect South Florida’s Commercial Market?


Panama Canal   (Marcus & Millichap file photo)
WALNUT CREEK, CA -- Q: How will the expansion of the Panama Canal and the subsequent improvements to Miami and Port Everglades harbors affect South Florida’s commercial real estate market?

Kirk Felici
A: “The Panama Canal expansion is a historic event that presents investors with an opportunity that comes along only once in a generation,” says Kirk Felici, first vice president and regional manager at Marcus & Millichap.

Being the closest to the Panama Canal, the Port of Miami and Ft. Lauderdale’s Port Everglades will have an advantage over other eastern seaboard ports.

The Port of Miami has already begun port and storage expansion to accommodate larger post-Panamax ships and more traffic.

In addition, the port authority is planning a $1 billion tunnel project that will prevent increased trucking traffic from congesting current roadways while allowing improved access to intermodal transportation to move cargo inland from the port. Port Everglades is also planning a $313 million project to deepen its canal.

According to Felici, the Panama Canal expansion is projected to significantly impact commercial real estate demand in South Florida. The increased cargo volume will increase demand for all four of the major property types that Marcus & Millichap represent: industrial, office, shopping centers, and apartments.

“Within 10 years of completion of the canal and our port expansions, port volume is projected to double and create 3% annual job growth,” Felici says. “Increased cargo volume is expected to increase demand for commercial properties such as storage facilities, distribution centers, and warehouses.”

He adds, “Other port-related businesses such as custom brokers, logistic firms and freight forwarders will also need additional warehouse and office space due to demand created by post-Panamax deliveries.”

Commercial property investors are projected to see a strong return on investment fueled by three key factors:

•Job growth — More local jobs will power a strong demand for housing and retail properties.


•International economic growth — As the gateway to South America, Florida ports will provide essential infrastructure for that growing region. In addition, special events such as soccer’s World Cup and the Olympics (both slated to be hosted by Brazil in coming years) will create demand spikes that will further increase demand for commercial properties.

•Geographic and industrial zone limitations — South Florida’s limited commercial property supply will also put these properties at a premium. The peninsula not only has limited commercial space because of geographic constraints, but also because of zoning restrictions for industrial properties. The value of that land will definitely increase as Panama Canal traffic picks up.

Felici says, “In anticipation of the coming growth, prudent investors can get ahead of the cycle by investing in these properties now. As demand grows so will rents and therefore prices will also increase, and investors are likely to be in a strong position for good ROI.”

For a complete copy of the company’s news release, please contact:

Kirk Felici
786-522-7050
.
Marcus & Millichap
5900 North Andrews Avenue
Suite 100
Ft. Lauderdale, FL 33309
Tel: (954) 245-3400
Fax: (954) 245-3410

Marcus & Millichap
5201 Blue Lagoon Drive
Suite 100
Miami, FL 33126
Tel: (786) 522-7000
Fax: (786) 522-7010

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