“A major part of the country is currently locked into a debate over the definition of the word “Recession” after the US posted its second consecutive quarter of negative gross domestic product (GDP). So much so, that Wikipedia has now locked its page on the word Recession after seeing it changed back and forth so many times. Most of the attention here is targeting the political points that may be scored based on what people accept to be true. I don’t really care what the world decides the definition is, and in my mind, it is simply “Not Growth” in GDP.
If I am being truly honest, I really only care where the national statistics land because I continue to watch how Florida is outpacing the national averages. We have established our foothold as one of the leading markets, even as the country walks through the likely “pasta bowl” recovery we are currently in (Sean Snaith like). When I read the CoStar market outlooks that were released this week, all I could think is, “Man, I am thankful we are in Orlando and Florida”. We continue to see strong demand in most all of the product areas we are involved in. Office leasing and sales demand is strong, Industrial leasing and sales remain strong, Retail leasing and sales remain strong, Multifamily land demand is strong, Multifamily per unit pricing is at all-time highs, and it seems the whole world continues to want to be involved in Central Florida.
While there is no doubt that increasing interest rates can impact future investment sales and owner user purchases, the good news (so far) is that long term rates have stopped rising, even as the Fed raises their rates. The inverted yield curve means that while investors expect a challenging market in the near term, the long-term outlook looks brighter, and that is even more so the case for the Florida market. Most of our clients and buyers are positioning for the long run and can see where the Central Florida market is headed. When nearly every metric for value is at a 10-year high, near-term forecasts are for continued growth, and there is no compelling reason to think there will be any substantial retractions in the long run. It seems clear that Central Florida commercial real estate has taken a permanent step upward, into a new “normal market range” for valuation metrics in nearly every asset class.