Industrial sector fundamentals in Florida are strong, according to Vince Signorello, president of Flagler Development Company, which has more than 12 million square feet of class-A office and industrial space located throughout the state.
Florida's industrial rents rose 20 percent over the last year, and Signorello said that the demand profile for industrial space is as strong as it has been in the past four years.
"We've seen most of the large blocks of space within the market consumed. That has triggered a development cycle in South Florida," he said during a video interview with REIT.com at the Akerman U.S. Real Estate Summit this month in Miami.
However, he said that the office market still faces challenges, and added that with the exception of places like Miami, Boca Raton, and Orlando, the state is largely a suburban market that is tied to job growth and businesses committing to capital.
"That capital commitment is what triggers companies to hire individuals," said Signorello. While the state has not yet seen a significant increase in this regard, he believes the market is strengthening.
"I'm still optimistic, and there's no deterioration in that market," Signorello asserted. He added that the good news is that the office market is just coming off the bottom and is trending upward.
Additionally, Signorello explained that there's been moderate progress in commercial real estate's recovery from the recession. While CBD assets in Boston, New York and Washington are doing well he said that in order for there to be a healthy, dynamic market, there needs to be more transactions involving properties such as five-story office buildings or strip retail centers.
Flagler is currently exploring alternatives within its own portfolio and is in constant discussion with capital providers to get a better understanding of where valuation might be, according to Signorello.
When it comes to fully stabilized assets, especially those like multifamily and industrial, he noted that pricing for those types of assets have never been better.
"The appetite from core capital sources is tremendous, and they are very eager to make large capital investments in stabilized assets," he said.