According to property data firm Vizzda, commercial real estate brokers in South Florida had a difficult fourth quarter, with property sales falling by 55% compared to the previous year. The total value of commercial real estate sales of at least $1 million each in the tri-county region was $5.2 billion, down from $11.6 billion in the same quarter a year ago, while the number of transactions declined by 40% to 631, and the average price of each deal also dropped.
Two main factors that contributed to the decline in sales were the reluctance of buyers and sellers to agree on a price, and the lack of bank financing, with lenders demanding more equity in deals, making them unfeasible.
Rising interest rates also affected commercial real estate prices, making debt more expensive and reducing profit margins for buyers. Multifamily property sales experienced the largest decline of 72% to $1.2 billion, followed by the office market, which saw a 65% decline to $455 million.
Sales of retail property fell by 31% to $1.1 billion, while industrial property sales only declined by 11% to $1.14 billion. The outlook for 2023 suggests that the number of deals will pick up in the second half of the year, primarily driven by maturing debt and reduced interest rates.
