Hotel Online Special Report

 Latin Americans Will Continue to Invest 
in South Florida Real Estate Market 
/ Sonnenblick-Goldman Predicts
Miami, FL - May 24, 1999 - South Florida's commercial real estate markets will continue to enjoy high occupancy levels and rental rate growth as a result of the local economy's vibrancy and the lack of development activity, predicted Manuel de Zarraga, Managing Director of Sonnenblick-Goldman Company's Miami office. De Zarraga also noted that although the declining Brazilian economy (Florida's leading trading partner) will negatively impact certain sectors of the real estate market this summer, South Florida will continue to evolve as a megalopolis that has a highly diversified economy and is increasingly becoming a serious participant in the South American economy. This evolution, in turn, will continue to command the attention of major institutional investors for South Florida commercial real estate.

Hotel Market

The economic difficulties currently being experienced in Brazil may negatively impact certain sectors of the lodging markets in South Florida and Orlando this summer, de Zarraga commented. As the cost of travel for Brazilians to the United States has increased by nearly 50% over the past three months, tourist areas like Orlando may experience a drop in occupancy rates due to a sharp drop in Brazilian traffic. Reductions in lodging business in Florida resulting from the absence of Brazilian tourists may be significantly offset by anticipated strong domestic summer travel demand. Much of the large budget group business that originated from Brazil and targeted downtown Miami will also be down dramatically this summer. Additionally, the potential overbuilding of luxury hotels in Miami and limited service hotels throughout South Florida are areas of concern, de Zarraga added.

Retail Market

Retail sales in certain areas of South Florida, like downtown Miami, will also experience reductions in sales volumes with the loss of Brazilian shoppers. Before the recent devaluation of the Reais, Brazilians bought many American goods and products and then funded their travel expenses with the savings they accrued by shopping in the US, noted de Zarraga. However, the Brazilian economy has recently showed strong signs of stabilizing with the strengthened Reais, falling interest rates, and inflation levels below expectations, de Zarraga added. 

Renewed confidence amongst Brazilian consumers should translate into improved sales at Brazil's limited number of regional malls and shopping centers. As a result, American investors are beginning to refocus on the excellent potentials of investing in Brazil's emerging regional mall and shopping center markets.

Office / Industrial Market

The South Florida office markets should not experience any appreciable impact from the economic issues affecting Brazil, Colombia, Ecuador or Venezuela. The underlying demand fundamentals for office space driven by the vibrant U.S. economy overcome any contractions of office space needs by banks, trading companies and finance firms serving Latin America. The industrial warehouse markets will behave in a manner similar to that of the office markets, however in certain areas of Dade County certain large industrial space users that were primarily involved in exports to Brazil will significantly reduce their space usage. Most of the industrial spaces that become available are quickly absorbed by users involved in the vibrant domestic markets. 

Multi-family Market

Historically, Latin Americans have invested large amounts of capital in Florida's residential condominium units. This trend will continue throughout 1999 and the year 2000 and this capital will originate from a diverse group of Latin American countries, de Zarraga said. For example, Venezuela will be particularly active in flight capital due to the perceived political uncertainty and Ecuador will see significant flight capital because there is a severe lack of confidence in the country's banking system. In essence, there will always be a flow of capital to real estate from Latin America, but the flow will vary from different countries at any point in time, de Zarraga added.

The residential condominium markets in certain areas of South Florida, particularly those with more affordably priced units, continue to benefit from strong demand amongst Brazilian buyers, as they have in the past. As a result of the economic difficulties in Brazil, many Brazilians invest in residential condominiums in the U.S. to shield their capital from their country's currency devaluation.

Sonnenblick-Goldman has completed approximately $1 billion of real estate investment sales and financing during the past 18-months throughout Florida. Recent transactions completed in the area include the $132 million sale of Miami Center, $141 million sale of the Buena Vista Palace, $150 million joint venture for the development of hotels at Universal Studios in Orlando, the $57 million sale of SunTrust International Center in Miami, the $42 million sale of Presidential Circle in Hollywood, the $37 million sale of Loehmann's Fashion Island, and the $24 million sale of Brickell Bayview Center in Miami's Brickell district.

Sonnenblick-Goldman Company is the leading independent real estate investment banking firm. Founded in 1893 to serve the financing needs of the real estate industry, Sonnenblick-Goldman Company provides a full range of real estate financial services including debt and equity placements, joint ventures investment sales, and other real estate advisory services. Headquartered in New York, Sonnenblick-Goldman Company maintains offices in Denver, Hong Kong, Los Angeles, Miami, San Francisco, Singapore, and Washington, D.C. In 1998 alone, Sonnenblick-Goldman Company completed over $8 billion in transactions.

Kim Moffitt
Also See: Asia's Hotel Markets and Owners Face a Difficult Year Ahead, Value-Buying Opportunities / Jan 1999 

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