Is Fort Lauderdale, FL Commercial Real Estate Affordable?
Fort Lauderdale is a beachfront Florida city, with neighbors Miami to the north and Palm Beach to the south.
While the city enjoys its beach-going tourists, its diversified economy designates it as one of Florida’s economic hotspots with heavy activity in finance, technology, television production, real estate, and more.
And Fort Lauderdale, FL’s commercial real estate market tends to draw eyes and ears from investors all over the country.
Fort Lauderdale enjoys 3,000 hours of sunshine each year, which draw millions of tourists to its beaches.
Thoroughly researching Fort Lauderdale’s commercial real estate market is the first step to opening a business in the area.
This should include studying average pricing, identifying the four commercial real estate sectors, and gathering potential customer data.
Fort Lauderdale: The “Venice of America”
Fort Lauderdale was named after Major William Lauderdale and built in 1838. Lauderdale is known for leading Tennessee volunteers to refuge in South Florida.
Fort Lauderdale would later receive the nickname “Venice of America,” inspired by its many hundreds of miles of inland waterways, many of which run through the city itself.
While Fort Lauderdale is a diverse hub of business opportunity, market research is key to proceeding with your venture.
Let’s start with a closer look at the variety of commercial real estate currently available in Fort Lauderdale.
Fort Lauderdale’s Four Types of Commercial Real Estate
These are the standard types of real estate in Fort Lauderdale.
Retail commercial spaces are generally smaller spaces. Pricing for retail space in Fort Lauderdale, FL varies widely with traffic and location.
Office commercial spaces are often combined with other types of commercial real estate. Office space is broken down into three classifications graded by property condition and affordability: Class A, Class B, and Class C. Class A office space provides premium amenities at premium rates, while Class C usually needs to be majorly renovated but is the most affordable.
As of August 15, 2022, the average asking rents per square foot for office space in Fort Lauderdale, Florida, are about $37.
Multifamily commercial spaces come with immense variety regarding size and quality.
Similar to office space, multifamily spaces that are the most expensive are located in the most premier locations and feature the best amenities. For example, a two-bedroom, three-bath apartment at Icon Las Olas, a luxury downtown development, currently rents for just over $9,000 a month.
Industrial commercial real estate typically carries the most foundational business focus. Businesses generally buy or lease industrial real estate for supply chain, logistics, and inventory storage purposes, but some industrial real estate doubles as office space.
Factors for Defining Affordability
According to the National Association of Realtors (NAR) Commercial Real Estate Metro Market Conditions Index for 1Q 2022, Florida held the top five hottest commercial real estate metro markets: Orlando, Fort Myers, Fort Lauderdale, Miami, and Palm Beach.
NAR’s Index took a deep dive into the Fort Lauderdale market. Here are some takeaways:
The metro area’s commercial market and economic conditions are stronger compared to the national except for the lodging or hotel industry. It is at par with national conditions.
This earns the city an index of 72 (so it outperformed the U.S. on 18 indicators).
- The retail vacancy rate sits at about 3.9% compared to 4.5%; which has a slightly higher share of the workforce in retail/lodging, at 10.5% compared to 10% nationally.
- The office vacancy rate is at 10.5% compared to 12.2% nationally.
- Multifamily asking rents are twice higher at 22.9% versus 11.4% nationally.
- The industrial vacancy rate is 3.8% slightly lower than national which is 4.1%. Meanwhile, industrial rents rose to 16.4%.
The numbers may possibly limit your options in some areas. However, they also suggest that your business has a better chance of success than if you were buying or leasing commercial real estate in other locations.
Location, Location, Location
Like most larger cities, Fort Lauderdale offers a variety of commercial real estate options, from the once-in-a-lifetime purchase to bargain retail space in a less-than-ideal neighborhood.
For example, a 1.06-acre property in Lauderdale-by-the-Sea, described as “Anglin’s Fishing Pier Portfolio,” is currently offered for purchase for $45 million. The portfolio includes:
- Over 46,000 square feet of land;
- One pier, two restaurants, three retail stores;
- Two parking lots.
On the other end of the spectrum, retail showroom/warehouse real estate in a less-prestigious neighborhood can be leased for as little as $14 per square foot annually.
However, you may be setting up shop in one of the city’s most dangerous neighborhoods.
Your assignment? Before shortlisting your preferred neighborhoods and reviewing the average price per square foot, study Fort Lauderdale’s neighborhood demographics, including crime statistics.
Fort Lauderdale Commercial Real Estate Pricing
The square footage of the property is generally used to determine its pricing on an annual, per-square-foot basis when leasing and a direct price-per-square-foot when buying.
To begin researching typical pricing, keep the following in mind
- When possible, search specifically for your preferred type of commercial real estate: retail, office, multi-family, or industrial listings.
- If you’ve decided your business needs to be close to the beach, the airport, or an area with plenty of entertainment venues, identify these by zip code or neighborhood.
- Working with a broker is never a bad idea, as long as you choose one who specializes in your type of commercial real estate.
Do your research and stay diligent.
What’s your business personality?
While certain retail businesses have a nearly-universal appeal, such as an informal eatery or deli, others will appeal to a certain age group and lifestyle.
Therefore, before you begin shopping for retail commercial space in Fort Lauderdale, you need to ask yourself: will the locals be interested in what I have to sell?
Fort Lauderdale restaurants are often busy during the tourist season…but will yours bring in the locals, too?
According to a recent demographic survey:
- Fort Lauderdale’s largest age group is 35 to 44 years old, with 25 to 34-year-olds in second place. 45 to 54-year-olds come in third place.
- There are more homeowners than renters, with 55.4% of the population in owner-occupied units and 44.6% living in renter-occupied units.
- Non-family households are the most common, with a high percentage of householders living alone.
To determine affordability, take some time to really identify your business’s differentiators when it comes to its location: What new and exciting features and experiences will it offer the locals and customers? Is it a good fit with the area’s personality?
Putting in this time and effort will reap dividends in the long run and help you solidify profitability.