Fort Myers/Cape Coral vs. Palm Beach/Delray Beach
The Florida Department of Economic Opportunity continues to tout the robust growth in employment and business activity across the state over the most recent fifteen months. Florida’s overall unemployment rate remains well below the early pandemic highs and continues to be better than the national level. In addition, data reported by real estate leader Colliers International shows that as part of a promising trend nationwide, South Florida experienced positive net absorption of almost two million feet of office space in the third quarter of 2021 alone.
Research reported by the National Association of Realtors taps four metro areas in Florida as the highest performing in the U.S. as of the third quarter of 2021, including Fort Myers and Palm beach. Using an average measure of 50 (with a number greater than 50 indicating a strong market), the Cape Coral-Ft. Myers metro area scored 68.9 in the current NAR data. In the same period, the Palm Beach-Boca Raton- Delray Beach region scored 65.2.
In regional comparisons, some sectors and metro areas are faring better than others. For example, in Cape Coral-Fort Myers, the current unemployment rate of 4.8 percent has been supported by increases in the leisure and hospitality and construction sectors. However, the total job count in the hospitality sector is still lower than the pre-pandemic level.
Unequal performance across sectors
Cape Coral absorbed nearly one million square feet of retail space, at the same time that over 18,000 people moved into the area over the last year, also increasing demand for multi-family housing. As a result, asking rents for apartments are up over ten percent from a year ago, and the vacancy rent has decreased to around five percent. Multi-family construction activity is higher than the national average, but the issuance of building permits is lagging.
Cape Coral-Fort Myers has experienced a more robust overall real estate recovery than the U.S. nationally, with strength in the office sector. In addition, the metro retail and industrial sectors are more potent than the sector performance nationally, although lagging other parts of commercial real estate and other Florida regions.
Regional differences but better than national
On Florida’s east coast, Palm Beach has a low 4.1 percent unemployment rate, bolstered by new jobs in the hospitality sector as well. The metro area shows wages growing more quickly than the U.S. as a whole but marginally lower than the Cape Coral-Ft. Myers region. In Q3 of 2021, Palm Beach County showed a retail recovery with lower vacancy and higher net absorption. Reportedly, the increases are supported both by expansions of existing retailers and new-to-market entrants. Office vacancy is lower than the U.S. rate but still higher than the vacancy in Cape Coral-Ft. Myers (9.6 percent versus 5.1 percent vacancy in Q3.)
Multi-family housing in the corridor from Palm Beach to Delray is experiencing increased demand, with faster absorption than the national average and rents rising over thirty percent in the third quarter compared to the third quarter of 2020. In addition, vacancies have dropped during the same time from
7.1 percent to 3.7 percent, which is below the national average (6.7 percent in Q3 2020 and 4.5 percent in Q3 2021.) In response, construction in multi-family housing is more active than the national trend. In short, both east and west Florida are primed for success in commercial real estate as the recovery continues.
