MIAMI—Jones Lang LaSalle Hotels today announced that hotel transaction volume in Miami has increased by 154 percent in 2011, reaching $557 million, marking the second highest level since 2005. According to the firm’s research report, Hotel Intelligence Miami, investor interest in the Miami market is expected to remain high throughout 2012 and transaction volumes are projected to increase by a total of 17 percent over 2011 volumes.
“Miami transaction volumes are expected to amount to $650 million in 2012, driven by real estate owned (REO) properties from lenders who have taken ownership of defaulted properties. Additionally, owners with non-performing assets who are unable to invest equity or restructure debt will look to the transaction market as an outlet to shed properties,” said Gregory Rumpel, Managing Director of Jones Lang LaSalle Hotels in Miami.
Additionally, equity-rich buyers such as real estate investment trusts (REITs) and private equity funds will pursue acquisitions in the market. “High demand levels and significant rate premiums will enable the city to maintain a strong hotel performance over the medium term, piquing investor interest,” added Rumpel.
Miami’s hotel market posted one of the highest rates of revenue per available room (RevPAR) growth of any major gateway market in the U.S. during the first quarter of 2012. Strong leisure and business demand and constrained supply additions drove up premiums as well, as the city recorded the second greatest nominal average daily rate (ADR) growth rate of 44 percent over the past decade, second only to New York.
“Market demand in Miami increased by 9.5 percent in 2011, as low supply levels increased merely 1.6 percent bringing total room stock to just over 47,000 rooms. Demand growth is expected to outpace supply growth in 2012. Just two hotels with a total of 393 rooms are expected to open in the city in 2012; however, the new room additions in 2013 are expected to be more robust,” added Rumpel.
Shifting their sights away from the ocean view, the investment community is looking inland for acquisition opportunities in 2012. Just a few miles from the oceanfront, the Downtown Miami/ Brickell submarket has redefined itself as a 24/7 business hub and attractive location for investors looking for development opportunities in a high-barrier to entry growth market.
Rumpel added, “For investors looking ‘beyond the beach,’ the Downtown Miami/Brickell submarket is a increasingly attractive investment opportunity. The area witnessed a 12 percent increase in RevPAR in 2011 with growth moving in an upward trajectory.”
Miami will continue to be a market to watch as its economic outlook continues to flourish. Robust foreign demand, and record-level air, cruise and tourist travel to the area will keep the short-term outlook positive. The city’s future growth will stem from an increase of foreign visitors, expanding infrastructure and ties to international trade which will position the market to outperform national averages and solidify its position as one of the top investment and hospitality markets in the United States.