Tom C. Murphy
Coastal Construction Group
Construction activity in Miami is steadily moving forward, even if a little slower than last year, says Murphy.
Luxury condo projects and private office developments are the most active market sectors in the Miami area, he says, and while new work is slower than last year, contractors have large backlogs and revenue is increasing.
Forecasts from Dodge Data & Analytics show that construction starts in the Miami-Fort Lauderdale-Miami Beach region are expected to grow in nearly all categories, especially residential, with a projected increase of almost $1 billion between 2023 and 2024. That follows an expected jump of more than $1.6 billion between 2022 and 2023.
But Miami firms are keeping an eye on interest rates, the rising cost of debt and equity prices, especially in the market-rate housing sector, Murphy says.
“If interest rates continue to rise, there will be a slowdown in most sectors,” he says.
Another issue is Senate Bill 1718, which Murphy says contractors are also watching to see what effect it will have on the industry’s workforce.
The bill, signed by Gov. Ron DeSantis May 10, introduces penalties for violations of new employment mandates, which take effect July 1, 2024, including quarterly reporting and suspension or revocation of employer licenses in certain circumstances.
Most of the law goes into effect July 1, including provisions that limit social services for undocumented immigrants and allocate millions for expanding a migrant relocation program. Other provisions coming online will invalidate driver’s licenses from other states issued to undocumented people and require hospitals that receive Medicaid funds to ask for patients’ immigration status.
“If interest rates continue to rise, there will be a slowdown in most sectors.”
—Tom C. Murphy, Co-President, Coastal Construction Group
Pending that bill, Murphy says, contractors are facing very much the same challenges as last year, namely a tight labor market and availability of trade contractors as well as some lingering supply chain issues.
But contractors like Coastal are staying busy, Murphy says, and even if new deals coming to the table have receded some from the high-water mark, they’re still happening.
“Miami is continuing to move forward with current work and projects which are far along in the process,” Murphy says.
Dodge forecasts commercial starts in the region to increase by $175 million from 2023 to 2024, after an expected drop of $171 million between 2022-2023.
Block 55 at Sawyer’s Walk will contribute to the big jump in residential projects in the Miami market forecast by Dodge Data & Analytics.
Rendering courtesy Sawyer’s Walk/Block 55
An office tower being constructed by Chicago-based Sterling Bay for Citadel, Murphy says, is expected to rise at 1201 Brickell Bay Drive, where earlier this year Citadel paid nearly $650 million for the bayfront site and a nearby office building at 1221 Brickell Ave.
For Coastal, work is ongoing on more than $3 billion in construction, including projects for Aston Martin, Ritz Residences, housing at the University of Miami and several multifamily and condominium projects as well as more than $150 million in custom homes and estates.
The One Flagler Office Tower, a 25-story Class A project designed by architect David Childs, will bring 270,000 sq ft of flexible office space, 4,100 sq ft of restaurant space and 1.25 acres of green space to the waterfront when completed in 2024, according to developers The Related Group.