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Starwood Capital Group
Jones Lang La Salle
Miami Hotel Sector
Leading real estate firm Jones Lang La Salle is foretelling a strong year for hotel investment this year. In a recent report the firm predicts total investment somewhere in the region of USD 750 million, which would be a 12% increase compared to 2012.
According to the report USD 200 million has already been transacted in hotel investments in Q1, beating last year's figure.
"In the year ahead, we'll likely see more hotels trade hands than last year, but the lack of big-box hotel sales opportunities will keep Miami's transaction volume in check," said Gregory Rumpel, leader of JLL's hotel and hospitality group in Miami.
Big box sales certainly helped Last year's USD 600 million total, including the sale of the Gansevoort, which was picked up by a consortium led by Starwood Capital Group; and the Miami Beach Resort and Spa, which sold to the Chetrit Group for USD 117 million.
However the activity was dominated by boutique transactions in Miami and South Beach and especially in Miami Beach which was responsible for 71% of last year's transaction volume and is predicted to stay on top. In those hotspots independent and unbranded high-end hotels are prevalent.
Since 2010 REITs, private equity and institutional investors have invested USD 1.6 billion into Miami, JLL said. According to the report (and common sense) the investors are being drawn by rising tourism numbers, particularly international tourists which account for 50% of overnight stays in Miami. Over the last 13 years Miami has experienced a compound annual RevPAR growth rate (CAGR) of four percent, "significantly higher than the top 25 U.S. markets with the exception of San Francisco," JLL reports. In the first quarter of 2013, "Miami fundamentals have continued to follow this positive growth trend witnessing a RevPAR increase of 16.7 percent to USD 192, driven by 12.2 percent growth in ADR and four percent growth in occupancy during the first quarter of 2012," JLL reports. "The market is positioned to continue to outperform national averages, further solidifying its position as one of the top investment and hospitality markets," JLL v.p. Andrew Dickey said.
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