Canada's economic boom sends investments Miami's way
By Yudislaidy Fernandez
The sale of a 30,527-square-foot retail and office building in Key Biscayne announced Tuesday is an early sign of a wave of Canadian investment, as good times in the sister country equals good times for Canadian investors in Miami.
The strength of the Canadian dollar and booming economy, coupled with South Florida's assortment of attractively-priced properties, is an appealing combination for Canadians, realty professionals and investors say.
This is an ideal time for commercial and residential real estate investors, said Albert Bolter, vice president and broker of Colliers International in Toronto.
"There's interest for Canadians to go to the states to purchase real estate," he said, especially with the distressed products available and, in their corner, they have the stronger value of the Canadian currency.
"It's an ideal time, whether buying office or industrial," he said. "Typically, they are looking for well-leased buildings."
An undisclosed Canadian investor bought Key Biscayne's Key Colony Plaza at 200 Crandon Blvd., which consists of 12,000 square feet of retail, 12,000 square feet of office and 6,000 square feet of storage. The property, boasting 96% occupancy, has as lead tenants Starbucks, Mount Sinai Medical and Asian Origins Bistro. Christian Johannsen, senior vice president of Colliers International's Coral Gables office, represented seller Tesaurus Holdings in the all-cash transaction.
Mr. Bolter, who previously worked in Colliers' Gables office, said Miami appeals to investors because of its cultural diversity, international business concentration and warm weather.
For example, he noted South Florida is a prime target for hotel investors.
On the down side, the multi-cultural metropolitan area has high insurance rates on real estate and the realty taxes are higher for non-residents, he noted.
Mr. Bolter listed Washington, DC, New York City and Boston as other desirable markets because today these are "recession-proof."
"I have no doubt you will see more Canadian investment," he said, "more Canadians wanting to go south of the border, especially with the situation with the dollar."
The loonie — the Canadian currency's nickname because of the aquatic bird that appears on one face of the coin — was C$1.0537 per US dollar on Tuesday.
Since the beginning of the year the Canadian dollar has remained strong overall. But it weakened last week as US consumer sales reports suggested a possible slowdown in economic recovery, which affects Canada because the US is its largest trading partner.
Commercial buyers want safe investments, such as shopping centers, that have strong anchor tenants and "a strong corporate presence already in there," said Michael Falsetto, a local realty professional. "Those are going to have the most interest and be worth more."
The types of Canadian investors interested in the South Florida market, he said, are "predominantly Canadian investments groups, companies that own these types of products in Canada, and private investors who already have residences here and are looking for business opportunities and to make investments here since they are spending time here."
Toronto-based Christian Strauch said his investor group is seeking properties with stable returns.
The target is investments in major markets such as Miami, New York City and Washington, DC, said Mr. Strauch, managing director at KGAL-Group's North America office. The Munich investment firm has offices in the US and Canada.
These have to be commercial properties, such as downtown office buildings and neighborhood shopping centers, with long leases in place and in a good location that can attract future buyers, Mr. Strauch explained.
The assets are generally held five to 10 years, he added.
When cherry-picking their investments, he said "it's all about the long-term stability of the income stream."
Mr. Strauch agrees the value correction in many top US markets, coupled with a stronger Canadian currency, is fueling investors' interest to buy real estate now.
But competition is stiff for class A properties, he said, because there are too few to meet the demand of well-capitalized investors.
"We as buyers and, I hear from other buyers in Canada and abroad, have a bit of frustration because in this top bracket there's not too many assets to buy and those to buy are expensive," Mr. Strauch said. "There's more wealth globally looking to buy these top-tier assets, so there's great competition for these assets."
Canadian buyers who now have significant purchasing power, many from Quebec, are making all-cash transactions, said realty attorney Louis Archambault, adding that that's very good for this market, where credit is tight.
Mr. Archambault, a real estate partner with Miami law firm Pathman Lewis, works with international buyers, primarily Canadians and Italians.
Many of the Canadians interested in buying here, Mr. Archambault said, are seeking commercial spaces such as retail, restaurant, warehouse or industrial space.
"A more established investor looking for business opportunities in trading," he said, "would look for properties to suit their needs in commercial or industrial areas."
Canada and Miami have strong trade ties, Mr. Archambault said, in part, because of the similarities in language and Miami's tropical weather.
Canada serves as Florida's leading international economic partner and No. 1 source of international tourism, with bilateral trade in merchandise totaling $7.8 billion in 2008, according to the most recent data from the Canadian Consulate here.
"Estimates of the total number of Canadians who own residential real estate in Florida range as high as 450,000, and while that data is impressive, it is only one part of the extensive Canada-Florida real estate picture," said Canada's Consul General Louise Léger. "Canadian foreign-direct investment in commercial ventures is equally vital and should not be overlooked…"
Ms. Léger noted that Canadian holdings in Florida were estimated at $3 billion in 2008 and contribute to the estimated 400,000-plus Florida jobs generated by the relationship. That's in addition to an estimated $5 billion invested in real estate, the consulate says.
The baby boomers — those born from 1946 to 1964 and approaching retirement — are actively looking for "a place to retire and spend a significant amount of time," said Mr. Falsetto, president and broker of The Grand & Associates Realty, a firm that specializes in the Canadian and European markets.
And many are finding it here.
"Canada has a lot of things going for it, but not a lot of warm weather in months like January and February," Mr. Falsetto said.
Canadian law allows citizens to have residency outside for up to six months without interrupting residency benefits like health care, he explained.
Visit Florida, the state's tourism promotion agency, released 2009 tourism figures showing that, despite a drop in visitors earlier in the year, Canadian travel to Florida during the fourth quarter rose 10.3%, according to the Canadian consulate.
In 2008, more than 2.8 million Canadian "snowbirds" flocked to the Sunshine State, the consulate says, making this group a loyal and important tourism segment for the state because they are choosing to vacation here over other international destinations.
Residents, especially from Toronto and Montreal, are shopping for post-retirement homes in areas like Miami and Fort Lauderdale.
All the stars are aligned for Canadian homebuyers and commercial investors, Mr. Falsetto said, as he foresees this attractive investment climate to continue.
"The conditions we have now will last into the foreseeable future because Canada has raised interested rates already twice this year," he said. "There's a good year and a half to two years of real good conditions for them [investors] to come here and do business."