Jan 27, 2019 - 0 Comments - Observations -

Estimating 2017 Commercial Property Sales Volume in Miami-Dade County

A big mystery is always exactly how much commercial real estate trades in a given year. The data is murky. Even if the county data is reviewed, many transactions show a total amount for a set of parcels for each of the parcels within, resulting in double counting of those sales, and many sales show a selling price of $1, obfuscating the actual selling price. However, I think I found a way to get reasonably close to the number.

The total market value per Miami-Dade of commercial properties that sold in 2017 was about $7.45 billion. As astute commercial property investors know, however, the market value according to the county is seldom correct, leaving the question remaining as to how much actual value traded, i.e. what the real sales volume was.

I thus considered the ratio of sales price to market value per the county for properties that traded in 2018, excluding any noted as “multi-parcel sales” and any with a sales price of less than $100,000. The latter is principally to exclude $1 sales, which tells me nothing, but also smaller sales that may be essentially invalid, albeit for different reasons. The resultant ratio is 1.75. Now we’re getting somewhere.

Applying this ratio of 1.75 to the $7.45 billion in county declared market value arrives at an estimated $13 billion in sales of commercial property in Miami-Dade in 2017. Excluding multi-parcel sales will largely exclude land sales, which likely have the largest sales to market value per Miami-Dade ratios. Thus, this 1.75 ratio may be a touch higher, but likely not much. Thus, my final educated guess is $13 billion.

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Another metric, not necessary for this calculation but interesting nonetheless, is that about 8.6% of commercial properties turned over during 2017 as compared with about 10% on average in the 5 years ending with 2018. Also worth noting is that total market value per Miami-Dade for commercial properties that sold in the year appears to be about 28% of that for residential properties.

 

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