Frank Begrowicz, Executive Managing Director, Newmark

Invest: spoke with Frank Begrowicz, executive managing director of Newmark, about the evolution of Miami’s commercial real estate market, the rise of mixed-use development, and the infrastructure needed to support the region’s next phase of growth. “Miami’s next phase of growth will depend on creating a more functional and more economical way for people to move around South Florida without depending entirely on their cars,” Begrowicz said.

What key milestones and changes over the past year have most influenced your positioning at Newmark and in Miami?

It has been no secret, and it has been well publicized, that there has been an inflow of corporate users that may not have been looking at Miami in a pre-pandemic world. Over the last cycle, Miami came into focus as a place where companies could relocate for tax reasons, workforce reasons, or because it made sense for future growth. That shift affects every aspect of commercial real estate, whether it is office, industrial, retail, restaurants, or entertainment.

What has been especially interesting is seeing how development has responded. Everything is now a mixed-use project, for the most part, and that creates a retail component almost by default. For us, that has created exciting opportunities.

How has that momentum influenced transaction activity and investor demand for certain assets?

I think we are only on the front end of what is happening in Miami. There has been a tremendous amount of investment, but many investors are still learning the market. They may know they want to be in Brickell, for example, but then they have to confront broader questions around transportation, schools, housing for employees, and whether that housing matches the needs of their workforce.

Miami also has geographic boundaries that are unique. Between the Everglades and the ocean, there is an inherent tightness to land availability that is not easily replicated in other markets. We have always been a boom-and-bust town, and one thing Miami has done well over time is pivot toward the investments it needs to make. Right now, we are still figuring out where those investments need to go first, second, and third to support the growth that is underway.

What is encouraging is that the investment is coming across all food groups. It is not just office or condos. We are attracting a broad-based investment community with different specialties, and that is a sign of a growing, healthy environment. Miami has long had the promise of being a gateway city, and after hearing that for decades, we are finally starting to live up to it.

What trends are shaping the role of mixed-use development in Miami today?

We have seen explosive growth in office rental rates to the point that they are starting to come close to ground-floor retail rates. As we look at how mixed-use product is being delivered, there is a real question about how much retail should be delivered versus other uses. The large development sites are starting to disappear, and now we are trying to do more with less.

That means the discussion is increasingly driven by what happens from the second floor to the penthouse. Retail is still important, especially because the ground floor has to generate real returns in a market with high land prices, but there is also an understanding that not every submarket needs the same amount of retail. It has become much more thoughtful. The question is not whether retail matters, but how the retail component contributes to the overall health of the development.

Parking is also an important part of the equation. For a time, there were questions about whether rideshare would reduce the need for parking, but what we have learned locally is that parking still matters. Miami remains heavily dependent on the car, and that changes what developers can and should deliver. Many investors come from markets with established public transportation systems, and Miami is not there yet. We have the makings of one, but we are still building toward it.

How are tenant expectations influencing office development and location decisions?

We were more of a Tier 2 city, so companies might move a Latin American headquarters or a regional office here rather than a global headquarters. That is slowly starting to change, but it means developers still have to think carefully about what kind of office product makes sense for the end user.

Tenants are also thinking much more about where their workforce will come from. It used to be assumed that people would have to work downtown or in Brickell, but now there are multiple submarkets offering real alternatives. Coral Gables remains a major office submarket, but now you also see office in Coconut Grove, Wynwood, and the Design District. These areas provide opportunities for businesses to locate closer to their employees and offer a different lifestyle than simply being in the central business district.

That shift also reflects what the pandemic changed. People got used to a different lifestyle and a different way of balancing work and quality of life. Even as people return to the office, they are doing so with new expectations. That has influenced office design, with more user-friendly layouts and more amenities, but it also influences where buildings are being developed. Employers want locations that reduce commute times and make daily life easier for workers.

How are interest rates and financing conditions shaping commercial real estate today?

At the retail level, I do not experience capital markets as directly as others might, but I do feel the downstream effects. If land costs more, then the rents required to make a project work have to be more aggressive. Tenants coming into Miami are often surprised by how expensive the market is, and part of the challenge is explaining why that is the case.

There is also a shadow customer in Miami that does not always show up in traditional data. For decades, affluent individuals from countries to the south of us have treated Miami as a second home or a playground. They send their children to school here, they spend time here, and they materially influence commercial real estate and business activity. That has always been part of the market.

Where we see stress most clearly is in food and beverage, because margins are so tight. If a developer wants a signature restaurant, there is a substantial cost involved, from rent to buildout to permitting. Construction costs are high, and permitting can take longer here than in other places. Retailers also feel pressure from warehousing and import costs, especially as industrial rents remain strong. That said, the retail market is still generally healthy. Occupancy is high, particularly east of I-95, and there is still strong demand for well-located space.

Where do you see the biggest opportunities for Miami’s commercial real estate market over the next five years?

From Newmark’s perspective, one of the reasons we moved was that we saw a national platform being built in a way that was right for this moment. There is real value in brokers interacting across markets, sharing business, and looking at expansion more holistically. That matters for Miami because the city is no longer just about the same handful of submarkets getting all the attention.

You now see meaningful activity in places like Wynwood, the Design District, Coconut Grove, and South Miami, and you also see southern trade areas such as Dadeland and The Falls performing better than ever. In the western suburbs, people can increasingly live their lives close to home, with access to jobs, services, and lifestyle centers without having to commute east and north every day. That is the future of Miami.

For retail, that means the old model no longer applies. Brands used to think in terms of five-mile rings around stores to avoid cannibalization, but Miami is too constrained and too traffic-challenged for that framework to hold. Retailers now have the opportunity to add more distribution points and serve smaller, denser trade areas. Places that once looked like simple bedroom communities can now support their own retail ecosystems. Every new development helps refine that understanding, and over time, the backfill tends to be stronger because the market learns what each neighborhood can support.

The other major opportunity is infrastructure. Miami’s next phase of growth will depend on creating a more functional and more economical way for people to move around South Florida without depending entirely on their cars. Traffic is real, and it does hinder the way people move around the city. Solving that challenge would unlock the next phase of growth.