Victor Garcia, Managing Director & Market Leader – Miami, Marcus & Millichap

Invest: spoke with Victor Garcia, managing director and Miami market leader of Marcus & Millichap, about how Miami’s commercial investment market is adjusting to normalized interest rates, where buyers are still leaning in, and why 2026 could bring a healthier pace of deal flow. “Sellers who are realistic on values today are getting deals done,” Garcia said.

How would you describe demand, pricing trends, and transaction volume across Miami’s commercial investment sales market?

Across South Florida, we are seeing selective but improving investment sales activity. Transaction volume slowed meaningfully in 2023 and 2024 as interest rates moved up quickly and the bid-ask spread widened. Buyers and sellers had a hard time agreeing on value when debt costs were changing and underwriting assumptions were being reset.

Pricing has started to stabilize, and that has helped the market function again. Sellers who are realistic on values today are getting deals done, especially when the asset has strong in-place cash flow or a clear mark-to-market story. In South Florida, properties that also carry longer-term redevelopment or development potential can attract an additional layer of demand.

Miami continues to pull capital relative to other gateway markets because population growth and job creation remain compelling, and Florida’s lack of state income tax supports long-term demand across property types. The market is not uniform, but the direction is improving as expectations converge.

What are you seeing by asset class right now, starting with multifamily?

Multifamily remains the most liquid asset class in South Florida, although fundamentals vary by submarket. Rent growth has normalized after the post-pandemic surge, and absorption has slowed in the near term due to elevated new supply in some urban cores.

Even with that moderation, investor appetite is strong for well-located assets that produce durable cash flow today and offer long-term rent growth drivers. Development pipelines remain active, but construction costs and tighter financing are constraining new projects. Over the medium term, those constraints should help supply and demand rebalance in a healthier way.

How are retail, industrial, and office performing?

Retail has been a bright spot, particularly neighborhood and necessity-based centers anchored by grocery, service, and medical uses. With limited new supply and continued population growth, occupancy has stayed resilient, and rent growth has remained supported in many trade areas.

Industrial is highly sought after, especially small-bay and infill warehouses that serve last-mile distribution. Pricing has adjusted slightly because debt costs are higher, but demand for well-located logistics space in dense submarkets remains strong. 

Office is the most bifurcated. Class-A assets in prime locations with strong amenities are performing exceptionally well and achieving record rents. Older, commodity office buildings face structural headwinds, which can create repositioning and conversion opportunities in select instances. For experienced operators, that gap between best-in-class assets and everything else is where strategy really matters.

How have capital markets and financing conditions shaped deal flow?

Financing remains the gating factor for transaction velocity. Lenders are more conservative today, with lower leverage, tighter underwriting, and an increased focus on sponsor strength and property fundamentals. That environment naturally slows the pace of deals, because the capital stack is harder to assemble and pricing has to reflect that reality.

Debt is still available, particularly from local and regional banks, credit unions, debt funds, and agency lenders for multifamily. As rate stability improves, we expect transaction velocity to increase because buyer and seller expectations will continue to converge. When the market can underwrite with more confidence, it becomes easier to bridge pricing discussions and move deals forward.

How important is international and cross-border investment to Miami right now?

International capital continues to play a meaningful role in Miami, especially from Latin America, Europe, and Canada. Currency fluctuations and global uncertainty can slow activity at times, but Miami still functions as a preferred safe-haven market for many investors seeking long-term stability and growth.

Our platform allows us to connect international investors with domestic opportunities while providing on-the-ground market intelligence and execution. That combination matters, because cross-border buyers want local underwriting, market insight, and trusted execution to navigate complexity efficiently.

What role are 1031 exchanges playing in South Florida investment activity?

1031 exchange activity remains a significant driver of transactions, particularly from investors selling in high-priced coastal markets and reallocating capital into Florida. We are doing a lot of work with clients who are exiting markets like New York and using a 1031 exchange to reposition their capital into South Florida.

Over the last five years, we have imported approximately $12.1 billion from other markets into Florida assets. A national footprint helps in this environment because identifying replacement properties quickly across markets and asset classes is a major competitive advantage. The goal is to help clients preserve equity, manage timing risk, and execute exchanges efficiently.

Are you seeing differences in behavior between private capital and institutional investors?

Private capital continues to be active in South Florida and often moves faster, particularly in value-add strategies and smaller deal sizes. Those investors can be nimble and step in when institutional buyers are still waiting for clearer market signals.

Institutional investors remain selective and focused on core and core-plus opportunities with strong long-term fundamentals. That said, we are beginning to see a return of institutional capital in 2026. As that happens, the differing risk profiles create opportunities where private capital can step in ahead of larger institutional re-entry.

Where are you seeing distress, restructuring, or value-add opportunities emerge?

We are not seeing widespread distress, but there are pockets of stress tied to near-term debt maturities and higher interest rates that make refinancing more challenging. In some cases, business plans were underwritten on aggressive rent growth assumptions that did not materialize.

Those situations are creating opportunities for well-capitalized investors through recapitalizations, note sales, and value-add strategies, particularly in office and select multifamily assets where pricing can be reset and the path to stabilized cash flow is clear.

Where do you see the strongest growth opportunities?

Retail is the standout right now in Miami. The sector went through a major adjustment as e-commerce accelerated, and it has emerged more disciplined. Limited new construction has constrained supply, while retailers have become more strategic about location and tenant mix.

Necessity retail remains attractive, and experience-driven uses continue to perform well. We often refer to the three Fs: food, fitness, and fun. These uses are difficult to replicate online and help centers stay relevant and resilient.

Multifamily remains highly desired because fundamentals are strong and agency financing supports liquidity. There will be select distress from deals underwritten aggressively in 2021 and 2022, but overall demand remains durable.

Office can be a contrarian opportunity for the right investors. Pricing has adjusted meaningfully, and in some cases, assets can be acquired below replacement cost. As return-to-office trends continue and new growth engines emerge, well-capitalized owners with expertise may see strong long-term upside.

What are the biggest challenges for commercial real estate, and how are you adapting?

The primary challenge remains financing. Interest rates have returned closer to historical norms, but the industry became accustomed to exceptionally low borrowing costs for a long period. When capital is more expensive, buyers cannot pay the same price per dollar of net operating income, which creates friction between buyer capability and seller expectations.

That gap has been narrowing, however. Sellers who recognize that we are likely in a normalized rate environment are meeting the market, and transactions are moving forward. There is plenty of capital for assets that are priced correctly.

Our approach is to provide clarity. We help sellers understand where the market is today using real-time data and buyer feedback. Through Marcus & Millichap Capital Corporation, we also help structure the best available financing, whether the right move is to refinance, recapitalize, or pursue acquisition financing. Execution and transparency are critical in this environment.

Looking ahead, what is your outlook for South Florida over the near term?

We remain bullish on South Florida. From Palm Beach through Miami‑Dade, all the fundamental ingredients are firmly in place for continued strength in the commercial real estate market. The region continues to benefit from sustained high‑net‑worth in‑migration, corporate relocations and expansions, a pro‑business environment, low taxes, and an unmatched quality of life supported by strong tourism and year‑round demand.

South Florida is also rapidly emerging as a global hub for technology, finance, and professional services, further diversifying its economic base. Policy tailwinds are adding to the optimism as well, including the elimination of Florida’s commercial rent tax, which directly benefits tenants and businesses, and the renewal of bonus depreciation, which enhances after‑tax returns for investors. Taken together, these demographic, economic, and legislative drivers position South Florida for resilient performance and long‑term growth, even amid broader market volatility.

2025 was a strong year and a clear improvement over the prior two years. All signs point to 2026 being even stronger. Barring a black swan event, we expect increased deal activity and look forward to helping clients navigate near-term uncertainty while capitalizing on Miami’s long-term growth story.