Southeast Financial Center, center, located at 200 S. Biscayne Blvd, Downtown Miami.

The preeminent deal in the past two years — the $516 million purchase of the Southeast Financial Center in downtown Miami — speaks of the enduring demand by foreign buyers for South Florida office space.

Moreover, it speaks to the health of the region’s office market.

Alex Zylberglait.

It’s strong thanks to high demand and limited supply, which in turn push up rental rates, said Alex Zylberglait, senior managing director of investments for Marcus & Millichap in Miami.

“It’s good to be an office building landlord right now,” he said.

A company tied to the family office of Spanish billionaire Amancio Ortega, founder of the Zara apparel and accessories chain, bought the 55-story tower. The blockbuster sale in December may have signaled growth in 2017.

In the first half of this year, the net absorption of office space was more than that for all of 2016 in Miami-Dade County, according to a Colliers International report.

The growth of tech-related, e-commerce and wealth management companies means the industries are scooping up more offices, according to Colliers.

Things were looking up over the past year in two other asset classes.

Demand for industrial and multifamily real estate largely is fueled by institutional investors, experts said.

Steve Wasserman.

Of the 10 biggest industrial deals since October 2016, eight were purchases by institutional buyers, Steven Wasserman, executive vice president of Colliers International South Florida in Fort Lauderdale, said after reviewing a list of the deals compiled by real estate data provider CoStar Group.

The two biggest deals were purchases by CenterPoint Properties, a Chicago-based industrial developer and investor owned by public pension fund CalPERS and real estate investment management firm LaSalle Investment Management.

CenterPoint Properties bought the Pan American Business Park at 10400 NW 122nd St. in Medley for $106 million in December and the Winn-Dixie distribution and warehouse facility at 3300 NW 123rd St. northwest of Hialeah in August.

And of the 10 biggest multifamily deals just in 2017, seven were purchases by institutional buyers, Avery Klann, executive managing director for ARA Newmark in Boca Raton, said after reviewing a list of the deals and based on his own knowledge of the market.

In the biggest multifamily deal of the past year, Harbor Group International LLC, which invests in real estate for institutional investors, bought Montage at City Center at 10170 SW Seventh St. in Pembroke Pines for $158.5 million in April.

And the Berkshire Group, a real estate investment management group, bought the 276-unit multifamily complex now named Berkshire Coral Gables at 3880 Bird Road in Miami for $100 million in June.

The industrial and multifamily markets did well in part due to a favorable tip in the supply-and-demand balance.

“This is clearly a seller’s market,” Wasserman said of industrial real estate. “There’s probably five buyers for every one asset that comes on to the market.”

Sky Groden — executive vice president, national director for commercial real estate company JLL in Miami — said getting into the market is tough.

The top barrier is residential and retail development absorbing industrial land. At the same time, demand is increasing as trade, e-commerce and population grow, Groden said.

“Some of the sales prices are due to institutional acquisitions that feel that there’s a lot of barriers to entry in the industrial market in South Florida with limited land and already significant players owning large portfolios of the market share,” he said.

The multifamily market also is competitive with open land being difficult to come by and construction costs increasing, Klann said.

“From an investment sales point of view, South Florida really is considered to be a primary market, so there’s much more competition for assets when they come to market. There’s more competition, so it’s harder to buy,” he said.

Investment Risk

For investors, putting money in some types of real estate is a safe bet, but other types are riskier. That could influence the market for different asset classes.

The industrial market, for one, is robust.

“Everybody loves industrial because it’s a very simple type of property to operate,” Wasserman said. “From the institutional standpoint, when a tenant leaves, the cost to retrofit the space is a lot less than on apartments or a hotel or an office building. There’s less dollars that have to go into it, and therefore there’s less risk.”

Hotels are a different type of investment entirely.

“Hotels are the riskiest product in commercial real estate,” said Rich Lillis, executive vice president of Colliers International South Florida and national director for Colliers Hotels, USA in Boca Raton. “If you look over a long period of time, hotel investments are the most volatile. The reason is hotels are more susceptible to changes. … In an office building that’s fully leased, it’s not affected by Zika. But hotels are instantly affected by these things. Over time, the value of hotels is very volatile.”

That’s one of the reasons the segment is slowing, but only slightly, Lillis said.

The decline is a result in part of added supply when the 2016 Zika outbreak and a strong dollar hindered South Florida tourism, he said.

RevPAR, or revenue per available room, is an industry measure of the health of the hotel industry that takes into account occupancy rates and revenue from booked rooms.

In Miami, it dropped 4 percent in the first half of 2016 compared with the same time the year before, and it went down 5.2 percent in the first half of this year compared with the same time frame in 2016, according to CBRE Inc.

“Investors, when they consider investing in a hotel, they consider all these things. When they see the RevPAR decline in 2016, they are going to take that into account when they are getting ready to make an offer,” Lillis said. “It’s been one of the factors that have put a damper on the transaction activity in 2017.”

Trophy Assets

Last year, at least three asset classes had trophy sales.

In hotels, it was The Confidante Miami Beach. The beachfront hotel sold for about $230 million in April.

In retail, several shopping malls changed hands. The Palms at Town & Country off Florida’s Turnpike in West Kendall sold for $285 million in July.

In land sales, about 100 acres northeast of Interstate 95 and Stirling Road in Dania Beach sold for $203 million. Now, it’s being developed into Dania Pointe, which will include residences, retail, restaurants and offices.

But so far in 2017, none of these asset classes experienced similar trophy transactions.

Katy Welsh.

“The trophy assets sold in 2016. It doesn’t appear they were sold in 2017,” Katy Welsh, senior vice president of retail for Colliers International South Florida in Boca Raton, said of retail transactions after reviewing a list of the 10 biggest deals.

Yet that doesn’t mean the retail, hotel and land markets have hit hard times.

Waiting Game

Call it more of a waiting game on the part of property owners, at least when it comes to the hotel and retail markets.

Property owners might be holding onto their assets in hopes of getting better offers in the future, Lillis said.

“The real question is if there are willing sellers. If there were willing sellers, there would be a lot more big transactions,” Lillis said.

Ritz-Carlton in Coconut Grove.

Hotel owners, he said, have high expectations for purchase prices because Miami has been one of the premier hotel markets in the U.S. — and still is despite the recent decline in revenue per available room.

“They think their properties are worth a very high amount,” Lillis said.

Miami remained one of the top five U.S. hotel markets in the first half of this year, according to CBRE. The other top markets are New York, Oahu, San Francisco and Los Angeles.

In retail, talk in the industry that e-commerce is stealing business from physical stores might be influencing the sale of malls even though data doesn’t support the sentiment that stores are suffering because of e-commerce, Welsh added.

The owners of malls with a store that is perceived as weaker, such as some sporting goods stores, prefer to hold onto their assets until either they replace the tenants or talks of retail suffering subsides, Welsh said.

“Then I can sell my asset and get a lot more money than if I sell it now,” she said.

On the other hand, the land market’s lack of trophy sales is an indication of maturing, not weakening, said Peter Mekras, managing director at Aztec Group in Miami.

“It’s not because of lack of demand for development. It’s rather that the opportunities are more scarce. It’s becoming more and more challenging to find the right site for the use desired by the developer,” Mekras said.

Anomaly sales, such as the one in Dania Beach, now will happen about every 10 years, he added.

“The market is maturing. There’s no question about that.” Mekras said. “And people take for granted the fact that this market was in a perilous state five years ago and has been on a strong recovery for those five years.”