By: Diana Bello Aristizábal
DORAL, FL – In many ways, Miami is a paradise: nice weather, cultural diversity, excellent geographical location, low taxes, quality education, and many opportunities for businesses. With these features, Forbes Magazine described Miami in a recent report in which the city stands out as the best place to create new businesses.
This recognition made us wonder if Miami is a good destination for investors and if this is a good time to invest. The short answer to these two questions is: it depends on the industry in which you want to invest, how you want to do it, and in what areas.
If the desire is investing in a business, it should be taken into consideration that although Miami is a good city to run a company – according to Kauffman, South Florida ranked first in 2017 in startup activity among the U.S. -, not all industries behave positively.
This is not the case with the technological industry that each day becomes a more and more safe bet for investors. “It is a good time to invest in businesses that have shown sustained growth in technologies development,” says Juan Pablo Casimiro, CEO of Biznovator with a master in business education.
The services sector is also showing a positive behavior for the investor, especially companies that work in the training area, and/or provide consulting services.
On the other hand, it is also a good moment to invest in venture capital funds. A study conducted by the Martin Prosperity Institute in 2016 put Miami in the 15th place in terms of venture capital dollars, with 0.98% of the U.S.’s total venture capital investment.
As for the real estate sector, one of the most appealing industries for foreign investors, the picture is uncertain. Rumour has it there will be an imminent bubble that could put investors’ money at risk.
In this regard, the main recommendation is to study the market and analyze future projections, as well as the level of occupation of the real estate project in which you want to invest if you plan to put it for rent, as many condos located in expensive areas of the city only reach an occupancy level of 20 or 30 percent (percentage of units rented).
Pros and cons of investing in Miami
Apart from the sectors in which is better to invest, which vary greatly depending on the market situation, we wonder what makes Miami so appealing for investment? For Juan Pablo Casimiro it is its excellent geographical location.
“Miami has become the main hub for Latin America, and while working here you can easily access clients who are in countries close to 3 or less hours by plane,” explains Casimiro.
In addition, Miami allows many people to live and work in the same area, which reduces the level of stress for traffic. This might seem inaccurate for some people who complain about high housing costs, although compared to other large cities such as New York or Los Angeles, prices are still significantly lower.
Another thing that makes Miami so appealing for investors is that this is a young city. “When there is youth and talent, there is potential for growth,” says Juan Pablo Casimiro, warning this constitutes a double-edged sword, since Millennial generation workers, although talented, tend to stay for short periods in companies and, sometimes, lack commitment.
In this sense, those wishing to invest in Miami should consider that there is a great gap in terms of available talent and level of commitment, which has forced many companies to seek non-local talent incurring in additional expenses.
Another aspect to consider is the companies’ turnover rate. Although Miami is one of the main cities to bring businesses, according to a study conducted by the Ewin Marion Kauffman Foundation, an organization that supports national and international entrepreneurship, it is also a destination with a high turnover, as many businesses that start with the right foot, later disappear from the market.
Doral, a strategic point for investors
Within Miami-Dade County, one of the most important investment destinations is the city of Doral, which, like Miami, offers many benefits to local and foreign investors. “We have a strong economy, because we are located near the airport,” says Manuel Pila, City of Doral Economic Developer.
Its great location has turned the city into a hub of international trade operations for Latin America, as well as the favorite destination for those wishing to invest in logistics companies. “It is an area in which we continue to grow and attract the interest of entrepreneurs,” says Manuel Pila.
According to a 2017 FIU study, other factors that attract investors involve the fact that Doral is a small city with regional impact, has access to the main roads of the county, offers quality of life as there is a good work-life balance, and the workforce has a high level of education.
All of the above has made Doral not only an important destination for international trade and logistics companies, but also for businesses working in distribution and electronic commerce, business services, financial services, hospitality and tourism, entertainment and media, and marketing, design and publishing, among others.
“We are growing in the pharmaceutical, technological, communications and medical sectors, although the strongest one is technology applied to all areas, from artificial intelligence to technology for the transportation sector or applied to the medical one,” says Manuel Pila.
There is also a significant growth in the construction industry that is highly appealing for investors as Doral is a relatively young city and tourism oriented. “This is a good place to build hotels, because people from all over the world continue to arrive, and we are developing the oldest parts of the city,” says Pila.
And what are the types of business in which Doral is most invested? According to research from the City of Doral, startups and franchises. These are distributed among all productive sectors and normally attract families.
Speaking in raw numbers, according to a report made by Beacon Council, Doral has more than 10 thousand companies, receives more than 100 new businesses each month, has more than 240 multinational companies, more than 30 HQ companies, more than 50 banking and financial institutions, and more than 775 advanced industries firms.
However, despite this positive outlook, Doral has similar problems to Miami, as there is a great need to have more skilled workers who occupy the offered vacancies. “We need more talent especially in the technological areas,” says Manuel Pila.
On the other hand, the turnover rate is high. Every two years, approximately 30 percent of businesses leave the city or do not survive. Unfortunately, this is not a problem of Doral exclusively, but of the entire state and even of the country that shares very similar statistics.
For this reason, anyone interested in opening a new business or finding investing opportunities, can make an appointment with the Planning and Zoning Department to receive a personalized consultation to address individual needs.
“We can put entrepeneurs in contact with our pile of experts so that they can know what are the associated risks and costs of their businesses plans,” says Manuel. In addition, residents can also attend the StartUp Doral series workshops or The Import-Export Academy that offers training to local businesses that want to expand their operations to the international market.