Why Miami, the US gateway to Latin America, is on the up

Miami, ranked 27th on the Global Cities Index, is a hub that plays a crucial role in trade between the US and Latin America.

08-07-2017
Miami-ocean-drive

Authors

Hugo Machin
Co-Head of Global Listed Real Assets

On our recent trip to Miami we found a city that is on the up. It has been bolstered by trade with Latin America. But its increasing importance is also reflected by two contrasting elements of the city: its rapidly improving transport infrastructure and growing arts scene, which we explore in greater detail here.

Transport

Miami International Airport (MIA) clearly plays an important role in the city’s appeal.

It has more scheduled non-stop cargo flights to Latin America and the Caribbean than Orlando, Houston, New Orleans, Atlanta, Tampa, and New York's Kennedy airports combined. It is also one of American Airlines’ ten busiest hubs and its completed $500 million Cargo Development Program includes 17 new cargo buildings, amounting to more than 3.5 million gross square feet.

MIA and the General Aviation Airport’s annual economic impact on Miami-Dade County is approximately $26.7 billion.

Meanwhile, Miami boasts an impressive rail network. The Metrorail is a 25-mile dual track, elevated rapid transit system, which currently uses 136 train cars. Then there is the free, mass transit, automated Metromover, a 4.4 mile electrically powered and fully automated railway which connects with Metrorail and Metrobus stations.

The Metrobus system serves all the major shopping, entertainment and cultural centres in the Miami-Dade County 365 days a year.

Arts

Our visit to Miami’s design district confirmed that there is a further component to the city emerging.

As the New York Times reported in December 2016: “Few cities have come so far and so fast as Miami in terms of creating new, year-round arts institutions”.

We think a vibrant arts scene is crucial in announcing that a city has arrived. Cultural attractions provide a further leg-up in economic consumption, as locals and visitors look to spend more time in a city, making it a destination and not just a place to do business.

Our verdict

Miami has many elements we look for when investing in a city. The foundations are built on the trade and infrastructure that fuels the economy.

When assessing the constituents of the Schroders Global Cities index, we see cities that are exposed largely to just one industry as potentially vulnerable to structural downturns. In Miami’s case, it has a number of strings to its bow: a strong service sector, tourism and its role as a trade hub.

But Latin America is the key to Miami, with 65% of the population speaking Spanish.

There is also a sense that Miami is maturing and shaking off its seedy image of the 1980s. The arts scene is cementing Miami as a vibrant international hub. This is a strong fillip to the already well-established financial services sector in the city.

Miami ranks high on the Schroders Global Cities index and we think it is well-positioned to continue to grow.

 

Miami-data
 

Strengths

  • Strong service sector facilitating Latin American trade
  • Miami International Airport is an important hub and is gaining increased market share in the world’s cargo market.
  • Improving Metrorail and Metromover system
  • Burgeoning arts scene focused on the design district
  • Continued draw of tourism

Weaknesses

  • Higher education is not strong as other higher ranked cities
  • Traffic: Miami’s roads struggle at peak hours and the city’s traffic is ranked ninth worst in the TomTom traffic index for the US.

Subscribe to our Insights

Visit our preference center, where you can choose which Schroders Insights you would like to receive

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.

Authors

Hugo Machin
Co-Head of Global Listed Real Assets

Topics

Please consider a fund's investment objectives, risks, charges and expenses carefully before investing. The Schroder mutual funds (the “Funds”) are distributed by The Hartford Funds, a member of FINRA. To obtain product risk and other information on any Schroders Fund, please click the following link. Read the prospectus carefully before investing. To obtain any further information call your financial advisor or call The Hartford Funds at 1-800-456-7526 for Individual Investors.  The Hartford Funds is not an affiliate of Schroders plc.

Schroder Investment Management North America Inc. (“SIMNA”) is an SEC registered investment adviser, CRD Number 105820, providing asset management products and services to clients in the US and registered as a Portfolio Manager with the securities regulatory authorities in Canada.  Schroder Fund Advisors LLC (“SFA”) is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with FINRA and as an Exempt Market Dealer with the securities regulatory authorities in Canada.  SFA markets certain investment vehicles for which other Schroders entities are investment advisers.

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security/sector/country.

Schroders Capital is the private markets investment division of Schroders plc. Schroders Capital Management (US) Inc. (‘Schroders Capital US’) is registered as an investment adviser with the US Securities and Exchange Commission (SEC).It provides asset management products and services to clients in the United States and Canada.For more information, visit www.schroderscapital.com

SIMNA, SFA and Schroders Capital are wholly owned subsidiaries of Schroders plc.