MIAMI—Miami-Dade County’s office market saw nearly 1 million square feet of positive absorption in 2012. That points to significant improvements in its underlying market fundamentals.
As a result of its strongest year, at least in terms of yearly absorption, since 2005, the overall
vacancy rate closed the 2012 calendar year at 21%, 70 basis points lower than a year prior. So says Transwestern‘s Office Market Trends for the fourth quarter of 2012.
“The positive absorption numbers at the end of last year indicated a healthy finish to an uncertain year and pointed towards a positive 2013 and beyond,” Eric Groffman, senior vice president with Transwestern, tells GlobeSt.com. “Although many of the economic factors are still uncertain, positive absorption through new to market tenants, expansions and rental rate growth are highly encouraging.”
The good news: Private sector jobs grew by 0.5% over the year bolstered by the professional and business services sectors, which added 6,300 jobs, Transwestern reports. The bad news: Government related jobs continue to hamper employment growth as local budget cuts have prevented Miami public sector payrolls from recovering as quickly as the rest of the state.
Landlords in tertiary markets such as Fort Lauderdale and West Palm have struggled to retain tenants amid the broader shift in the market, drawing more companies to the major markets such as Miami, according to Transwestern. The report points to Millicom International Services, a global telecommunications group, opted to relocate its 22,280-square-foot Fort Lauderdale office to the LEED Gold certified, 396 Alhambra building in Coral Gables. Transwestern also notes that Klewin Construction moved its corporate headquarters from West Palm Beach to 444 Brickell Avenue due to convincing perceptions of a thriving Miami market with strong growth potential.
Transwestern predicts that a reviving housing market and improving office-using employment growth will solidify Miami’s recovery through 2013. Furthermore, the firm says, the presidential election of 2012 is now behind us and the fact that the country dodged the much-anticipated “fiscal cliff,” businesses should begin to regain even greater confidence in the local Miami market and begin to ramp up hiring. The forecast: Long-term Miami will outperform the nation because of its growing infrastructure, strong international trade ties, and stature as an international
“Over the past 12 to 18 months, there has been a renewed interest in South Florida, and in particular Miami,” Groffman says. “International companies are looking to establish a presence or increase an existing footprint, particularly in the professional service sector. Congruently employment numbers continue to tick upwards which will increase development in core residential markets.”