MIAMI—In 2010, when more than 1 million square feet of office space delivered to Downtown Miami and Brickell during one of the worst real estate busts in history, a buzz phrase emerged: flight to quality. Now, that buzz phrase is making a comeback as businesses begin moving once again from class B office buildings to more efficient spaces in class A buildings.
GlobeSt.com caught up with Greg Martin, a principal at Avison Young, to get his take on the trend in part one of this exclusive interview. Be sure to return this afternoon for part two, where Martin will discuss what does this mean for mid to large-sized office tenants looking to expand, what it means for class B buildings, and more.
GlobeSt.com: What are the economic elements that are causing small to mid-sized businesses to feel more confident in the market?
Martin: I think interest rates have maintained a healthy environment for investment and spending, and we are seeing good activity in the residential markets again. We can visibly see new construction taking place which has increased economic activity, showing that investor, developer, and corporate confidence is rising.
GlobeSt.com: What has caused tenant demand to shift from “the bigger the better” mindset to “less is more”?
Martin: Everything in our society is moving toward more efficiencies, mobility and sustainability. Companies are in the same mode trying to maximize the combination of technology, workforce, and workplace to maximize their operations.
GlobeSt.com: Smaller spaces are being taken off the market in class A buildings due to smaller businesses moving into these spaces from class B buildings. Can you provide examples of this trend?
Martin: While this is true in some situations, and in general we have seen a flight to quality, I think a lot of the small spaces are coming off the market due to existing tenant consolidation or expansion needs. Examples include Berkowitz, Pollack & Brant and Edens & Avant Investments, both of which expanded during the respective firm’s most recent renewal transactions at SunTrust in Downtown Fort Lauderdale. In addition, we are starting discussions with Business Financial Solutions in Coral Springs to expand into a small space to complete the floor for new office space in Coral Springs.