MIAMI—Office market fundamentals across the State of Florida during the current real estate cycle have steadily improved. Indeed, all markets are posting significant rent increases year-over-year.

That's according to Cushman & Wakefield's Third Quarter 2016 Florida Statewide Rental Report (FLRR). The report highlights current office asking rates in major markets across Florida and compares them to rates documented at the height of the last real estate cycle (2008 and 2009.

Florida research manager Chris Owen believes increased demand for office space may lead to the development of new office product in select markets. “One of the more enduring trends during this economic cycle has been the lack of new quality construction in some markets,” Owen tells GlobeSt.com. “This trend has benefitted class B and C buildings and non-traditional office submarkets. Indicators point to an increase in new office construction if underlined demand fundamentals remain constant.”

According to the report, the latest jobs report shows a 3.4% increase, or the addition of 276,300 new jobs, over the past year, pushing up demand for office space up. Full-service asking rental rates for class A office space increased 9.5% over the past year to $32.26 with all markets showing solid increases in asking rents.

For the most part, rental improvement was not being driven by new construction but by heightened leasing demand and absorption. Office sales picked up, leading some landlords to push rates to record highs to justify rental assumptions for acquisition. Three out of the six major Florida markets had rental gains of 5% or more over the past four quarters.

Since the third quarter of 2009, Florida's class A office market has seen 7.9 million square feet of overall available space absorbed by new and existing tenants, representing a 6.9 percentage point drop in the direct vacancy rate through the third quarter of 2016. Full-service asking rents for class A space, from a statewide basis, have surpassed rent peaks from the last cycle.

“Continued increases in occupancies coupled with limited new construction in most markets indicate short-term rental rates will be pushed higher,” says Owen. “This could potentially provide enough incentive for developers to break ground on large-scale speculative projects.”

Tere Blanca points to one big trend in Downtown Miami. Check it out.

Instant Insights /

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