Miami, Fort Lauderdale Office Fundamentals Down But Not Out: Improvement Expected
Although big tenants like WeWork scaled back on their office leases, interest from financial firms in South Florida makes for an optimistic outlook.
Miami-Dade and Broward counties’ office real estate fundamentals don’t look nearly as good as they did pre-pandemic, but there’s no reason to panic. The recent interest from financial firms bodes well for the market.
Both counties saw negative net absorption as some tenants declined to renew leases. But the market is expected to start climbing back up this year, in part thanks to renewed confidence as financial giants like Blackstone and Goldman Sachs are expanding to South Florida, according to new JLL data for last year’s fourth quarter.
JLL said the outlook is positive, even though fundamentals don’t exactly show it right now.
Although Miami-Dade vacancies ticked up, “new-to-market demand will eventually result in occupancy gains,” according to the JLL report. The Broward vacancy rate also increased and rents aren’t growing, but “as new demand continues to materialize, and quality space becomes harder to find, rates are likely to recover in short order,” the report said.
Miami-Dade saw some office giants scale back and others, including new-to-market tenants, expand to the county. WeWork gave back its 18th floor space at downtown Miami’s Southeast Financial Center, HSBC downsized its space at the Four Seasons and Charles Schwab freed up the entire sixth floor at 801 Brickell after temporarily closing its office.
Among the biggest Miami gains was global investment behemoth Blackstone taking out a 41,000-square-foot lease at 2 MiamiCentral atop Brightline’s downtown station. Blackstone will keep its New York headquarters and focus its Miami office on expanding in-house technology capabilities.
Private equity and alternative assets investor H.I.G. Capital expanded into a 22,000-square-foot office at The Plaza Coral Gables, and at the same time renewed its lease at 1450 Brickell in the Brickell Financial District.
The Miami-Dade vacancy rate is 18% — higher than the 11.6% from last year. It’s continuing construction, and not sublease availability, that’s fueling the inventory. In fact, Miami-Dade sublease availability is among the lowest in the nation at 2.2%.
Overall, 1.5 million square feet of office space is under construction.
In Broward, the marked was “muted” with limited new leases but JLL expects this to pick up this year, again in part thanks to financial firms flocking to South Florida.
Asset management firm Goldman Sachs Group Inc. is said to be looking for an office space in the region, with JLL reporting Goldman is looking for a multi-floor space in downtown Fort Lauderdale.
Broward reported a 16.2% vacancy, but construction still is chugging along with 145,322 square feet underway.
Notably, The Main Las Olas delivered its 25-story Class A office tower in downtown Fort Lauderdale late last year. It hasn’t reported any new leases, however, aside from those who signed pre-pandemic. They are project developer Stiles, Akerman, BBX Capital and Berger Singerman.
This means the 357,520-square-foot tower has 223,702 square feet of space up for grabs.
JLL also reported office space concessions in both counties are on the rise. This is typical amid market downtimes, as landlords offer the concessions in an attempt to make themselves more lucrative to tenants.
Read the Miami-Dade County report:
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Read the Broward County report:
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