Broward Suburban Office Vacancies at Record High

The 3.7 million-sf Fort Lauderdale central business district emerged with the lowest vacancy level in 2001 at 16.92%. "However, this market is not without its concerns," notes RealData research director William R. Hemingway. "Another 411,367 sf are under construction with expected completion by year end, potentially dropping the occupancy rate to 81% (19% vacant)."

West Broward submarkets are bleeding with a 23% vacancy level for non-sublease space and a 26.7% vacancy mark with sublease included.

The largest amount of vacant space, 757,615 sf, is in the Sunrise, FL submarket. Plantation, FL is next with 431,670 sf of non-tenant premises.

Of more concern to property owners is the drop in average asking rents. The 9.67 million-sf class A market is asking $25.16 per sf, down 2.63% from a year ago. The 9.76 million-sf class B market is averaging $20.48 per sf, down 5.05%. The 2.9 million-sf class C market is at $15.71 per sf, down 9.97%. Countywide, the average asking rent is $21.89, down 5.61% from fourth quarter 2000. The lowest asking rent is $8 per sf; the highest, $34.75.

"Currently, most economists expect the economy to improve by the end of the second quarter of 2002," RealData Research Director William R. Hemingway says in his report. "If that occurs, the pickup in real estate will probably lag behind another quarter or two as employers gain confidence and begin to increase staff and add space."

However, Hemingway says, "until then, the tenants will have the upper hand." He adds, "For tenants with a long-term view, now is a great time to secure office space at favorable rates."

Net absorption numbers were soft in all of 2001. Class A space fared the best with positive absorption of 362,578. Class B had a negative 160,966 sf; class C, a negative 40,600 sf. Total net absorption for the year was 161,012--with 160,846 sf absorbed in fourth quarter 2001 alone.

The 2001 net absorption performance pales when compared to an average 520,494 sf on a total 3.12 million sf leased over the six-year analysis period studied by RealData.

New office product that will surface shortly are the 23-story, 411,000-sf Las Olas City Centre, 401 East Las Olas Blvd., Downtown Fort Lauderdale; the four-story, 100,000-sf Cross Roads IV at 8051 Peters Road, Fort Lauderdale; and the four-story, 250,000-sf Cypress Creek Concourse being developed by the Alter Group of Chicago at NW 15th Avenue and Cypress Creek Road.

Quoted rental rates at Las Olas City Centre are $19.75 per sf, triple net, plus expenses of $11 per sf, with an expected tenant improvement allowance of $25 per sf. Preleasing is at the 45% level with estimated completion in the third quarter of this year.

Quoted rates at Cross Roads are $15.50 per sf, triple net with completion expected by April of this year. There is no-preleasing reported.

Rents at Cypress Creek Concourse are projected at $18.50 per sf, triple net, plus estimated expenses of $7.50 per sf. The tenant improvement allowance is projected at $25 per sf.