Broward Class A Office at 20.9% Vacancy

A new study by Insignia/ESG Research Services Group here shows the 10.88 million-sf, class A office inventory is 20.9% vacant. The overall 27.6 million-sf market is 17.2% unoccupied.

Worse, of the 790,151 sf of new completions last year, 65% of the space remains vacant. Eighteen percent of all available space is sublease product. Class A sublease space accounts for 20.3% of all class A available space. Average asking rents decreased during the year to $22.17 per sf from $23 per sf.

"The Broward office market is still trying to absorb the 2.6 million sf of office space that has been added to the market over the last two years," says Keith Graves, director, Insignia/ESG Inc. Overall, net absorption during this period was only 900,000 sf.

"This has contributed to availability rates increasing from 13.2% to 20.4% over the last two years," Graves says. "However, the region continues to have strong leasing levels and positive absorption…With construction levels dramatically receding, the market should approach equilibrium in late 2003."

"The real estate market, by its nature, is cyclical," he adds. "Correctly interpreting a market's position in the real estate cycle helps developers, owners and tenants plan for the future." However, he notes that, "wide disagreement about Broward's location in the real estate cycle and the country's position in the economic cycle has created uncertainty" among tenants.

Among Broward's major submarkets, Fort Lauderdale may be the most fortunate in having "a relatively low amount" of sublease space, Graves says. But the 3.1 million-sf, class A inventory is at 24.4% and the overall 4.8 million-sf inventory is at 19.9%.

Only 40,000 sf of new class A product is under construction. Average class A asking rent is $26.72 per sf; overall average, $25.09 per sf. Year-to-date absorption was 45,763 sf; overall, a negative 81,798 sf.

The 4.9 million-sf Cypress Creek submarket, with 1.8 million sf of class A product is hurting, primarily due to the downturn in the technology sector. This market is "dominated with service and technology related tenants," says Graves. "As these business sectors have a high degree of elasticity, the Cypress Creek submarket has felt the brunt of the poor market conditions."

Cypress Creek class A office has a 16.8% vacancy rate; overall, 19.3%. Average asking class A rent is $23.85 per sf; overall average, $19 per sf. Year-to-date absorption was a negative 37,812 sf in class A and a positive 44,905 sf overall.