Why Some Office Users Are Moving North

MIAMI—Why would multinationals prefer Broward County over Coral Gables or Downtown Miami? That's what we asked Stephen L. Smith, vice president of The Hogan Group, which manages and leases 1.4 million square feet of office space at Waterford at Blue Lagoon in Airport West.

GlobeSt.com also caught up with Smith to learn more about the success of Waterford at Blue Lagoon and why rental rates are rising in part two of this exclusive interview. You can still read part one: Hogan Hints at New Office Paradigm.

GlobeSt.com: Why would multinationals prefer this location instead of Coral Gables, where they used to locate traditionally?

Smith: I think some of it has to do with the residential growth in southwestern Broward County. It is a lot easier to commute into this area than to Coral Gables.

Waterford is right in the middle of the county with direct access to State Road 836. Also, it is in the proximity to Miami International Airport, which is right next to us. Many of our tenants travel to Latin America often so it is convenient to be so close to the airport.

GlobeSt.com: Can you name some of the major companies with offices at Waterford at Blue Lagoon?

Smith: Some of our multinationals are FedEx, Avaya, Caterpillar, Estee Lauder Companies, Hewlett-Packard, Hasbro and Procter & Gamble just to name a few. Other major tenants include Baxter Healthcare, Marriott, Miami Children's Hospital, Swatch Group, Toyota, and CareCloud.

GlobeSt.com: Waterford at Blue Lagoon is so big that it can be considered an office submarket of its own. What's the vacancy rate there?

Smith: At Waterford, we manage and handle leasing for the 1.4 million square feet of office space owned by TIAA-CREF in six buildings. Overall Waterford at Blue Lagoon consists of 2.7 million square feet of corporate office space, which is about a third of the 8.9 million square feet of office space in the Airport West submarket. Our buildings have about 4% vacancy rate. In contrast, Airport West has a 9.8% vacancy rate in the class A office market, which competes directly with us.

GlobeSt.com: What's the current situation with rental rates in your buildings?

Smith: Rents are going up, in part, because we eliminated concessions, which is free rent. We're quoting higher rental rates on new transactions, depending on the building.

For example, in a newer building, we are quoting $32 to $33 a square foot for full service.The rental rates we are quoting now are close to what we were quoting back in 2007 and 2008, before the financial crisis. Soon, we will be reaching the rates we were quoting at the height of the market from 2005 to 2007.