Office Vacancies Shrinking Even as New Product Surfaces

Miami’s CBD vacancy rate has fallen 3.3 percentage points since mid-1999 to 11.4%, reports Cushman & Wakefield.

New construction is occurring along Brickell Avenue where the 500,000-sf Barclays Financial Centre is due for delivery this November. The asset is already more than half preleased—including the recent signing by Wall Street’s Morgan Stanley Dean Witter for 48,000 sf.

The Airport/West Dade, Coral Gables and Miami Beach submarkets are even hotter, though new construction in the suburbs softened the vacancy-rate decline there from 13.4% to 11.2% over the last year.

Miami-Dade County’s mid-2000 office vacancy rate was 11.3%, down 2.6 percentage points during the previous 12 months and the lowest in more than a decade. The average asking rent for class A CBD space is now up to $30.48 psf. Non-CBD space averages $24.71 psf. Countywide (the CBD plus the suburbs), the average class A rental was $27.05 psf at this year’s midpoint.

In Broward, corporate relocations and expansions are sparking office space demand, especially outside the CBD. Countywide, however, the vacancy rate declined only 2.5 percentage points during the past year to 13.1% as new construction augmented space supply. As of mid-2000, more than 1.9 million sf of projects are under construction—mostly in Broward’s western and southern sections. The Sunrise area alone had 938,000 sf of new development in progress.

More modest space movement this year in the Fort Lauderdale CBD held the office vacancy rate steady at 10.6%. Downtown building includes Trammell Crow’s 101 Tower of 177,000 sf, which is 26% preleased, and Stiles’ 100,000-sf 300 Las Olas Place where the development firm itself plans to occupy half the space for new headquarters. Broward class A rents have held generally level over the past year—now averaging $24.48 psf ($27.53 Downtown; $23.65 beyond the CBD).

Palm Beach is being flooded with high-tech startups, particularly in Boca Raton, which C&W estimates all by itself accounted of 64% of the county’s total office space absorption in this year’s first six months. The countywide office vacancy rate fell 2.7 percentage points over the last year to 12.9% at mid-2000.

Nearly 861,000 sf of space is under construction, with almost 700,000 sf of that in Boca Raton where Codina and St. Joe Company are completing a 300,000-sf built-to-suit headquarters for the National Council of Compensation Insurance. Average class A asking rent for all of Palm Beach rose last year to $28.56 psf ($32.52 in Downtown West Palm Beach and $26.85 outside the CBD).