Office Market Continues to Grow in South Florida

MIAMI-While the office markets in Miami-Dade and Palm Beach counties have continued to grow at a steady pace, Broward County is booming, according to the Codina Group’s latest analysis of South Florida.

The Miami-Dade County office market is comprised of 43.2 million sf, with another 1.9 million sf under construction. The 10.7% vacancy rate is 1.2% greater than this time last year. Rental rates are averaging $29.65 per sf full service for class A; $20.26 per sf for class B; and $17.97 per sf for class C. The lowest average rental rate for class A space in the three-county area is Miami Lakes at $19.15 per sf.

Codina concludes the Miami-Dade County office market will continue to prosper at a slow but steady pace. Sublease space, currently pushing 677,000 sf, also will continue to rise.

North of Miami-Dade, much of Broward County’s office market is “growing by leaps and bounds,” according to Codina. With an inventory of 24.3 million sf–just over half of Miami-Dade’s–Broward has 1.4 million sf under construction, with upward of 875,000 sf proposed. In the Miramar area, a 24,000-sf facility and 96,394-sf office building were fully leased upon completion.

Broward’s average rental rates for class A space varies from $22.93 per sf in the Deerfield Beach submarket to $28.63 per sf in downtown Fort Lauderdale, where 654,302 sf is under construction. Codina attributes Broward County’s office market growth to “decidedly pro-business atmospheres and a tax structure that is one of the most advantageous in the nation,” combined with a growing workforce, fast economic growth and a large financial community. However, Codina says the new buzzword is caution since vacancy is riding at 14.6% in comparison to 10.3% at the end of last year.

In Palm Beach County, north of Broward County, the 14.2% vacancy rate represents an increase of 2.5% over last year. However, the class A vacancy rate has decreased 1.7% over the same period and currently stands at 10.4%. Class A rental rates average $25.75 per sf, with Palm Beach Island posting the highest average in the three-county area with $46.25 per sf.

The Palm Beach County office market is comprised of 19.7 million sf, with 669,925 sf under construction. Year-to-date net absorption is 145,956 sf, down 778,820 sf from the 924,806 sf recorded in third quarter 2000. This, Codina notes, is “a prime example of one of the most dramatic changes resulting from the current state of the economy.” Codina predicts developers will postpone new construction in the county until the excess space is absorbed and the economy shows signs of greater stability.