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MIAMI-Overall office vacancy for Miami-Dade County stands at 10.9%, according to a third-quarter report by the local office of Grubb & Ellis. The figure represents is a 3.9% drop from the same quarter a year ago. “Year-to-date net absorption is up 36%,” says Jonathan Kingsley, managing director and EVP of South Florida for G&E.

Single-digit vacancy was last achieved nearly four years ago, Kingsley tells GlobeSt.com, and he attributes the office-market’s rise primarily to the area’s growing population. “This is the first time in memory that we actually have young people moving here to stay,” he says. “It’s not just retirees and people with second, winter homes, so we have actual job growth.”

Additional factors impacting the market, he says, “are Miami International Airport and the Port of Miami and their tremendous distribution link.” While they have made Miami, “by far, the largest industrial market in South Florida, they have also impacted the office market. European companies seeking to expand look first at Miami.”

Office sublease volume in the county totals less than 500,000 sf, a 38%-drop from third-quarter 2004. “There is no doubt that owners are back in the driver’s seat as asking rents continue to head north,” Kingsley says. The average asking rate for class A space is $30.05 per sf, up 74 cents per sf versus the same quarter a year ago. The asking average for class B space surged 7.5%, compared with the same quarter a year ago, to stand at $24.03 per sf. Class A properties on Brickell Avenue are the standard-bearer at an asking average of $33.01 per sf. The Miami Lakes’ asking average of $22.50 per sf is the lowest of 13 Miami submarkets.

The redevelopment of office properties into residential is shrinking the office pie. “There is no land available in Miami-Dade that is not tightly controlled by a developer,” Kingsley says. Because of increases in construction materials, “we’re reaching a new rent threshold,” he says. But, while developers in all real estate categories are re-thinking their rent structures, the increased costs have not stopped growth.

The only danger Kingsley sees, “is any crash of Latin American countries occurring at once, and weather. If we have another year with two to three storms in a season, I can envision companies bypassing Miami-Dade when they consider expansion plans.”

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