You Might be Surprised by This Downtown Miami Office News

Located at 1441 Brickell Avenue in Miami, the class A trophy asset offers 250,000 square feet of office space.

MIAMI— Office rents in Downtown Miami are rising. In fact, they have jumped into record territory this year at an average of $46.09 per square foot. That’s more than 8% higher than the first quarter of 2015, according to JLL’s 2016 Skyline report. What’s more, rents for trophies office assets along Miami’s skyline are even pricier at $48.14 per square foot. That said, the report also shows rent growth may be moderating, especially in high-growth markets that have recorded consistent rent appreciation over the last several years. “Miami has seen strong investment activity over the previous 18 months, much of which occurred in the class B segment of the market,” says Marc Miller , Florida research manager at JLL. “However, in 2016 investors have turned their attention to Miami’s Skyline properties as the market continues performing strongly. Since late December, three Skyline assets have traded totaling $360 million, and there is more Skyline product likely to trade before the year ends.” Consider these JLL statistics: Three-quarters of the existing competitive skyline buildings now have select prime spaces quoted at or above $50 per square foot. With Miami’s Skyline direct vacancy shrinking to roughly 15%—down from 24 percent five years ago—the spread between trophy and non-trophy Skyline pricing on average has narrowed to the smallest difference since 2005. Both foreign and domestic buyers continue to be drawn to markets like Miami where rent growth is still achievable and tenant demand will persist. “Miami’s maturity as an international city, coupled with significant enhancements to the residential, retail and recreational components to the urban core, make it an increasingly attractive place where companies, particularly with Latin American connections, want to have an office or regional presence,” says JLL managing director Don Cartwright . “The continued demand for office space , particularly among the assets that comprise the skyline and the manageable new construction in the pipeline, is fueling solid increases in rent as long as supply remains in check.” Assets that pepper the Miami skyline are still the gold standard. However, owners need to make sure they don’t tarnish with complacency, according to the JLL report. In Downtown Miami, for example, like Miami Center’s Crocker Partners continue to make significant upgrades and building renovations. “The City of Miami saw $1.035 billion worth of new construction last year, with much of it concentrated in the urban core,” Ken Krasnow , executive managing director and market leader of Colliers International in South Florida, tells GlobeSt.com. “Many of those development sites began with a real estate transaction so there is a huge demand for the type of services our Urban Core division will provide to our clients. Creating the Urban Core team led by two seasoned brokers is Colliers International’s response to the rapid urbanization of South Florida’s urban cores. We are just in the beginning of this trend and the best is yet to come.” What foreign buyers are investing the most in Miami? Get the answer in my recent column .