Downtown Miami Office Vacancy at 24 Percent in Q2, Up Slightly From Q1

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Vacancy rates for office and retail properties remain high, but brokers and businesses are betting on a booming Miami market for business transplants.

Direct vacancy for Downtown Miami office buildings was at 23 percent on average in the second quarter, according to a report from Colliers. Vacancies for all Miami-Dade County office properties stood at 12.3 percent, a slight increase from the first quarter of this year at 12.1 percent.

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It’s also an increase from pre-pandemic levels, when office vacancy stood at 9.2 percent in the third quarter of 2019.

Even with increasing vacancy, rents have risen since the first quarter of 2020, just before the pandemic hit. Average direct asking rents stood at $43.44 in the county, up from $41.40 pre-COVID. That’s highly affordable compared with cities like San Francisco, Boston and New York, and is one of the reasons that Miami has become a popular relocation destination, according to a previous Colliers report. (Manhattan sported asking rents of $73.23 on average for office space in April.) 

And buyers are betting on a busy transplant market in Miami. CP Group recently led a joint venture to purchase the 38-story One Biscayne Tower for $225 million in Downtown Miami. Brett Reese, CP Group’s senior vice president, previously told Commercial Observer that he’s confident that the migration to Florida will only continue and is betting on financial services, real estate and insurance companies flying south — but not just for the winter. 

A few blocks away from One Biscayne Tower, Monarch Alternative Capital snatched up a majority interest in the Citigroup Center in Downtown Miami, one of the largest office towers in the city. The company will take a 90 percent stake for $300 million in the 34-story tower, and cited companies across various industries entering the Miami market as a reason for the purchase. 

While the office sector appears to be in full recovery, the retail and industrial sectors have less of a way to go in recovering from the pandemic.

Total retail vacancies were down slightly from the first quarter of 2021, at 4.3 percent. In Miami’s central business district, Downtown Miami saw the highest vacancy rates at 20 percent, followed by Wynwood at nearly 10 percent. The Biscayne Corridor, which runs along the coast from just north of NE 79th Street to Interstate 395, saw the second-lowest vacancy rates at 4.4 percent. 

Industrial properties — including warehouse, manufacturing and flex space — saw a lower total vacancy at 3.9 percent in Miami-Dade County than the first quarter of 2021 at 4.6 percent. Asking rents were higher for warehouse, manufacturing and flex space overall. 

Outside the city center, Broward County saw similar vacancy rates: 5.3 percent total vacancy rate for retail, 13.3 percent for office, and 7.6 percent industrial on average. Palm Beach had slightly lower vacancy rates all around, at only 4.4 percent for industrial, 5.2 percent for retail and 11.4 percent for office space.

Celia Young can be reached at cyoung@commercialobserver.com.