Miami’s Office Leasing Activity Lags Hype, But Momentum Is Real
Miami’s office boom prophecy has yet to materialize.
Even as the country’s premier financial and tech companies — such as Citadel, Apollo Management, Millennium Management and SoftBank — tour and sign leases in the Magic City, the interest is not sufficient to erase the pandemic’s devastating effects on the office market.
Office vacancy in Miami-Dade County was at its highest point in eight years in the second quarter of 2021, totaling 16.9 percent, according to an Avison Young report. Net absorption rates remained negative as well, ending the quarter 144,262 square feet in the red, a Newmark report shows.
Just over half of Miami’s workforce, 53 percent, has returned to the office, per Avison Young. Compared to the country’s major cities, the figure puts Miami in the middle of the pack.
That’s not to say the prognosis looks bleak for the emerging Wall Street and Silicon Valley of the South.
The high vacancy rate is, in part, due to new developments, such as the trophy tower 830 Brickell, which is increasing supply. In the second quarter, 167,184 square feet of office space was delivered last quarter, another 1.5 million square feet remains under construction, per Newmark.
Absorption is recovering, picking up 50,123 square feet between the first and second of 2021. The figure is expected to grow as new-to-market companies take occupancy and hire new employees after signing their leases.
Landlords, seeing the interest from these firms, are keeping rates up. Asking rents rose for a fourth consecutive quarter to an average of $46 per square foot, up 2.6 percent from pre-pandemic levels, a JLL report noted. Sought-after neighborhoods — Brickell, Wynwood, and the Design District — came out on the top, with asking rents ranging between $58.24 and $60.46 per square foot.
Julia Echikson can be reached at firstname.lastname@example.org.