Brickell Leads South Florida’s Strong Q1 Office Market
By Jeff Ostrowski April 8, 2024 9:00 am
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In contrast to the dark clouds looming over the national office market, South Florida’s office space continues to attract strong interest from tenants willing to pay top dollar.
Overall rental rates in Miami-Dade County rose to an average asking of $53.53 per square foot in the first quarter, up 9.1 percent from a year earlier, commercial real estate firm Cushman & Wakefield (CWK) reported. Brickell and Miami Beach were the county’s most desirable office submarkets, with annual asking rents topping $74 a square foot.
The trends on Brickell are especially eye-popping. In the Class A market there, vacancy was just 5.7 percent, and average rents were $102.39 per square foot, up 21.1 percent from a year ago.
“You’re seeing rental rates skyrocket,” said Eric Messer, senior research manager at Cushman & Wakefield. “Landlords are very happy.”
Overall leasing volume in Miami-Dade County was 467,733 square feet, up 3.2 percent from a year ago.
In Palm Beach County, the average rental rate for office space was $46.29 per square foot, up 3.6 percent from the first quarter of 2023, according to Cushman & Wakefield. The most attention-catching submarket there was the town of Palm Beach, where Class A rental rates remained at $108.20 per square foot, unchanged from a year ago.
In Broward County rents rose 3.6 percent, to $39.85 a foot. Vacancy was at 16.8 percent. Leasing activity, at 299,574 square feet, was off 24 percent from a year ago. While Broward remains the weakest of the three countywide office markets in South Florida, Messer sees the softness as a “slight hiccup” rather than a sign of an ominous downturn.
The continued strength in South Florida rental rates comes as office markets in much of the nation struggle. Work-from-home trends have reduced office occupancy to the extent that $54.7 billion in office properties nationwide were in distress as of the first quarter, according to a recent report by MSCI Real Assets.
In South Florida, signs of distress remain rare, although there are scattered signs that the market might be taking a breather. In Palm Beach County, office vacancy rose to 11.7 percent, up from 11 percent in the first quarter of 2023, Cushman reported. And leasing activity was off 40 percent from a year ago, to 221,269 square feet.
In Miami-Dade County, vacancy was 15.4 percent in the first quarter, down from 15.5 percent from a year earlier.
Jeff Ostrowski can be reached at jostrowski@commercialobserver.com.
