South Florida Offices Buck National Trends: JLL
By Jeff Ostrowski July 12, 2024 2:45 pm
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South Florida’s office market continues to defy the bleak national picture for the sector.
Overall asking rental rates in Miami-Dade County rose to an average of $63.49 per square foot per year in the second quarter, up 12.7 percent from a year earlier, commercial real estate firm JLL (JLL) reported. Annual asking rents for Class A space in the Miami area topped $72 a square foot.
The trends in Miami’s Brickell submarket have been particularly robust. Space at Oko Group and Cain International’s 830 Brickell – where rents are well above $100 a foot – is 93 percent leased, according to JLL data. And when that 55-story trophy tower is completed later this year, it’s likely to be 100 percent leased.
In a sign that South Florida continues to attract out-of-state employers, 450,000 square feet of space at the 638,000-square-foot 830 Brickell will be filled by new-to-market tenants. That roster includes Citadel, Microsoft (MSFT), private equity firm Thoma Bravo and law firms Kirkland & Ellis and Sidley Austin.
Overall leasing volume in Miami-Dade County in the second quarter was 855,000 square feet. In one notable second-quarter lease, tech firm Kaseya took 76,000 square feet in the Wells Fargo Center in Downtown Miami, JLL said.
North of Miami in Palm Beach County, the average rental rate for office space was $55.18 per square foot, up 4.1 percent from the second quarter of 2023, according to JLL. The hottest submarket there was the town of Palm Beach, where Class A rental rates jumped to $126.47 per square foot, up 25.4 percent from a year earlier.
In one sign of softness, Palm Beach County had a year-to-date net absorption of negative 246,000 square feet, driven by large departures from the Boca Raton office market, JLL said.
In Broward County, rents rose 4.6 percent compared to the same time in 2023, to $41.14 a foot. Vacancy was at 16.1 percent, down from 17 percent in the first quarter. Leasing activity was 500,000 square feet, and year-to-date absorption was a negative 63,809 square feet.
The sunny outlook for South Florida rental rates and activity stands in contrast to the clouds looming over office markets in much of the nation. 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 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 12.8 percent, up from 11.8 percent in the second quarter of 2023, JLL reported. But that was well below the national vacancy rate of 20.5 percent.
In Miami-Dade County, vacancy was 15.8 percent in the second quarter, down from 16.7 percent from a year earlier.
Jeff Ostrowski can be reached at jostrowski@commercialobserver.com.
