Miami Office Rents Keep Rising, Despite Building Boom

Office rents in Miami-Dade County continued their long climb in the second quarter, reaching an average of $62.61 per square foot, according to a report by Savills.

That represents a 14.4 percent increase from a year ago, and a 55.3 percent jump from five years ago, the moment that Miami’s pandemic-related boom vaulted rents into a new stratosphere.

Miami Beach was the priciest office submarket in Miami-Dade County, with annual asking rents nearing $110 a square foot, Savills reported. Miami’s Brickell neighborhood was next, at $92 a square foot, followed by the Wynwood-Design District submarket, at $82 a square foot.

Miami-Dade County’s office market has some pockets that are more affordable for tenants. The Airport West, Coral Way, Miami Lakes-Hialeah and South Dade markets all posted average asking rents less than $40 a square foot.

While the pace of office relocations into South Florida is slowing, vacancy rates remain modest. Just 20.4 percent of Class A space was empty at midyear, and the overall office vacancy rate was 17 percent.

That’s in spite of 1.6 million square feet of new office space being delivered in the past 18 months. An additional 1.9 million square feet of new space is under construction. Those new office buildings are outpacing older properties in rent growth, Savills said.

“Miami — alongside New York City — remains one of the top U.S. markets for office attendance, demonstrating greater resilience to the effects of hybrid work trends,” wrote Andrea Duque, Savills senior research analyst in Miami.

Savills cited two large pre-lease deals that will help absorb new space: Royal Caribbean’s deal for a 350,000-square-foot headquarters, and AdventHealth’s 120,000-square-foot deal.

Jeff Ostrowski can be reached at jostrowski@commercialobserver.com.