Office lease activity in Miami-Dade picks up after slow first quarter: JLL

Office lease activity in Miami-Dade picks up after slow first quarter: JLL

Wednesday, July 13, 2016
Night view of Brickell from the Brickell Key Bridge (Credit: EdoDodo)

Night view of Brickell from the Brickell Key Bridge (Credit: EdoDodo)

Miami’s office market is picking up after a slow first quarter, according to a new report from commercial brokerage JLL.

The Q2 2016 Office Insight report said that office leasing has increased from the first quarter, but that the market is still “subdued” compared to previous cycles. Historically, the second quarters of 2011 through 2015 averaged 12.5 percent more deal activity and 70 percent more square footage leased, according to the report.

The second quarter of this year saw 200 leases signed, averaging 2,000 square feet each, up from 150 leases of the same size in the first quarter, according to JLL’s report.

Miami’s Central Business District and Miami Beach saw greater demand than supply during the second quarter, unlike the rest of Miami-Dade’s office markets. Vacancy in the CBD, a market with nearly 15 million square feet of office space in downtown Miami and Brickell, was at 18.2 percent, up from 17.1 percent last quarter. Aventura, with about 1 million square feet of office space, had the lowest vacancy rate at 4 percent.

“Downtown has more volatility and moving parts over the next two years,” Morrison told The Real Deal, citing the now under-construction All Aboard Florida. In total, the mixed-use project aims to add 280,000 square feet of office space to downtown Miami.

Overall, the vacancy rate in the second quarter averaged 13.5 percent in Miami-Dade County, which marks the first increase since the recession when it peaked at 20.7 percent in 2010. Last year, the office market recorded a 12.3 percent vacancy rate.

Out of the 772,910 square feet of new office space that is under construction in the county, more than 26.4 percent is preleased, according to the report.

Morrison said that large, outstanding leases are more important to look at. “A lot of what happens in the next six months will be indicative of the next two years,” he told TRD. That means lease renewals, companies relocating and downsizing. Morrison declined to provide specific tenants.

Landlords, meanwhile, are confident. Rents have steadily increased, up 1.6 percent from the first quarter to now. Since last year, rents have increased across the county by 5.1 percent to $36.47 a foot, the report shows.

Brickell saw the highest rents, averaging $44.09 per square foot in the second quarter.

“We don’t see any indication of that slowing down,” Morrison told TRD.

Here’s a breakdown from the report:

Submarket Inventory Absorption Vacancy Asking rent
Brickell 6.8 million square feet 33,406 square feet 15.3% $44.09
Downtown 8 million square feet 11,378 square feet 20.6% $38.81
CBD 14.8 million square feet 44,784 square feet 18.2% $40.61
Aventura/North Miami 1 million square feet -4,798 square feet 4.3% $44.96
Coconut Grove 900,000 square feet 2,487 square feet 9.9% $33.64
Coral Gables 6 million square feet 15,030 square feet 10.2% $38.23
Kendall/Dadeland 3 million square feet -32,071 square feet 13.5% $31.45
Miami Airport 9 million square feet 34,340 square feet 9.4% $28.68
Miami Beach 2 million square feet 33,566 square feet 7.6% $39.10
Miami Lakes 900,000 square feet 26,966 square feet 24.8% $23.56
All suburbs 23 million square feet 75,520 square feet 10.4% $32.57
Miami-Dade County 38 million square feet 120,304 square feet 13.5% $36.47

Source: The Real Deal