The Real Deal Miami

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

Office rents have steadily increased to $36 per square foot on average countywide

July 13, 2016 05:15PM
By Katherine Kallergis

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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,” Will Morrison, JLL associate, 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:

SubmarketInventoryAbsorptionVacancyAsking rent
Brickell6.8 million square feet33,406 square feet15.3%$44.09
Downtown8 million square feet11,378 square feet 20.6%$38.81
CBD14.8 million square feet44,784 square feet18.2%$40.61
Aventura/North Miami1 million square feet-4,798 square feet4.3%$44.96
Coconut Grove900,000 square feet2,487 square feet9.9%$33.64
Coral Gables6 million square feet15,030 square feet10.2%$38.23
Kendall/Dadeland3 million square feet-32,071 square feet13.5%$31.45
Miami Airport9 million square feet34,340 square feet9.4%$28.68
Miami Beach2 million square feet33,566 square feet7.6%$39.10
Miami Lakes900,000 square feet26,966 square feet24.8%$23.56
All suburbs23 million square feet75,520 square feet10.4%$32.57
Miami-Dade County38 million square feet120,304 square feet13.5%$36.47