Vacancy in Miami office market continues to drop
For the fifth straight quarter, the vacancy rate in the Miami office market dropped as absorption stayed positive. Steady tenant demand and a dearth of new office construction have been the main reasons for both.
The Miami vacancy rate for the second quarter was 8.72 percent, according to CB Richard Ellis, down from around 10 percent in the first quarter — and at its lowest level since at least the beginning of 2001. In the second quarter, also, 241,588 square feet of space was positively absorbed in the Miami office market.
Average asking rents in Miami-Dade County increased 1.3 percentage points from the first quarter for an average rate of $25.88 per square foot.
Analysts expect the market to get tighter during the rest of 2006. Right now, only 130,000 square feet of new office space is under construction in Miami-Dade County, CBRE reported, and demand for space in general remains high.
In Broward County, the vacancy rate was also tight at 8.33 percent during the second quarter, down 4.4 percentage points from a year ago. Average asking rates rose 10.7 percentage points from $13.75 per square foot a year ago to $15.06 per square foot this year.
In Palm Beach County, the office vacancy rate dipped to 8.4 percent during the second quarter, down from 9.4 percent a year ago. As a result, average asking rents have risen 9.4 percent over the year to $18.31 per square foot, according to CBRE.
Miami rental market strong, despite condo slowdown
While the condominium market is cooling down, the Miami rental market is still being buoyed by a number of factors, including positive employment trends.
Employers in Miami-Dade County are projected to add 16,000 jobs in 2006, a 1.6 percent increase over last year. Nearly one-half of those jobs will hail from the construction as well as professional and business service sectors.
Rental rates are forecast to increase 3.2 percent over the next quarter to an average of $1,058 per month, according to Marcus & Millichap. Net effective rents are projected to rise 3.6 percent over the next quarter to an average of $1,014 per month.
Massive mixed-use project on the block in Miami
Some are calling it a $375 million exhibit in a pile of mounting evidence that the Miami housing market has cooled.
Midtown Miami, the mixed-use residential development planned for just north of downtown that’s suppose to include 3,000 condos, went on sale in July, the Miami Herald reported. Developer Joe Cayre is asking the $375 million for 80 percent of the project. Cayre said he’s selling for tax purposes and that he’s always planned to sell part of Midtown Miami after construction started.
Some, though, aren’t buying that explanation.
“This is another sign of where this market might be headed,” Jay Massirman, a vice chairman with CB Richard Ellis, told the Herald. “It says to me that they’re worried about the market. The challenge will be finding someone to take over their risk position and bet on the market.”
At least 11 towers are planned on 56 acres in the Midtown Miami development. Along with the condos, more than 645,000 square feet of office and retail space is slated for the project.
Housing costs driving out South Florida middle class
The high cost of homes in South Florida is helping fuel a middle-class exodus.
With the median price of a home in Broward County at $377,000, for instance, many South Florida residents are taking stock of other quality of life issues like long commutes and the threat of hurricanes and opting out of the region altogether, according to the Miami Herald.
A recent study by the Brookings Institution found that Miami-Dade County had the nation’s fifth-lowest proportion of middle-income neighborhoods, barely ahead of pricier places like New York City and Los Angles. Broward County had the 82nd-lowest proportion and Palm Beach County the 80th.
Although the pace of home sales in South Florida continues to cool, prices remain prohibitively high for many in the middle class. The median South Florida home cost $158,000 in 2001, the Florida Association of Realtors estimated. Today, the median home price in the region is $378,000 — or about 73 percent above the U.S. average. That means a home buyer would have to plunk down $37,800 as a down payment, more than the median annual income of a Miami-Dade household: $33,035 in 2003, the last year data was available from the Census Bureau.