Despite high office vacancies, Broward brokers upbeat
Despite the sluggish economy, rising vacancies and an uptick in sublease space from corporate downsizing, real estate pros remain optimistic that the demand for Class A office space in Fort Lauderdale will remain stable this year.
Businesses with a national reach and regional companies with local customers will continue to fuel the demand for office space in Broward County, brokers said.
In the second quarter, Fort Lauderdale had 1.92 million square feet of office space, with a vacancy rate of 14.5 percent and an average asking rent of $20.35 per square foot, according to brokerage CBRE. The city’s Class A space, which consists of 4.35 million square feet, had a 16.2 percent vacancy rate and an average asking rent of $21.24 per square foot.
A factor in the high vacancy rate is the addition of several big new developments, including the 66,917-square-foot Riverbend Corporate Park and 200 Las Olas Circle in downtown Fort Lauderdale, a 17-story office project with 204,000 square feet.
Developer Stiles Corp. continues to court potential tenants to 200 Las Olas Circle, which opened in November. Bank of Florida already occupies 25,000 square feet.
Countywide, Broward had a vacancy rate of 12.6 percent and an average asking rent of $18.29 per square foot in the second quarter, according to CBRE.
Other big Class A projects have added space in Broward County recently, including the 52,424-square-foot Cornerstone Corporate Center V in Plantation and the 63,000-square-foot Huntington Executive Plaza in Miramar.
And more space is in the pipeline for delivery this year, while another 8 million square feet of proposed projects awaits approval. More than 51 percent of that space would be located in the downtown Fort Lauderdale business district.
The subprime mortgage crisis fallout and tighter lending standards will determine if all of the planned projects actually go through, said Rod Loschiavo, senior director of brokerage services for Cushman & Wakefield in Fort Lauderdale.
Already, plans for significant projects are being shelved. Cocker Partners has put plans to break ground on the 447,000 square-foot Atlantic Center on hold indefinitely. The tower, which would be the tallest in Fort Lauderdale’s central business district, was originally supposed to start construction earlier this year.
In Broward, Loschiavo believes the housing bust and the credit crunch could spell opportunity for companies seeking Class A office space in South Florida, making Fort Lauderdale particularly attractive for new or expanding companies.
“South Florida’s housing market has been one of the most impacted in the country,” said Loschiavo. “The benefit to businesses however, is that Fort Lauderdale now has an affordable housing market with ample supply for relocated employees to choose from.”
Dan Lindblade, Greater Fort Lauderdale Chamber of Commerce’s president and CEO, is betting state-of-the-art education facilities and available office space and housing will attract various companies to the city.
He said the biggest challenge is recruiting a workforce that can afford to live in close proximity to the job market.
Three tech firms announced in June that they plan to open offices in Broward County. Cell phone manufacturer Foxconn International Holdings and Communications, information systems firm General Dynamics C4 Systems and BlackBerry maker Research in Motion will create more than 400 jobs.