Some positive signs for SF office market
But rents remain down
South Florida’s troubled commercial market is showing signs of new life, with the vacancy rate dropping slightly in the tri-county area despite two huge new office towers in Miami.
Miami saw more than 1.3 million square feet added to the downtown Brickell corridor over the summer with 1450 Brickell and the newly named Wells Fargo Financial Center (formerly Met 2 Financial Center).
Miami-Dade County’s vacancy rate fell to 18.1 percent at the end of the third quarter from 18.4 percent at the end of the second quarter, according to a report from Cushman & Wakefield.
But rental rates are still struggling in the region, with each county showing lower prices across building types. Miami-Dade County has the region’s highest office rents, with an average rate of $29.77 per square foot, down from $30.93 in the second quarter.
The market was led by the year’s biggest office lease, when travel technology company Amadeus signed a lease to be the anchor tenant at One Park Square in Doral. The firm signed a deal for 105,000 square feet at the project, which is a total of 281,623 square feet.
In the same area, CB Richard Ellis leased 21,142 square feet at 999 Brickell Avenue, a Class B building totaling around 100,000 square feet, with new tenants including Geico.
Law firm Bilzin Sumberg, the anchor tenant at 1450 Brickell, officially relocated to 80,000 square feet of space at 1450 Brickell on Oct. 11.
“I think the office market has been pretty hot, actually,” said Suzanne Amaducci-Adams, who handles commercial real estate transactions as a partner at Bilzin Sumberg. ” I think there’s been a lot of activity, especially around 1450 Brickell. There has been a bunch of leasing activity that we’ve seen, both renewals and also tenants that want to move into the newer buildings.”
Another law firm, Miami-based Ratzan & Rubio, announced this week that it had also relocated to 1450 Brickell, after signing a seven-year lease for 63,030 square feet of space earlier in the year.
Palm Beach County, however, showed a slight increase in vacancy, bumping up to 24.9 percent, though that number was still below the rate of 25.3 percent in the same period in 2009. Office rents were down to an overall number of $27.29 in Palm Beach County, falling from $27.76 in the second quarter of this year.
Jason Sundook, a principal at NAI Merin Hunter Codman in West Palm Beach, said there was still not a lot of expansion, but more landlords were beginning to wake up to the conditions of the market.
“There are those that had not come to the realization that the market was poor, and were not saying yes to deals, that are now starting to say yes, and not pushing back so hard. I would say it’s still a tenants’ market, although it’s much closer to equilibrium than we were seeing about six or 12 months ago,” he said.
Broward County’s office market boasted the lowest vacancy rate in the tri-county area, at 17.7 percent, down from 18.7 percent in the second quarter. The number was identical to its vacancy rate in the third quarter of 2009.