Two buildings, 1450 Brickell and Wells Fargo Financial Center, added more than 1.3 million square feet to the Miami downtown office market last year — hiking up the vacancy rate and leaving many office towers in the position of “feeder buildings” as tenants headed to newer space in a buyer’s market.
Now, as the two giants begin to fill up, downtown Miami’s existing buildings are beginning do what they can to compete with them — largely by holding on to their own tenants.
Earlier this month, the Brickell Bay Office Tower announced that it had closed on 70,000 square feet in leases last year, with 13 new leases and six renewals.
“For most buildings [in the area], 2010 was a very tough year,” said Christian Driussi, vice president and general manager at Brickell Bay Office Tower. “Renewals were one of the main reasons we were able to achieve [the new leases]. Most of the tenants had been with us for over 10 years and didn’t want to move.”
Driussi said Brickell Bay had taken a number of steps to upgrade the building, including new hallways, new elevators and other cost investments to improve the interior to keep up with newer properties.
But for most of such existing buildings, renewals, along with internal expansion, have been key to their business.
“The Brickell market had an interesting couple-year history,” said Jack Lowell, vice president at Flagler Real Estate Services. “What people have done is be very proactive on renewals; there has not been much success on the part of the buildings that have empty space in attracting new tenancy.”
According to Lowell, buildings like the Four Seasons, Sabadell Financial Center and 1221 Brickell have been able to retain a number of their tenants. He said 1441 Brickell and the Four Seasons building are effectively full, while the Espirito Santo building is at less than 95 percent occupancy and the Sabadell Financial Center at 98.5 percent occupancy.
The Brickell submarket as a whole has a vacancy rate of around 20 percent, although that does not include 600 Brickell Avenue, which is in a slow construction process, Lowell said.
Other buildings have been successful in adding space for renewing tenants.
“What you have are buildings that have good tenancy, like 701 Brickell, that have seen some internal expansion of tenancy,” Lowell said. “When those tenants have gone to the market to move, it’s been more cost effective to stay put.”
Cushman and Wakefield’s Diana Parker recently took over the exclusive leasing agency at Sabadell.