Miami’s office market will shoot up five places this year to become the 13th best office market in the country, according to a National Office Property Index released today by Marcus & Millichap.
The vacancy rate will fall to 16.2 percent this year from 17.1 percent in 2011, as 6,800 new office-using positions are added to the city and, for the first time in two years, there won’t be significant new supply in the city’s office sector. As a result rents are expected to rise 3 percent to $24.86 per square foot. Miami’s international appeal helped it secure a top-15 place on the national list.
While the office market will make modest improvements in the 28th-ranked Fort Lauderdale this year, Marcus & Millichap predicted it would be difficult for the market to improve much more down the line as the city lacks a single sector to spark a turnaround. The addition of 3,000 office-using employees should help absorb 250,000 square feet, which will cut the vacancy rate by 80 basis points – the largest year-over-year drop since 2006 — to 19.3 percent. Rents willl rise 1.9 percent to $20.44 per square foot.
West Palm Beach, on the other hand, fell one place in this year’s list, ranking 35th among U.S. office markets. But the falling rents from 2011 and expanding payrolls will increase demand in the city, pushing the vacacny rate down 130 basis points to 20.2 percent. As a result, this yaer’s rents will actually rise slightly, by 0.6 percent, to $22.40. That’s good news for a market that had negative net absorption of 98,000 square feet last year.
Overall, Marcus & Millichap expects the national metro office vacancy rate average to fall 70 basis points to 16.6 percent and effective rents to rise to $23.13 in 2012 from $22.51. — Adam Fusfeld