While Miami’s top office markets are maintaining their strength, a new report from a commercial association highlights the airport submarket as the weakest link.
Overall, the office market experienced a second straight quarter of slow leasing activity, according to a report by CIASF.
In the first three months of this year, there were 175 transactions with a median of 2,000 square feet compared to 220 transactions of the same size in the first quarter of 2015. The slowdown is primarily concentrated in the Miami airport area where only 30 transactions with a median of 1,500 square feet marked the slowest first quarter start in that submarket in more than a decade, the report shows.
However, the quiet leasing activity will have a minimal impact on rents and deal terms as the slowdown is tied to the Miami airport submarket’s supply constraints, says Noël Steinfeld, capital markets group executive vice president for Jones Lang LaSalle, which prepared the report for CIASF, also known as the Commercial Industrial Association of South Florida.
“Last year’s numbers were pumped up by some very large deals that are not the norm,” Steinfeld added. “We are still seeing a healthy amount of tenant activity and healthy rental rate growth, particularly in the class A sector.”
In Miami’s central business district, Brickell is experiencing a 13.5 percent vacancy rate while downtown Miami has a vacancy rate of 18 percent. According to the report, average rent in downtown is $38 a square foot compared to $42 a square foot in Brickell.
“There are some big blocks of space available in downtown, which is good for attracting clients,” Steinfeld said. “Tenants should look at the vacancy rate in downtown as an opportunity to get a better rate.”
In suburban Miami-Dade, the submarkets that are doing extremely well are Aventura, Coral Gables and Doral, where vacancy rates are at 4 percent, 10.6 percent and 10.4 percent, respectively. “Those submarkets are extremely strong,” she said. “There has been quite a bit of vacancy in the Kendall and Miami Lakes submarkets. But those are outliers. And as the market continues to firm up, I think we will see those areas tighten as well.”