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Miami office rents increased, I-sales fell in 2017: report
More office space was absorbed last year compared to 2016
Despite increases in rent and absorption, sales volume fell dramatically for Miami-Dade’s office market in 2017, according to a report from Avison Young.
Sales volume dropped 58 percent from the previous year to more than $816 million. In 2016, investment sales totaled more than $2.3 billion thanks to the $516 million trade of the Southeast Financial Center and the $220 million sale of the Miami Tower, both Class A office towers in downtown Miami. The biggest investment deals last year were the $155 million sale of 1221 Brickell and the $96 million trade of Park Square at Doral.
In 2017, the average asking rent for full-service, Class A space in Miami-Dade County was $45.10 per square foot, up 9 percent from $41.26 per square foot in 2016, the report shows.
Net absorption was negative along the Biscayne corridor, in Miami Beach and in South Dade, but overall vacancy improved slightly, falling to 10.10 percent from nearly 11 percent in 2016, as about 310,000 square feet of space was absorbed in 2017.
The 115,000-square-foot renewal and expansion of Amadeus North America at One Park Square at Doral in the third quarter topped the year’s list of biggest leases. It was followed by the renewal of Merrill Lynch’s nearly 106,000-square-foot lease at the Bank of America Tower in downtown Miami in the fourth quarter. And the third largest deal was a short-term lease for FEMA in Doral, according to the report. The Federal Emergency Management Agency took the 94,000-square-foot building at 2001 Northwest 107th Avenue in Doral to service the Florida Keys post-Irma.
Brightline is also expected to give the tri-county region a boost, especially its office markets. Once the three stations in West Palm Beach, Fort Lauderdale and downtown Miami are up and running, proponents hope tenants and residents will move to the urban cores. Brightline’s mixed-use MiamiCentral station will be adding 300,000 square feet of Class A office space to the area.
Tighter submarkets like Coconut Grove may also see rents drop as new office buildings are delivered, although that may extend into 2019 and 2020. Last year, the Grove’s office market reported a 96 percent occupancy with 21,000 square feet absorbed. Less than 500 square feet of the vacant 42,000 square feet was Class A space, according to the report. About 75,000 square feet of Class A space is now under construction in the Grove.