Palm Beach and Broward counties’ office markets reported growing rents and declining vacancies in the first quarter of this year, while the office market in Miami-Dade showed marginally higher vacancies, according to recently released reports from JLL.
In Miami, the overall vacancy rate rose slightly to 13.5 percent in the first quarter of this year, compared to 13.2 percent the same period last year. Rents also increased to $37.77 per square foot from $36.99 per square foot in 2017. Rent growth will be capped for properties north of the Miami River due to high vacancies in downtown Miami, according to the report.
During the first quarter, net absorption totaled 40,355 square feet, marking only 0.1 percent of the total office stock in Miami-Dade County. About 123,000 square feet of office space was added with another 690,000 square feet that are under construction, according to the report. Office projects that will be completed this year include MiamiCentral, which will be delivered in June, Sunset Office Center in Coral Gables, Giralda Place in Coral Gables, Mary Street in Coconut Grove and Cube Wynwyd in Wynwood.
Overall vacancy, which includes sublet space, dropped to 12.5 percent in the first quarter compared to 14.4 percent a year ago in Broward County, according to JLL. The average rental rate rose to $31.45 per square foot, up from $28.75.
Newly signed leases in Broward include Spaces, a co-working concept from IWG that signed a 32,000-square-foot lease at Las Olas Square, and KEMET Corporation, which is relocating to 1 East Broward and expanding by more than 45,000 square feet.
Older buildouts are also falling out of favor. The penthouse at 450 East Las Olas has been vacant since Huizenga Holdings vacated the space a year ago. JLL said tenants are increasingly seeking concession packages, specifically tenant improvement expenses.
Overall rents rose slightly in Palm Beach County – up 1.5 percent to $31.57 per square foot from $31.07 per square foot a year ago. The vacancy rate also fell to 14.7 percent from 15.6 percent.
In downtown West Palm Beach, where Class A trophy buildings are now more than 95 percent occupied, the overall average asking rent in the fourth quarter increased to $48.10 per square foot, nearly 10 percent higher than the $43.89 per-foot rent in the first quarter of last year.
JLL said suburban markets like Boca Raton North are stronger than the urban core thanks to large relocations and expansions. Shoes for Crews, for example, took nearly 35,000 square feet at the Boca Raton Innovation Campus, relocating from One Clearlake Center in West Palm Beach. Crocker Partners and Rialto Capital Management recently paid $179.3 million for the Boca Raton Innovation Campus, which was the biggest office sale in the tri-county region since 2016.