South Florida office market cools off in the first half of 2018: report

All three counties reported negative net absorption in the second quarter

Miami /
Jul.July 05, 2018 12:40 PM

Downtown Fort Lauderdale (Credit: iStock)

South Florida’s once-booming office market is slowing down, according to a recent report by JLL.

After numerous consecutive quarters of growth, net absorption went into the red in all three counties as supply surpassed demand in the second quarter.

Broward, Miami-Dade and Palm Beach counties also saw vacancy rates rise, signaling a slowdown in the market.

In Miami-Dade, net absorption was negative 153,700 square feet year-to-date in the second quarter of 2018, down from 167,200 square of positive net absorption in the second quarter of 2017. Vacancy rates rose 1.4 percentage points to 14.2 percent in the second quarter of 2018.

While the report highlighted some bright spots in the market, including delivering new office space at Three MiamiCentral and Canal Park Office, the slowdown was due to an “underperformance” in Class B office space as more tenants moved out of lower quality space in the most recent quarter.

Broward’s office market also cooled down with a year-to-date net absorption of negative 107,000 square feet in the second quarter of 2018, down from a positive 202,070 square feet absorbed in the second quarter of 2017.

Vacancy rates, however, declined in the most recent quarter to 12.7 percent from 13.4 percent in the second quarter of 2017. KEMET Corporation expanded by more than about 45,000 square feet in downtown Fort Lauderdale and Spaces leased 32,000 square feet in Las Olas Square also in downtown Fort Lauderdale.

In addition, rent growth in Broward increased to $31.95 per square foot from $29.52 per square foot. But rent prices are not projected to move higher, according to JLL, as asking rents have hit or surpassed the previous cycle’s peak.

Meanwhile, Palm Beach’s office market activity continued its slowdown due to a lack of Class A office space. No new major new office space is currently under construction, according to the report. Net absorption was negative 243,000 square feet in the second quarter, marking the biggest shift in the market since 2008.

Some of the negative absorption was due to the lack of large tenant move-ins, as well as smaller tenants leaving their buildings or downsizing. Two large move-outs included Shoes for Crews leaving 37,700 square feet at One Clearlake and NTT America moving out of a 56,000-square-foot office at Boca Raton Innovation Campus.


Related Articles

arrow_forward_ios
Make-A-Wish South Florida CEO Norman Wedderburn and 350 Northwest Sixth Street (Getty, Google Maps)
Make-A-Wish pays $8M for Overtown dev site
Make-A-Wish pays $8M for Overtown dev site
Phillips Point office towers with Related’s Stephen Ross (JLL, Getty)
Related Cos. closes on West Palm office towers for $282M
Related Cos. closes on West Palm office towers for $282M
Saeed Amidi and Moishe Mana (Getty, iStock)
Plug and Play to open downtown Miami office
Plug and Play to open downtown Miami office
(iStock)
Empty cubicles: Vacancies up in South Florida office market in Q4
Empty cubicles: Vacancies up in South Florida office market in Q4
Glenn C. Rice and 2700 Aqua Vista Boulevard, Fort Lauderdale (Linkedin, Google Maps)
Pharma exec sells Fort Lauderdale waterfront mansion for nearly $13M
Pharma exec sells Fort Lauderdale waterfront mansion for nearly $13M
(iStock)
South Florida resi sales jump in Q4: Elliman
South Florida resi sales jump in Q4: Elliman
Sagi Shaked and 201 North Pine Island Road (Shaked Law, Google Maps)
Former Plantation fertility clinic sells for $8M
Former Plantation fertility clinic sells for $8M
Michael Cammarata (Linkedin, Neptune Wellness Solutions, iStock)
Cannabis wellness company relocates HQ to South Florida
Cannabis wellness company relocates HQ to South Florida
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...