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
RK Centers’ Raanan Katz and Aimco's Wes Powell with the SW corner of Northeast Fifth Avenue and Northeast Ninth Street (LinkedIn, Google Maps)
Aimco completes $100M Flagler Village dev assemblage with latest $16M deal
Aimco completes $100M Flagler Village dev assemblage with latest $16M deal
Rendering of 830 Brickell office tower; Cushman & Wakefield's Brian Gale, JLL's Manny De Zárraga, Avison Young's Donna Abood, Dwntwn Realty Advisors' Tony Arellano and Stephen Rutchik. (Credit: OKO Group and Cain International, JLL, CW, Dwntwn Realty Advisors, Cushman & Wakefield, Avison Young, Getty, 830 Brickell)
Meet the commercial brokers making bank in Miami
Meet the commercial brokers making bank in Miami
Brick & Timber's Jesse Feldman and Glenn Gilmore, Tricera Capital's Ben Mandell, and Lndmrk Development's Alex Karakhanian with Cube Wynwd (Brick & Timber, LinkedIn, Tricera, Lndmrk Development, Getty Images)
Brick & Timber to buy Cube Wynwd office building for $60M
Brick & Timber to buy Cube Wynwd office building for $60M
Ken Griffin in the center, with Brickell (right) and Palm Beach (below)
Ken Griffin’s Citadel comes to Brickell — and supercharges the market
Ken Griffin’s Citadel comes to Brickell — and supercharges the market
Brand Atlantic Real Estate Partners managing partners Andrew Dance and Adam Demark, and renderings of the two buildings at 300 Banyan Boulevard and 111 Olive Avenue (Brand Atlantic Real Estate, Getty)
JV scores $87M construction loan for West Palm Beach office projects
JV scores $87M construction loan for West Palm Beach office projects
Keiser University CEO Arthur Keiser in front of 1900 West Commercial Boulevard and 1500 Northwest 49th Street in Fort Lauderdale (Keiser University, Keenan Development Group, Getty Images)
Keiser University sells pair of Fort Lauderdale office properties for $58M
Keiser University sells pair of Fort Lauderdale office properties for $58M
From left: MHCommercial Real Estate Fund II's Jordan Paul, Dung Lam and Neil Merin along with the Yamato Office Center in Boca Raton and the Bridge Point Powerline Road in Pompano Beach (NAI Global, LoopNet, Getty Images)
Lease roundup: FirstService leases in Boca, PlantLab in Pompano Beach
Lease roundup: FirstService leases in Boca, PlantLab in Pompano Beach
From left: Jorge Mas, Swire’s Kieran Bowers, David Beckham, and Stephen Ross
Beckham’s soccer stadium; Swire, Ross’ Brickell City Centre tower rezonings get preliminary commission OK
Beckham’s soccer stadium; Swire, Ross’ Brickell City Centre tower rezonings get preliminary commission OK
arrow_forward_ios

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

Loading...