Class A office rents rise in Q2 across much of South Florida: report

Miami-Dade County was the exception, with asking rents declining 2.7%, year-over-year

West Palm Beach skyline (Credit: Wikipedia)
West Palm Beach skyline (Credit: Wikipedia)

Class A office rents across most of South Florida rose in the second quarter due to a strong economy and new construction, according to a new report by Cushman & Wakefield.

The exception was Miami-Dade County, where asking rents declined 2.7 percent year-over-year to $44.96 per square foot.

But Cushman & Wakefield’s Florida research director Chris Owen said this drop does not appear to be a trend or a result of waning demand from tenants. Instead, Owen said this was a result of some tenants taking higher priced property off the market. 

“We are very bullish,” about Miami’s office market,” Owen said. “The amount of tenant demand is still high.”

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In addition, the county has 582,000 square feet of Class A office space under construction at the end of the second quarter that was 55.0 percent pre-leased, according to the report.

Among all of Florida’s major markets, Palm Beach County leads in rent growth since the last cycle. The county’s Class A office rents at the end of the second quarter were 20.5 percent above peak rents in the last cycle, according to the report.

On a year-over-year basis, asking rents in Palm Beach County rose 2.9 percent to $44.45 per square foot. Palm Beach is predominantly a small office tenant market, “which allows landlords to push rates more aggressively,” the report said. Downtown Boca Raton’s asking rates increased 1.6 percent year-over-year to $37.82 per square foot. In West Palm Beach, the overall asking rate rose by 1.9 percent in 12 months to $56.62 per square foot.

In Broward County, rents increased 1.7 percent year-over-year to $37.79 per square foot at the end of the second quarter. Demand for office space remained strong as vacancy rates for Class A office space decreased to just more than 10 percent. Fort Lauderdale’s central business district remained relatively unchanged year-over-year at $46.25 per square foot, even as overall vacancy dipped 190 basis points to 10.8 percent, according to the report.