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.”
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.