Empty cubicles: Vacancies up in South Florida office market in Q4

Office vacancies rose across South Florida in the fourth quarter, and Broward and Palm Beach counties experienced negative net absorption of space, according to a newly released report from Colliers International.

Still, the region saw some significant deals close at the end of the year. And average asking rents in Broward and Miami-Dade counties rose, despite market uncertainty and new deliveries. With more corporate relocations to the area, plenty of newly constructed inventory could become occupied in the long run, according to the report.

Here’s a breakdown:

Miami-Dade County

Miami-Dade had an 11.3 percent vacancy rate in the fourth quarter, the lowest in the tri-county region. That’s up from 11 percent in the third quarter of 2020, and up from the 9.6 percent in the fourth quarter of 2019.

The county’s overall average asking rent was the highest in the region, at $42.16, up from $41.23 in the third quarter of 2020, and up from $38.93 for the fourth quarter of 2019.

The market saw 240,000 square feet absorbed during the quarter, the first quarter of positive net absorption since the pandemic began in March. The county saw delivery of 655,000 square feet of new construction — 291,000 square feet of that from the North Tower of The Plaza Coral Gables.

Miami-Dade has another 3.6 million square feet of office space under construction.

Big deals during the quarter included Banesco USA paying $11.95 million for a new headquarters in Doral, and Coral Gables property owner and broker Bill Kerdyk Jr. selling a downtown office building on Alhambra Circle in Coral Gables for $5.3 million.

Major leases signed during the quarter included Blackstone Group’s 41,000 square feet in downtown Miami, and Gastro Health’s 27,000 square feet in Kendall.

Broward County

Broward had the highest vacancy rate in the region at 12.1 percent, up from 11.2 percent in the third quarter of 2020, and up from 9.7 percent in the fourth quarter of 2019.

The county’s overall asking rent was $34.05 a square foot, up from $32.72 in the third quarter of 2020, and up from $31.40 in the fourth quarter of 2019.

The market saw negative absorption of 208,000 square feet, with 417,000 square feet of new construction delivered. That is the most new office supply since 2017 — a difficult amount to absorb, given that 2020 had only 59 percent of 2019’s leasing activity.

About 385,000 of that new office space supply came from the newly completed Main Las Olas in Fort Lauderdale. Broward has 1.4 million square feet of office space under construction.

All of the largest Broward leases of the quarter were renewals. Some of the larger office sales included Starwood Capital selling several buildings within a Plantation office park for $78 million, and a Miami real estate investment and asset management firm buying the Miramar headquarters of an information technology company for $22.6 million.

Palm Beach County

Palm Beach County had an 11.9 percent vacancy rate during the quarter, up from 11.6 percent in the third quarter of 2020, and up from 10.9 percent in the fourth quarter of 2019.

The county saw negative net absorption of 153,000 square feet. It had 11,400 square feet of new office space built, the least amount of new inventory in the tri-county area. Palm Beach still has 1.2 million square feet of office space under construction.

The county saw the lowest average asking rent of $33.01 a square foot, down from $34.50 in the third quarter of 2020, and up from $32.86 in the fourth quarter of 2019.

Major leases signed included the relocation of Elliott Management, the hedge fund founded by Paul Singer, to West Palm Beach.

Other large leases inked in the quarter included Baptist Health South Florida taking 38,000 square feet in Boca Raton; Incapital taking 18,000 square feet in Delray Beach; and Meisner Electric taking 15,000 square feet in Boca Raton.

Major deals during the quarter included local real estate investor Allen Chelminsky buying a pair of office buildings near Lake Worth Beach for $10.9 million.