Miami-Dade office vacancies plateaued in 2021, while asking rents kept rising

Office market ended the year with a 16% vacancy rate, the same as Q4 2020

Gateway at Wynwood and Tigertail at Coconut Grove (Google Maps)
Gateway at Wynwood and Tigertail at Coconut Grove (Google Maps)

Office landlords in Miami-Dade County continued to push up rents in 2021, even as the market experienced double-digit vacancies, according to a recently released report.

In the fourth quarter, the overall vacancy rate hit 16 percent, the same as the previous year’s fourth quarter, the report by Cushman & Wakefield shows. The rate represents a slight decrease from 2021’s third quarter, when the rate hit 17 percent.

From the start of the pandemic into early 2021, Miami-Dade’s office market experienced a rising vacancy rate for six consecutive quarters, the report states.

Yet, landlords in Miami-Dade’s office market drove up asking rents to an average of $45.04 a square foot, compared to $41.48 per square foot during the fourth quarter of 2020, according to the report. In the third quarter of 2021, average asking rent was $43.60.

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Heightened demand from out-of-state tenants into new office projects, such as Gateway at Wynwood and 2850 Tigertail, is slowly chipping away at the double-digit vacancy rate, the report shows. New leasing activity totaled more than 2.7 million square feet last year, representing a 115 percent increase compared to 2020, according to the report.

In 2021, health company Blue Legacy Ventures leased the 10-story medical and wellness center at the Legacy Hotel & Residences planned for Miami Worldcenter. The 120,000-square-foot lease is the biggest ever in downtown Miami, and also represented the second largest lease signed in 2021 in South Florida’s office market, after online pet retailer Chewy’s 221,597-square-foot lease for its national headquarters in Plantation.

Developed by R&B Realty Group, Gateway at Wynwood is a 12-story office building offering 195,000 square feet of Class A office space and nearly 25,900 square feet of ground-floor retail. One of the first major tenants, biotech company Veru, signed an eight-year lease for a new 12,155-square-foot global headquarters.

2850 Tigertail is an eight-story, fully-leased Class A office building in Coconut Grove, developed by the Related Group and Terra. Related relocated its corporate headquarters into the top two floors, and D1 Capital Partners, a New York-based hedge fund led by Daniel Sundheim, signed a 10-year lease for a 25,000-square-foot office space at 2850 Tigertail.

Landlords of such new office projects are also driving up asking rents, especially in Brickell, downtown Miami, Wynwood, Coral Gables and Miami Beach, according to Cushman & Wakefield. Class A rents climbed 8 percent to $51.02 per square foot during the last 12 months. In downtown Miami and Brickell, the average asking rent jumped to $49.70 a square foot, a nearly 12 percent increase from 2020.