Miami-Dade and Palm Beach office markets riding high, while Broward flies at low altitude: report
Broward is poised for rebound in the next quarter, with demand from tenants priced out of Miami-Dade and Palm Beach, JLL report shows
Office markets in Miami-Dade and Palm Beach counties outperformed Broward in the first quarter, according to a recently released report.
While rents and demand continued climbing to the north and south, Broward County slowed to a crawl, JLL report’s states. In Miami-Dade, average asking rents grew for the seventh straight quarter, up 10.2 percent in the first quarter, year-over-year. Prices shot up amid tightening supply and robust demand driven by strong growth in Brickell and Miami Beach, JLL found.
In Palm Beach County, demand is beginning to exceed supply in the urban submarket, which includes downtown West Palm Beach. Rents rose by 26.5 percent in the first quarter, compared to the same period of last year, the report states.
New-to-market finance firms and technology companies scouting spaces in Miami’s Brickell and Wynwood fueled leasing and touring activity, JLL found. The average asking rents in both neighborhoods hit $69.62 a square foot and $67.37 a square foot during the first quarter, respectively. Brickell had a total vacancy rate of 10 percent, while Wynwood had a 41 percent vacancy rate in the latest quarter.
Miami-Dade, overall, had an average asking rent of $48.66 per square foot, and a vacancy rate of 18.8 percent in the most recent quarter, the report states.
Mastercard’s renewal of 53,700 square feet across three floors at 801 Brickell in Miami was the largest lease of the first quarter. Lennar’s relocation to 156,000 square feet at 5505 Blue Lagoon Drive in Miami was the quarter’s largest move-in. Lennar more than doubled its office space from its previous headquarters at Quattro Corporate Center, JLL said. Unique Vacations also took three floors at 5505 Blue Lagoon Drive, signing a deal for 53,100 square feet.
Tepid demand and rising vacancies, created by new office projects that poached tenants from other properties, softened Broward’s office market, especially in commercial business districts like downtown Fort Lauderdale, JLL found. For instance, The Main Las Olas office tower is nearly leased up, but acquired most of its tenants from other trophy office buildings, JLL said. Downtown Fort Lauderdale’s total vacancy hit 25 percent in the first quarter, with the average asking rent at $47.61 a square foot.
Northwest Broward experienced a 14 percent rent growth, spurred by new tenant interest in Coral Springs and Sunrise, JLL said. Healthcare technology company Connexion Point took 25,000 square feet at 1601 Sawgrass Centre, and truck driver recruiting company TransForce signed a 10,798-square-foot lease at Sawgrass Court. Both office properties are in Sunrise.
In the most recent quarter, the vacancy rate reached 25.9 percent in northwest Broward, and the average asking rent was $31.88 a square foot. Overall’s Broward vacancy rate was 20.4 percent, and the average asking rent hit $37.72 a square foot in the first quarter, JLL found.
Broward could bounce back in the next quarter as rising rents in Miami-Dade and Palm Beach counties will push tenants seeking better rates to Fort Lauderdale and surrounding cities, the report states.
Palm Beach County
Due to surging demand, construction of new office buildings will likely begin soon, led by Stephen Ross’ New York-based Related Companies, which has entitlements to build upwards of 1.3 million square feet of new offices at Rosemary Square in West Palm Beach, JLL said.
Asking rents are up in nearly every building in downtown West Palm Beach, due to extremely limited space availability, the report states. Even though developer Jeff Greene’s nearly completed One West Palm office tower’s 210,000 square feet remains fully available, the developer jacked up the asking rent from $25 a square foot to $75 a square foot, JLL said. Ross’ One Flagler, slated for completion next year, is asking $120 a square foot plus an additional $27.50 for operating expenses, the report shows.
The vacancy rate in Palm Beach County’s commercial business district, which includes downtown West Palm Beach, hit 14.7 percent in the most recent quarter, while the average asking rent was $101.61 a square foot. The county’s overall vacancy rate was 13.5 percent, and the average asking rent was $53.47 in the first quarter, the report states.