South Florida office leasing slows, rents rise in first quarter

UPDATED, April 27, 5:15 p.m.

Office leasing activity fell across South Florida in the first quarter, a recent report shows. 

Landlords experienced a drop in newly signed leases in Miami-Dade and Palm Beach counties, compared to the same period of last year, while new tenants in Broward wanted smaller spaces, according to Avison Young. 

Despite the softening market, office property owners continued to raise asking rents by 14 percent to 22 percent, year-over-year, in the tri-county region. 

Miami-Dade County

New office tenants signed 382 leases in Miami-Dade County in the first quarter, a 28.9 percent decline compared to 492 leases during the same period of last year, Avison Young’s report shows. Miami-Dade’s vacancy rate climbed to 18.2 percent, compared to 16.5 percent, year-over-year. Vacancies could continue rising with roughly 1 million square feet of new office space slated for completion this year, Avison Young found. 

The asking rent rose 22 percent to $57.45 a square foot in the first quarter, compared to $46.92 a square foot during the same period of last year, the report shows. 

The first quarter’s top sale was Bridge Industrial’s $41.1 million acquisition of the former Ryder headquarters at 11690 Northwest 105th Street in unincorporated Miami-Dade. Kaseya signed the biggest lease of the first quarter. The tech company is taking 101,000 square feet in the Wells Fargo Center at 333 Southeast Second Avenue in Miami.

Broward County

New tenants leased an average of 2,100 square feet in Broward County during the first quarter, shrinking the average size of a new lease by 1,700 square feet, compared to the same period of last year. Tenants are seeking smaller spaces to save costs and formalize hybrid and remote work models, Avison Young found. The vacancy rate dipped to 16.8 percent in the first quarter, compared to 17.8 percent during the same period of last year.

The asking rent rose to $43.28 a square foot, about a 20 percent increase compared to $37.21 a square foot during the same period of last year, according to Avison Young. 

Brookdale Group’s $37.9 million purchase of the Cornerstone Corporate Center at 1200 South Pines Island Road in Plantation represented the biggest deal of the first quarter in Broward. And the Weiner Museum of Decorative Arts signed the largest lease. The museum is taking 29,000 square feet at 3250 North 29tyh Avenue in Hollywood. 

Palm Beach County

Office leasing activity weakened in the first quarter in Palm Beach County after several quarters of strong activity, the report states. Leasing volume dropped by nearly 38 percent, year-over-year. Still, the vacancy rate slid to 11.1 percent in the first quarter, compared to 12.8 percent during the same period of last year, Avison Young found. A new wave of office supply, including the expected completion of Jeff Greene’s One West Palm in West Palm Beach, will likely push vacancy rates higher, the report states. 

The asking rent in the first quarter rose to $43.28 a square foot, compared to $37.21 a square foot during the same period of last year. 

Palm Beach County’s biggest office deal was the $104 million sale of the Office Depot headquarters in Boca Raton to a joint venture between Pebb Enterprises and BH Group. Telecommunications company Vertical Bridge signed the largest lease of the quarter. The firm is leasing 38,000 square feet at Sundy Village, at 22 West Atlantic Avenue in Delray Beach.