In South Florida, the median rent for office space rose in the second quarter, even as vacancies hovered above 10 percent, according to a new report.
The office market was propped up by the high-octane performance of submarkets in Miami’s Brickell neighborhood and downtown West Palm Beach, where a concentration of new trophy buildings got the most attention from out-of-state corporate tenants, the second quarter report by JLL shows.
Leading the way is billionaire Miami Dolphins owner Steve Ross, who just launched a new firm, Related Ross, that now controls his vast commercial real estate holdings in South Florida. That includes a collection of office projects that makes him the largest office property owner in downtown West Palm Beach. Ross’ One Flagler project, a 25-story office tower expected to be completed this year, is fetching rents of $120 per square foot to $140 a per square foot. The planned building is also 75 percent leased.
Miami-Dade County
In the second quarter, the median asking rent rose to $63.49 per square foot in Miami-Dade County, up 12.7 percent compared to $56.34 per square foot during the same period of last year, the JLL report shows. The vacancy rate dropped to 15.8 percent in the second quarter, compared to 16.7 percent during the same period of last year.
Developers are currently building 2.1 million square feet of new office space, including 830 Brickell, a 55-story office skyscraper under construction by Vlad Doronin’s Oko Group and Cain International, led by Jonathan Goldstein, the report states.
Last month, the building became fully pre-leased when billionaire hedge fund manager Ken Griffin’s Citadel signed up for 35,000 square feet on the 14th and 15th floors. Citadel also previously leased 95,000 square feet at 830 Brickell.
Broward County
While lagging behind Miami-Dade and Palm Beach counties in terms of demand, the Broward County office market is holding its own. The median asking rent in Broward rose by 4.6 percent in the second quarter to $44.07 per square foot, compared to $39.20 per square foot during the same period of last year, the report states. The vacancy rate dipped slightly to 16.1 percent in the second quarter, compared to 16.9 percent during the same period of last year.
Roughly 354,000 square feet of new office space was under construction in Broward County during the second quarter, compared to 75,000 square feet during the same period of last year, the report shows.
Notable tenant signings in Broward County included Jazwares, a toys and collectibles company, which leased a 132,638-square-foot office at South Pointe I, an office complex in Plantation.
Palm Beach County
In the second quarter, the median asking rent in Palm Beach County rose to $55.18 a square foot, representing a 4.1 percent increase compared to $52.02 a square foot in the same period of last year, the report shows. The vacancy rate rose to 12.8 percent in the second quarter, compared to 11.2 percent during the same period of last year.
While office space in downtown West Palm Beach and Palm Beach is in high demand, the rest of the county is dragging down the overall Palm Beach market, the report shows. For instance, the Boca Raton submarket recorded a high number of move-outs and leasing activity was down in the second quarter. But trophy assets like One Flagler are performing better with a vacancy rate of 6.5 percent, the report states.
Stephen Ross’ other office properties in West Palm Beach are also faring well. In May, six new tenants, including JPMorgan Chase, signed leases for space at Ross’ 360 Rosemary, a 20-story office tower completed in 2021.