The demand for office space throughout Miami-Dade County is higher than it’s been for the last decade.
According to the third quarter 2019 Office Insight report by the real estate services firm JLL, Miami-Dade had 1,816,666 square feet of Class A and Class B office space under construction in the third quarter of 2019.
That’s the biggest boom in office construction since 2009, when the market had 1.9 million square feet of projects in the pipeline in Brickell and downtown, as well as another 460,000 square feet throughout the rest of Miami-Dade.
“The growth spurt is due to swelling population numbers, job growth and the popularity of emerging neighborhoods”, said JLL Managing Director Matthew Cheezem. “You’re seeing more supply on the market because developers and investors are seeing a need.”
According to JLL, there are 1,785,666 square feet of Class A office space under development in Coral Gables, Coconut Grove, Aventura, Brickell, Wynwood and the Design District. Another 31,000 square feet of Class B office space is coming to Coconut Grove.
830 Brickell and the Plaza Coral Gables South Tower both broke ground in the third quarter, adding more than 716,000 square feet of under-construction office space. The Brickell project will add 552,000 square feet of Class A office space. Its largest tenant thus far is WeWork, which pre-leased 146,000 square feet, or 26.5% of the building’s total office space.
“In downtown and Brickell in 2011, you had almost two million square feet of available office space. The difference now is that development is spread out these days,” said Cheezem.
Miami-Dade County closed the third quarter with 55,067 square feet of positive absorption, which means more space was leased than vacated. The suburbs — which the study defines as any area outside the Central Business District (CBD) — had 56,000 square feet of positive absorption, due to delivered projects such as Optimum Onyx Tower in Aventura, with 44,293 square feet.
The CBD fared poorly with 1,078 square feet of negative absorption, which means there was more supply than demand. The JLL report attributes the surplus to the consolidation by SunTrust of its office spaces in the second through fourth floors at 777 Brickell to a smaller footprint in the building’s ninth floor.
The growing popularity of office markets outside the traditionally dominant downtown and Brickell locales is luring tenants to either relocate within the neighborhood or leave to up-and-coming office markets such as Wynwood.
Rental rates throughout Miami-Dade climbed by 1.1% over the same period year-over-year to an average asking rent of $41.11 a square foot. The highest rents for Class A office spaces were in Coconut Grove ($55.78 per square foot), Brickell ($55.36) and Aventura ($54.85). The highest asking rents for Class B office spaces were in Miami Beach ($40.78 per square foot), Brickell ($40.11) and Coconut Grove ($39.48). Miami Lakes had the lowest asking rents for all office types, including Class A ($27.62 per square foot) and Class B ($24.77).
Total office space vacancy throughout Miami-Dade dropped year-over-year from 16.3% in 2018 to 15.5% in 2019. JLL predicts the strong absorption to continue for the rest of 2019. But projections for the additional 1.8 million square feet of office space in the pipeline are cloudier.
“The million-dollar question is ‘Will this new space be filled?’” said Cheezem. “How does this play out? It’s anybody’s bet.”
The Miami-Dade office market had 1,816,666 square feet of Class A and Class B office space under construction in the third quarter of 2019. That’s the highest amount of office development in the pipeline since 2009 when the market had 1.9 million square feet of projects in the works in Brickell and downtown as well as another 460,000 square feet in the suburbs, according to the third quarter 2019 Office Insight report by JLL.
Source: Miami Herald