Miami’s office market is picking up after a slow first quarter, according to a new report from commercial brokerage JLL.
The Q2 2016 Office Insight report said that office leasing has increased from the first quarter, but that the market is still “subdued” compared to previous cycles. Historically, the second quarters of 2011 through 2015 averaged 12.5 percent more deal activity and 70 percent more square footage leased, according to the report.
The second quarter of this year saw 200 leases signed, averaging 2,000 square feet each, up from 150 leases of the same size in the first quarter, according to JLL’s report.
Miami’s Central Business District and Miami Beach saw greater demand than supply during the second quarter, unlike the rest of Miami-Dade’s office markets. Vacancy in the CBD, a market with nearly 15 million square feet of office space in downtown Miami and Brickell, was at 18.2 percent, up from 17.1 percent last quarter. Aventura, with about 1 million square feet of office space, had the lowest vacancy rate at 4 percent.
“Downtown has more volatility and moving parts over the next two years,” Morrison told The Real Deal, citing the now under-construction All Aboard Florida. In total, the mixed-use project aims to add 280,000 square feet of office space to downtown Miami.
Overall, the vacancy rate in the second quarter averaged 13.5 percent in Miami-Dade County, which marks the first increase since the recession when it peaked at 20.7 percent in 2010. Last year, the office market recorded a 12.3 percent vacancy rate.
Out of the 772,910 square feet of new office space that is under construction in the county, more than 26.4 percent is preleased, according to the report.
Morrison said that large, outstanding leases are more important to look at. “A lot of what happens in the next six months will be indicative of the next two years,” he told TRD. That means lease renewals, companies relocating and downsizing. Morrison declined to provide specific tenants.
Landlords, meanwhile, are confident. Rents have steadily increased, up 1.6 percent from the first quarter to now. Since last year, rents have increased across the county by 5.1 percent to $36.47 a foot, the report shows.
Brickell saw the highest rents, averaging $44.09 per square foot in the second quarter.
“We don’t see any indication of that slowing down,” Morrison told TRD.
Here’s a breakdown from the report:
|Brickell||6.8 million square feet||33,406 square feet||15.3%||$44.09|
|Downtown||8 million square feet||11,378 square feet||20.6%||$38.81|
|CBD||14.8 million square feet||44,784 square feet||18.2%||$40.61|
|Aventura/North Miami||1 million square feet||-4,798 square feet||4.3%||$44.96|
|Coconut Grove||900,000 square feet||2,487 square feet||9.9%||$33.64|
|Coral Gables||6 million square feet||15,030 square feet||10.2%||$38.23|
|Kendall/Dadeland||3 million square feet||-32,071 square feet||13.5%||$31.45|
|Miami Airport||9 million square feet||34,340 square feet||9.4%||$28.68|
|Miami Beach||2 million square feet||33,566 square feet||7.6%||$39.10|
|Miami Lakes||900,000 square feet||26,966 square feet||24.8%||$23.56|
|All suburbs||23 million square feet||75,520 square feet||10.4%||$32.57|
|Miami-Dade County||38 million square feet||120,304 square feet||13.5%||$36.47|