Constraints on development
and available land are making
South Florida markets tighter
than others across the country
buildings in Plantation, the West Broward submarket that is currently enjoying the county’s strongest vacancy numbers.
Vacancy has since grown to 11% as a result of some big blocks
of office space returning to market, says Deanna Lobinsky, first
VP of CB Richard Ellis in Ft. Lauderdale. These include 150,000
sf given back by Kos Pharmaceuticals Inc. in Weston and 90,000
sf by Citigroup at Sawgrass Pointe.
“We had gotten a little spoiled from 2005 to the end of 2007
having single-digit numbers for a long period of time, but relative to other markets across the country, 11% is still very good,”
Lobinsky says.
Downtown Ft. Lauderdale has the highest demand for office
space needs in Broward County, while the Cypress Creek and
West Broward submarkets are also likely to benefit from large
tenants seeking big blocks of space, says Lobinsky. The county
as a whole has 2. 7 million sf of space available in all classes, and
the length of time it takes for these blocks of space to be absorbed
will be a determining factor in what the future holds.
“We’ll either go back to a landlord market like in 2006, or the
tenants having the favor in terms of negotiating leases,” she says.
“Right now we’re balanced. Concessions are still minimal.”
Quoted class A triple-net rents are $24 to $25 per sf on popular Las Olas Boulevard and $18 to $19 in the balance of Downtown Ft. Lauderdale. Weston, a smaller yet desirable submarket
where many key decision-makers also live, enjoys prices of $20
to $22 per sf.
“Rental rates are all healthy [in Broward County],” says Lobinsky, “but my opinion is that the increase rental rate growth has
slowed down and stabilized.”
Office rents are expected to stabilize throughout this year, and
the overall outlook for the local markets is positive and should remain that way until the new Miami buildings open.
INDUSTRIAL OCCUPANCY SOARS
Warehouse and distribution space in South Florida in general is
in high demand and high-quality space is limited, experts say.
The entire region has seen record occupancy close to 95%.
Miami’s industrial market, totaling 180 million sf, typically absorbs around 2% annually but experienced negative absorption
of about 2. 5 million sf last year, according to Cushman & Wakefield. The change in absorption is largely attributed to Center-gate at Gratigny, currently the largest vacancy in South Florida
with about one million sf. The building is being divided for multiple tenants, and includes a mix of industrial and office space.
Despite the negative absorption, rental rates grew 10% last
year, says Jose Juncadella, principal of Fairchild Partners. Rents
have stabilized for 2008, but he does not think they will continue
growing by that much. The average rent in Miami-Dade County
is around $7 per sf.
Industrial rents are higher in Ft. Lauderdale and Broward
County, where a smaller amount of space is available, ranging
between $7.75 and $9 per sf, according to multiple reports.
