The first quarter of 2013 has shown that commercial real estate fundamentals are finally coming back to Miami office buildings. This means that rental rates are slowing increasing due to steady leasing activity and a large number of deals getting done. Landlords are tightening up on lease concessions (free rent and tenant improvement allowances). We are also gaining strong momentum in office building sales with two large sales in the first quarter and more in the pipeline.
It’s interesting that Miami’s office market continues to improve because Miami’s unemployment rate of 9.4% which is significantly higher than Florida (7.5%) and the U.S. overall (8%). Even with the robust leasing activity of over 100,000 sf of absorption in the first quarter, Miami-Dade County still has an 18% vacancy rate. Our absorption this quarter is the strongest in over a year. Downtown and Brickell which comprise the Central Business District (CBD) continues to lead the county with leasing activity and absorption yet its vacancy is still almost 20%. Coral Gables is also approximately 20% vacant, but it is finally beginning to gain momentum with strong leasing activity which should translate to lease transactions in the second and third quarters this year. The two softest submarkets are Miami Lakes and the Biscayne Blvd corridor.
Here are the top transactions so far in Miami-Dade. A moment to brag: I represented the landlord on the Bupa lease.
Tenant |
Sq Feet |
Submarket | Transaction Type |
FedEx Logistics/transportation |
73,000 |
Miami Airport |
Renewal/ |
Northern Trust Bank Financial Services |
62,000 |
Brickell |
Relocation |
Bupa Latin America Health Insurance |
60,000 |
Kendall |
Relocation |
The two largest sales for the first quarter are Brickell Bayview (80 SW 8th Street) traded for $245 per sq ft and Sabadell Bank (1111 Brickell) sold at $255 per sq ft. There are some big buildings on the market and other buildings have already traded this month, so 2013 will be a great year for investment sales.