Nobody is making bold moves. In five words, that sums up the third quarter for the Miami office market. Although there were four large office transactions totaling about 280,000 sf, these were all renewals of existing tenants.
The summer of 2011 was full of uncertainty between the government show down and Wall Street woes. This led to delayed decisions and a drop in corporate confidence. There was good news in the third quarter office stats. One great indicator is that unemployment is continuing to drop. Miami is down to 12.5% from a 3Q2010 of 13.5%. Although Miami’s unemployment is still higher than the national rate of 9.1%, economists are seeing Miami’s recovery as having a stronger momentum when compared to the nation.
Another positive, for tenants, is that net absorption is flat. Although many owners would want tenants to believe that concession packages of free rent and construction upgrades are fading, that is not always the case and tends to be more building-specific. The top quality, Class A buildings are experiencing positive absorption of vacant space because when tenants do decide to move, they are moving to nicer buildings. The Class B & C buildings have experienced negative absorption almost identical to the Class A positive absorption.
600 Brickell was completed and added over 600,000 sf of vacant Class A space to the Brickell office market. This increased Brickell vacancy to over 25%. Even though the majority of new buildings completed over the past three years have not hit the breakeven point of occupancy, developers are already announcing projects that could potentially add another 1.2 million sq ft of office space to Miami-Dade County over the next five years. That is an increase of about 3% of our current inventory.
How does your office lease stand amidst this time of uncertainty? If your office lease is
within two years of expiration, it is time to begin planning your next step. Call me today at 305.753.5435. Special thanks to CBRE for the market statistics — they are the best in the business.
Aviation Fuel Distributor
|125,000||Doral Costa||Miami Airport|
|69,700||Mayfair in the Grove||Coconut Grove|
|Genovese Joblove & Battista*
|36,000||Brickell Bay Offices||Brickell|
|25,000||Offices at the Atrium||Coral Gables|
renewal & expansion