Obviously, Miami always is, however, the crazy train I’m discussing today is related to office development. With the residential developers in a frenzy, office developers are jumping on that crazy train, but with more restraint than our previous new office building cycle. Even though the residential developers have been pricing the office developers out of the land market, Miami has over 1.5 million sq ft of proposed new office space over the next five years. While I admire developers for their fearlessness, time will tell if their vision is profitable.
During our previous boom of new office construction, developers constructed over 3 million sq ft. Today much of that space has been leased, but few would declare these projects financially successful. During our last cycle, the vast majority of this new construction was delivered during the height of the recession.
This next cycle of office development is interesting for several reasons. First, delivery of space is spread over five years rather than compacted into half that time. Second, the majority of the space will be in Downtown/Brickell with the largest chunk tied into the All Aboard Florida train station. Tying the office space to a major transportation hub is a smart move. Third, going back to the location of the development, it will be interesting to see how Miami developers handle traffic congestion and Miami residents’ love affairs with cars. Also, much of this new office development appears to be geared to ride the coattails of the residential development.
The party line by real estate professionals is that landlords continue to be bullish on the Miami office market because the new construction is staggered and absorption of existing office space is at a consistent pace that should reduce the impact of these new buildings. Time will tell.
Here are the current proposed new office projects in the works in Miami-Dade County:
Brickell City Centre: 550,000 sq ft in Phase II
Grand Central Station (All Aboard Florida): 210,000 sq ft in the initial phase followed by 610,000 sq ft in the second phase.
Note: No announcements have been made by the Port of Miami Authority, however, my guess is with many eyeing their land, the Port may announce something to keep soccer owners and others at bay.
Coral Gables Urban Village – 206,000 sq ft
201 Giralda Avenue – 65,000 sq ft
Downtown Doral – 185,500 sq ft
Note: This does not include the stalled Airport City project at Miami International Airport which is proposing over 500,000 sq ft of new office space.
New office construction and pre-leasing are a tricky business for both landlords and tenants. You need expert advice to navigate through the process, so give me a call if you are looking for a ticket on this new crazy train. It will be an exciting ride.