Miami Office Space – View From the Trenches

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Clearly we are in this downturn for the long-haul.  My office has a monthly meeting focused on the office portion of commercial real estate.  The number of large tenants (10,000 sf and up) seeking office space has declined when compared to September 2009.  We currently are tracking 29 companies seeking almost 1 million sf .  This is almost half of what we were tracking in September 2009.  Interestingly enough, the 54 tenants sought 1.2 million sf of office space – almost the same square footage as today.   Of these 54 large tenants from 2009, about 20 ended up signing either a renewal or a new lease.  Some of these tenants may simply be testing the waters or trying to leverage a better negotiating strategy with their landlord.  Some still show up on our tracking list a year later.

With large blocks of office space available, the big tenants have serious options to consider and may be able to upgrade their office space either by moving to a better building or planning a new, more efficient space  which lowers their footprint and ultimately their overhead.

Another clear trend is that the number of subleases is declining.  This actually benefits both landlords and tenants.  Tenants are not stuck with surplus space they must dispose of at fire sale pricing and landlords are not competing against these bargain basement spaces.

The next two years (2011 and 2012) are predicted to have quite a bit of lease rollover from expiring leases.  We have not seen much in new tenants to the market other than some smaller transactions of less than 10,000 sf.  The new buildings are slowly filling up with existing tenants moving from other locations in Miami.  Clearly Miami is experiencing its own brand of the “New Normal”.

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