Increasingly over the past 18 months, the Miami office market has decisively shifted to the landlord’s favor. Absorption of office space and rental rates have increased, there is little to no free rent and even though construction costs have risen, allowances have shrunk. It’s tough to be an office tenant.
What is a tenant to do and when will this cycle end? There is limited new construction in Miami-Dade County and the rental rates for new buildings will be at the top of the range. We are hearing whispers that interest rates will increase, but will that help or hurt the multitude of small businesses that are the foundation of Miami’s economy? Right now my industry gurus are predicting that this landlord-favored cycle could continue for another 2-3 years and I think it can hold for two years.
If you are a tenant with a lease approaching renewal in the next 18 months, my suggestion is to start early. Allow yourself more time than you think you will need. Just remember that time is the landlord’s greatest leverage. They know that 75% of tenants renew, so unless you start early you cannot use time as your leverage. Call us for our no-obligation, free lease analysis because it’s never too early to begin planning your next move.