January 9, 2020
The past several years have seen several high-profile firms not just open second offices in South Florida and Miami specifically, but relocate to the area altogether. We caught up with Steven Hurwitz, managing director of JLL South Florida, to chat about the trend.
Q: Northeastern office users are increasingly relocating to South Florida in greater numbers. What is causing this influx and why South Florida?
A: It’s clear that recent tax law changes are impacting certain niche boutique office markets proximate to high net-worth residential communities such as Miami Beach. What’s noteworthy about these newcomers is that they’re choosing to relocate to South Florida, and not just open second offices here. Take Carl Ichan’s move to Sunny Isles, for example. That may be the endorsement needed to define the trend, but it is not the first, and we expect the trend to continue as we head into 2020.
Also, while Miami Beach is home to a limited number of large users like Starwood, Wix and WeWork, the city has increasingly attracted small to moderate-footprint financial services firms. Since January 2019, we have seen a steady uptick in 2,000 to 5,000-square-foot lease transactions in Miami Beach from firms such as hedge funds and family offices. With tax policies slow to change, conditions are favorable for such office users to continue locating their businesses in attractive markets, starting with Miami Beach up through Aventura.
Q: Rental rates are strengthening and vacancy rates are compressing in almost every major market. If this cycle is coming to an end, how do you think Miami Beach will fare?
A: JLL research indicates that the finance industry represents 52 percent of the Miami Beach office market—and that percentage may continue to grow. While Miami Beach, along with emerging areas such as the Wynwood Arts District and Miami Design District, has long appealed to creative and entrepreneurial tenants, now these diverse neighborhoods are becoming viable options for family offices whose team members seek an attractive live-work-play environment.
For example, office buildings like 555 Washington, which sits within walking distance of the exclusive South of Fifth residential community, are well-positioned for increased interest from these types of tenants. The office property has recently welcomed Elite Models and several hedge funds and family offices to its tenant roster. What we’re talking about is a major diversification of office demand, which bodes well for the resilience of not only Miami Beach, but the greater Miami economy.
Q: What would be the impact of this growing number of office users seeking a business address in Miami Beach?
A: The influx of these types of tenants, many relocating from the Northeast with a high-wage employee base, is contributing to the growth of our local talent pool, which has long been a challenge in South Florida. As the area continues to mature, so does the diversification of office users who support higher paying jobs. That continued expansion of our highly educated workforce not only contributes to a healthier office market, but the residential and retail segments also stand to benefit.
Connect South Florida is coming to Key Biscayne on Feb. 26, 2020. For more information, or to register, click here.
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