June 27, 2019
By David Cohen
Office leasing activity across South Florida remains robust in the early part of 2019 according to a recent report by Colliers International. Driven by capital flight due to the impacts of tax reform, the firm’s First Quarter 2019 Office Market Report indicates that rental rates of Class A buildings in Miami-Dade, Broward and Palm Beach Counties increased by more than 3.4% in each of the counties.
Broward County, in particular, saw more than 700,000 square feet of office space leased in the first quarter of the year. Vacancy rates remained steady at under 10 percent, and rental rates increased 14% year-over-year to a high of $31.28-per-square-foot (gross).
Connect Media asked Jonathan Kingsley, Colliers’ executive managing director of office and industrial services, to share insights about what is driving demand across South Florida. Check out his responses in our latest CRE Q&A:
Q. Why are we seeing more leasing activity and a growing demand for office space in South Florida?
A. The impact of Tax Reform has been a major driver of demand and absorption of office space in South Florida, as the region has seen an influx of new residents. Downtown areas with highly-amenitized office buildings and transportation systems, similar to the kind of market the new residents are used to in the Northeast, are seeing the most demand. Broward County continues to be attractive to major tenants that are seeking to be at the center of South Florida’s tri-county region.
Q. What types of tenants are currently driving demand?
A. We are currently seeing demand being driven in the market among law, technology, insurance, accounting firms and co-working groups. An example of this trend is a recent transaction, led by our Senior Director of Office Services Jarred Goodstein, where we represented the landlord for a lease renewal with Florida Attorney General’s Office for 42,027 square feet of space at 110 Tower in Ft. Lauderdale. The 10-year lease is valued at $18.8 million, and was driven by the Attorney’s General’s Office’s desire to continue to be in a dense and growing downtown environment.
Q. What are some of the trends tenants are currently seeking out?
A. Major tenants are continuing to seek out office space with amenities designed to meet their productivity requirements, maintain their employees’ morale and attract new talent. Office space has been trending toward a more densified and efficient usage, with plenty of common space for conference rooms, group hangouts, social space and kitchens. Tenants are also attracted to modern office buildings that offer hotels with grand lobbies, high-end coffee shops and cafés, state-of-the-art fitness centers, wellness rooms and bars.
Q. What are your thoughts on the South Florida office market moving forward?
A. I believe we are going to continue to see a strong demand for premium office space across South Florida, as the region continues to grow. Developers are already racing to meet this demand. Currently, under-construction office space in the market is at its highest point since the recession. Broward County has approximately 1.3 million square feet of new office space under construction. This new development will only help growth, as it is expected to attract larger tenants that require large blocks of available space for lease to the area.
For comments, questions or concerns, please contact David Cohen