The volume of space leased in Miami-Dade’s office buildings is declining but landlords are asking average increases topping 10% in new leases compared to last year, new data from Avison Young’s Miami office shows.
Even while more than 15% of office space in the county is now vacant and more than 1 million square feet of what is leased is being offered for sublease, more than 2 million square feet of office space is under construction in the county and expected to open over a period of about two years, the company reports.
The Brickell area continues to be high in the ranks of office markets across the nation, the report says, although Class A space in the corridor is 11.9% vacant and less-desirable Class B space is 12% vacant. Average asking rents in Brickell Class A offices are $93.84 per square foot, and in the older Class B space $57.42 per foot.
Yet even in Brickell, 25,729 more square feet were empty than last year in the first half of this year.
Meanwhile, more new office space is in the pipeline and heading for an opening. OKO Group’s highly-touted 830 Brickell Building, a 55-story tower that has publicized rents as high as $130 per square foot for penthouses space, is scheduled to open this month and add 664,300 square feet to the market. Avison Young reports that the building is fully leased, although some space there is already subleased.
Also under development is One Southside Park, being developed by JDS at 1105 SW Second Ave., which is expected to add 165,000 more square feet to the Brickell market when it opens in two years.
But office leasing volume in the second quarter countywide dipped below 1 million square feet, Avison Young says, a softening that it contrasts with office leasing transactions, which slid only a bit to 331 in the quarter from 347 in the same quarter last year.
“The trend reflects tenants downsizing their footprints until companies can effectively implement return-to-office initiatives,” the company’s report days. Nationally, efforts to get off-site workers to return to the office have yielded in many instances to hybrid efforts as employers have met resistance to calls to come back in person full time.
As is historically true, office markets in the county vary considerably in vacancies and rental rates. While Brickell Class A offices south of the Miami River have an 11.9% average vacancy and asking rents averaging $93.84, on the north bank downtown’s offices have a 21.7% vacancy and $63.39 asking rents.
Class A vacancies are highest in Miami Beach at a whopping 38.9%, followed by 29% in the Biscayne Corridor, downtown’s at 21.7%, Medley/Hialeah at 21.2%, Coral Gables at 20.6% and Miami Lakes at 20%. Class A vacancies are lowest in Northeast Dade at 5.6% and Aventura at 6.5%.
As Miami Beach has the highest vacancy rate, it also has the highest Class A asking price at $97.44 per square foot, followed by downtown’s $93.84 and the Biscayne Corridor at 82.58%. Lowest Class A asking rates are $35.59 in Miami Lakes, $35.99 in Medley/Hialeah and $41.78 in Kendall, the Avison Young figures show.
The largest office market in total space is the vast Airport/Doral area, with 11.2 million square feet. That is followed by Brickell at almost 7.5 million, Coral Gables at more than 7.3 million and downtown at 7.3 million.
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