During the early stages of the pandemic, South Florida office landlords saw a surge in business activity, leading to a 5.5 percent increase in average asking rents in Miami-Dade, nearly 1 percent in Broward, and 0.3 percent in Palm Beach counties compared to the previous year, according to Colliers reports.
Despite economic uncertainty caused by higher interest rates and inflation nationwide, the South Florida office market remained relatively stable in the third quarter, with some exceptions. Miami-Dade and Palm Beach counties experienced a decrease in vacancy rates and positive net absorption, while Broward saw a slight uptick in vacancies by 0.3 percentage points.
This steady leasing activity can be attributed in part to companies transitioning back to in-office work following the remote-work trend that began in March 2020. Most companies have adopted hybrid work models, typically involving at least three days of in-office work per week, although some employers are requiring a full return to the office.
In Miami-Dade County, the average asking rent reached $52.06 per square foot in the third quarter, remaining flat compared to the previous quarter, but up from $49.36 per square foot year-over-year. With a 9.6 percent vacancy rate, it continues to be a landlord’s market.
Notable leases in the third quarter included law firm Greenberg Traurig renewing its 128,500-square-foot lease at the Wells Fargo Center in downtown Miami, and Sony Music leasing 45,000 square feet in Miami’s Wynwood neighborhood.
In Broward County, the average asking rent rose to $37.32 per square foot, up from $37.16 in the previous quarter and $36.98 in the same period last year. Broward was the only South Florida county to record a negative net absorption, resulting in an increase in vacancies to 11.7 percent.
Palm Beach County experienced the largest quarter-over-quarter increase in average asking rent, reaching $40.26 per square foot in the third quarter. The vacancy rate was 8.8 percent, slightly down from the previous quarter, but up from 7.9 percent in the third quarter of the previous year.
While investment sales activity was generally subdued, billionaire Ken Griffin made an exception by purchasing a nearly 50,000-square-foot office building at 125 Worth Avenue in Palm Beach for $83 million.
