Miami Office Vacancies Rise But Construction Continues

More space translated into higher vacancy rates for the Miami office market in third-quarter 2011 with the entry of 615,000 square feet at Brickell World Plaza, located at 600 Brickell Avenue.
It may be the last addition to a market that has been inundated with new product for some time, but not the end of new product in Miami-Dade, however.
A number of new projects are under construction:

• Aventura Optima Plaza will add 122,000 square feet to the North Miami area.
• A 39,000-square-foot project is under construction in South Miami at 5966 S Dixie Hwy.
• The new 172,000-square-foot North Tower at 396 Alhambra, scheduled for completion by year’s end.
• The Building, a 58,000-square-foot office tower located at 2990 Ponce De Leon Blvd., which is 65% preleased, according to CRE-sources’ data. Tenants include Zubi Advertising, Mas Group and Sanchez-Medina law firm. Projected completion is the end of 2012.
• Allen Morris Company’s Ponce de Leon Towers, a 203,000-square-foot, 16-story office project at the former Old Spanish Village site, is tentatively scheduled for a construction start in mid-2012.
• An executive suite center affiliated with the Rockefeller Group has preleased 24,500 square feet, and the developer will relocate its 7,000-square-foot headquarters there.

While the backdrop for office leasing and construction countrywide remains gloomy, Studley and other analysts note that the Miami-Dade office market showed modest improvement during the quarter.
“Deal volume increased,” Studley summarizes, “as area businesses signed long-term leases to lock in very tenant-favorable terms.”
Studley’s numbers show leasing up 9.5% in the quarter, with Miami-Dade accounting for 1.1 million of 1.8 million square feet of South Florida market activity, a 60.1% hike from the previous quarter, and a drop in Class A availability to 21.6% from 23.3% a year ago.
Optimism on the landlord side is still in evidence, Jones Lang LaSalle researchers say, but in its quarterly report, MarketView, CBRE cites a “wait-and-see mode” in the Miami market as larger tenants opted to renew rather than relocate.
The three largest transactions in the quarter, CBRE notes, were Crispin Porter & Bogusky, renewing close to 70,000 square feet at Mayfair in the Grove; Genovese Joblove & Battista, renewing for 46,000 at Miami Tower, and Aon, renewing for 38,000 at 1001 Brickell Bay Drive.
Each company reporting on the office market uses slightly different parameters, however, the vacancy in Miami’s CBD falls in the 23.7% – 24.7% range, suburban vacancy at 17.7% – 18.9%, and overall vacancy at 18.8% – 21.1%, down about 1% from a year ago.
Average asking rates range from $34 – $38 in the CBD, to $32 in the Gables, to $35 in Aventura. Average asking rates of $24 – $28 were found in the peripheral suburban markets.
Cushman & Wakefield’s third-quarter MarketBeat cites the new stadium for major league baseball’s Miami Marlins, opening in second quarter 2012; the Port of Miami Tunnel project, due to complete in second quarter 2014; and projects in the works by the Genting Group and Swire Properties in the Biscayne Boulevard corridor and Brickell area, respectively, as indications of better times ahead.
These, the Cushman & Wakefield team says, “bode well for Miami-Dade’s economic future, while strong trading partners in South America play a key role in future economic growth.”
Source:  Miami Today