Q1 2018 brought with it some really great looking numbers for office space in Miami-Dade County. Palm Beach and Broward led the pack in market improvements, even as overall vacancies in Miami-Dade County rose slightly.
The rate of vacancy in the county of the Miami Heat rose to 13.5 percent, which is slightly higher than the 13.2 percent vacancy rate a year ago (Q1 2017). Even though supply was slightly higher, rent actually went up around the county to US $37.77 per square foot. The number year-over-year was US $36.99 per square foot. Most of the vacancies occurred in downtown Miami, which caused rent growth to be capped for units located north of the Miami River.
Net absorption in Miami-Dade County totals only 0.1 percent of the total office space. Last year, approximately 123,000 ft.² was added to this total, and there are just under 700,000 ft.² that is currently under construction. Many office space projects will be completed in the year 2018, including the following –
• Sunset Office Center & Giralda Place, Coral Gables;
• MiamiCentral – Miami-Dade County;
• Mary Street – Coconut Grove; and
• Cube Wynwyd – Wynwood.
Broward and Palm Beach
The vacancy rate in Broward County fell to 12.5 percent from 14.4 percent year over year. The average rent rose from US $28.45 per square foot to US $31.45 per square foot. Older buildings are getting less attention, and the tenants within them are beginning to complain more.
In Palm Beach, rent rose around 1.5 percent from US $31.07 per square foot to US $31.57 per square foot. Vacancy also fell 0.9 percent from 15.6 percent to 14.7 percent. As with Broward County, older buildings are falling out of favor. Class A buildings in Palm Beach retain a 95 percent occupancy rate, which caused a 10 percent rise in rents within those buildings.
Residencies in Broward are expected to grow to 2.1 million people by 2022, and many of these new residents are coming for the jobs in the area. The number may grow even more if the enormous American Dream mall project in Miami-Dade is completed on schedule. In short, these new developments and trends are all spilling over into each other, including in office space.
Average cost of an apartment:
- Miami (Miami-Dade County) – US $410.39/sq. ft.
- Fort Lauderdale (Broward County) – US $306.44/sq. ft.
- West Palm Beach (Palm Beach County) – US $242.11/sq. ft
What Does This Mean for High-End Florida Real Estate?
Miami continues to be a safe haven for rich investors from Latin American countries and South American countries. Many of the developers that are coming into the area in all three of the counties mentioned above are from emerging markets like Venezuela, Argentina, Chile, and Brazil.
High-end Florida real estate will continue to inflate, according to reports from most experts familiar with the area. Municipal efforts to undergird the working and lower middle classes will bolster the effort in luxury markets. For instance, Miami-Dade County is partnering with many private investors to build inexpensive apartments for teachers, who are overwhelmingly priced out of the Miami real estate market.
Although the residential market will remain flat, offices for business people in the global economy will continue to rise. Miami is connected to international cities such as New York and Los Angeles. This means that inflation and improvements in the cities also affect Miami. The successes of neighboring counties tend to spill over into each other in the Miami environment, chain linking successful municipalities together. If we continue to see success in Broward County, then we will probably continue to see success in Miami-Dade County and Palm Beach County.
Bal Harbour, the Brickell City Center and the South Beach are also looking good when it comes to business. With even more foreign instability shaking up markets outside of the United States, Miami will likely become an even more important stop for international investors. Because the county governments are fully on board with international developers, the major cities within those counties will continue to grow. This only means great things for the international business community over the next 10 to 15 years.