South Florida Office Space Prices Are Seeing Record Highs
Prices for Class A office space have been rising in Florida. Miami-Dade county has seen some of the largest increases. Asking prices have averaged $40.75 per square foot, up 5.1% since the peak of the last real estate cycle in 2008. Palm Beach and Broward counties are also seeing increased prices, up 1.6% and 1.2% respectively. Class B office spaces have also seen record high rates.
RISE Realty President Keith Darby summarized the situation, saying growth and basic laws of supply and demand are at the core of the trend. “The class A and B office market is growing in the South Florida area. As the market grows, demand has increased, while supply has not followed. This is driving the prices up.”
Demand is increasing as more companies move into Miami and the surrounding areas. Improvements that have been made at the Port of Miami and Miami International Airport have contributed to some companies’ interest in the area. Others have noted that South Florida’s lifestyle is a benefit to their employees, and influenced their decision to enter the market.
Supply has not increased in recent years. The construction of office buildings has been slower with traditional financing limited or not available after the 2008 recession. Vacancies rates have been dropping steadily for the last few years. Some markets, like Ft. Lauderdale, have approached record high occupancy rates. With class A space limited, more class B spaces are being considered.
“There has consistently been strong leasing activity” says RISE Realty President Keith Darby. “Since we at RISE Realty believe the South Florida market will continue to grow, these are likely not the highest prices we will see.”