"Owners can be more conservative because the office market is so tight," David B. Voell, a senior director in Cushman & Wakefield's local office, tells GlobeSt.com. They became especially cautious after tech stocks hit the skids last spring.
Prospective renters may now be asked to sign longer-term leases, as well as put down bigger security deposits and even letters of credit as proof they can fulfill their lease obligations. Building managements are especially picky if they have to spend $25-$30 psf to get space ready for occupancy, says Voell. Tenants have a better chance of making a deal if they can use existing office layouts.
It's not only the techies that are finding space-shopping more challenging, notes David J. Pawlowski, director of brokerage operations at Colliers International in Fort Lauderdale. "Any startup will have problems in the current market," Pawlowski says, "but that doesn't mean they can't find perfectly fine footage."
More tech tenants are finding locations such as Florida Atlantic University's Research & Development Park in Boca Raton not only affordable but with immediate access to a campus talent pool. In the past three years, FAU has developed 450,000 sf of space on a 52-acre tract adjoining the school just off I-95, Pawlowski says. There's even an incubator building for new firms where office space goes for $14.75 psf plus another $2.50-$3 psf in operating expenses.
For example, given his choice, Leon Perez would have put his new Intermediario.com in one of the area's hot spots. Instead, he located his B2B operation, which facilitates the exchange of goods and services over the Internet in Latin America, at a South Broward County building where the rent is $17 psf.
Other startups, whether tech-related or not, will have to make similar choices, agree brokers Voell and Pawlowski. That's just the reality of today's commercial real estate market in South Florida.
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