Direct net absorption was negative 268,318 sf. Although grim, the slowed leasing pace was to be expected, given the slow economy and the bearish stock market, according to the report.
In fact, much of the county's office market was affected negatively by the threat of war with Iraq, an unstable stock market, and high unemployment rates and companies making significant cutbacks.
And it may be too late already to catch up to last year's pace. "The leasing activity is not on track to match the figures generated last year," the report states.
Reasons for that include a rise in the number of renewals and companies' decisions to expand in current locations in short-term leases instead of the more costly option of moving to new sites with longer lease terms.
This was the case with Cigna Dental Healthcare--the largest leasing deal in that county in the first quarter. The company opted to stay in the same building and signed a slightly larger lease of 62,477 sf at the Executive Pavilion in Plantation. This will save the company money long term. This deal was not unusual in the market; in the first quarter, the lack of new long-term leases was common throughout the county.
Companies in the Cypress Creek submarket also seemed hesitant. This typically strong submarket had the second-highest leasing activity--161,380 sf--in the first quarter and three of the largest leasing deals in the county. Those three leases were with Citrix Data Center, which signed a 19,000-sf lease at Corporate Park Five; Kirlin Construction, which signed a 20,135-sf deal at Lakeshore Business Center-III; and 180 Direct, which moved into 14,269 sf at Cypress Plaza.
However, a large amount of the leasing activity in the submarket was expansions and renewals. Furthermore, the three deals were not big enough to have much effect on the 23.4% overall vacancy rate, as more than 1.3 million sf of space remains vacant in the Cypress Creek submarket.
Other highlights of the Cushman & Wakefield report include:-More than 4.7 million sf of space in Broward County is yet to be absorbed.
-Construction was at a standstill early this year. A year earlier, almost half a million sf of new construction was delivered in the county.
-Rental rates dipped some in certain areas and were flat in others, compared with this quarter in 2002.
Until the economy stabilizes and the war ends, companies will stay cautious, which will mean a flat market and softer rental rates, the report states.
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