Overall, while the war in Iraq ended and the stock market and economy have shown improvement, the county is still affected by more than a year of negative absorption and increased overall vacancy rates.
The Boca Raton submarket, which is typically healthy, saw the strongest absorption in the county with absorption of positive 8,578 sf. This is almost a 70,000 sf increase compared with the negative 60,914-sf absorption at the end of the second quarter in 2002, according to C & W. The improvement is attributed in large part to the almost 400,000 sf of leasing activity there in the second quarter. This figure accounted for two-thirds of the county's total leasing activity in that period.
In fact, seven of the eight biggest lease deals in the county second quarter occurred in Boca Raton. Among the lease transactions were Kaplan Inc.'s 28,500-sf sublease at The Millennium Building, First United Bank's 19,393-sf deal at One City Center and the Bank of Florida's 12,410-sf transaction at 595 Financial Center-Phase II.
On the other hand, two smaller submarkets--Lake Worth and Riviera Beach--didn't have any major leasing deals in the second quarter.
In addition, North Palm Beach leasing activity totaled just 59,782 sf, the report states. Further, the completion of the Fairway Office Center-Building 2 (88,000 sf) in Palm Beach Gardens with no pre-leasing helped move the direct vacancy rate of that submarket to 20%, up from 12.7% the same time last year, the report states.
Just one submarket in Palm Beach County--Jupiter/Tequesta--had less than a 14.5% vacancy rate. That submarket ended the quarter with a vacancy rate of 3.9% and less than 10,000 sf of office space available for lease.
However, the West Palm Beach central business district remained a weak spot in the county's office market. The area had just 37,353 sf leased in second quarter. And since the same time last year, the central business district saw a nearly 50% decrease in leasing activity. The central business district direct average asking rental rate's hike of almost a dollar to $28.39 at the end of the second quarter from $27.41 last year isn't helping the area's leasing activity, C & W adds.
The report also shows that the overall sublease vacancy rate in the county was unchanged from a year earlier, at 2.2%. This, according to the report, indicates that a recovery might be possible before the end of this year.
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