Many signs in the report point toward a potential recovery by the end of the year. They include a drop in the overall vacancy rate, significant leases and expansions, absorption of subleases in several submarkets and a slowing down of new construction.
The Broward office market, which has absorbed a lot of its space, ended the quarter with a 75,915-sf positive overall absorption. This compares to a negative absorption of 124,962 sf a year earlier.
The overall vacancy rate for office space in the county decreased some, from 20% in second quarter 2002 to 19.6% the same time this year. The largest decline in vacancy rate was seen in the Northeast Broward submarket, where the vacancy rate was nearly cut in half from 16% at the end of second quarter 2002 to 9.2% the same time in 2003. The significant drop is attributed in part to that submarket's posting the county's lowest direct rental rate, $19.18, adding to the area's leasing appeal.
Also contributing to the vacancy decline in the submarket is the fact that two of the county's biggest leasing deals in the second quarter took place there. In one deal, Corinthian Colleges Inc. leased 53,146 sf at Atlantic Tower in Pompano Beach, and in the other deal, LA Fitness International LLC signed a 45,525-sf lease at Hillsboro Commons in Deerfield Beach.
Overall in the county, there was a 100,000-sf rise in leasing activity from the first to the second quarter of this year. But despite the improvement in second-quarter leasing activity, a big boost is necessary to stay on track with last year's leasing activity. For the first two quarters of this year, a total of 789,186 sf was absorbed. However, in the same period last year, nearly 1.5 million sf was absorbed.
Furthermore, at mid-year, the leasing activity accounted for about 46% of the more than 3.2 million sf leased last year. Therefore, the county must lease an extra 1.8 million sf by the end of the year to match the 2002 total.
C&W also found that construction completions totaled just 60,000 sf for the first two quarter of this year, Miramar had the highest rate of positive absorption in the county, at 119,892 sf, and the Cypress Creek and Fort Lauderdale central business district submarkets face challenges to overcome deficits as new inventory is delivered by early next year.
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