(Carl Cronan is editor of Real Estate Florida.)
MIAMI-With a local inventory of 40 million sf, it takes a lot to create a sharp turn in vacancy within Florida's single biggest office market. However, the prospect of at least two million sf of new space opening over the next two years might be enough to concern building owners.
Rather than dwelling on which existing buildings might become decimated as certain tenants clamor for shiny new space, along with competition from neighboring markets, office brokers in Miami-Dade County see plenty of upside potential in years to come. It's still the top choice for foreign companies wanting a gateway to US trade markets, and they contend that may never change.
"As Latin America goes, so goes Miami's office market," says Diana Parker, director of commercial brokerage for Cushman & Wakefield of Florida. "They want to be here because Miami is on their map."
Parker, one of several office brokers and developers participating in panel discussions during the RealShare South Florida Conference in Miami on Sept. 17, envisions Miami as a "mini-Chicago" with trade growth contributing to greater prospects for office construction and absorption. "We're 113 years young," she adds.
Three building projects in Downtown Miami—Brickell Financial Centre, Met 2 and 1450 Brickell—are scheduled to add 2.2 million sf of new class A office space in 2009 and 2010. A total of 3.9 million sf of offices were under construction in Miami-Dade at midyear, according to CB Richard Ellis research.
Yet with that added space comes additional tenant prospects, allowing Miami to sustain itself through the national economic shift, says Scott Sime, managing director of CBRE's local office. "International business investment and the expanding life science industry ensures Miami's place as a global business center," Sime stated in the firm's latest MarketView report.
Expansion of biotech industries in Miami-Dade County is expected to grow in years to come, creating new jobs and providing growth opportunities for commercial real estate, CBRE researchers stated. The University of Miami's Life Sciences complex is expected to attract additional companies looking to work in or near the Downtown Miami complex, they said.
Miami-Dade continues to command the state's highest rents for class A office space, at around $37 per sf in the Brickell Avenue and Coral Gables submarkets, according to CBRE. Meanwhile, brokers observe that Miami runs the risk of losing prospective tenants to lower-priced buildings in Broward and Palm Beach Counties, where comparable buildings rent for less than $20 per sf.
C&W's Parker notes that while Latin American division chiefs still prefer Miami over other major markets, such as Fort Lauderdale, their corporations are making more of an effort to control operating costs. "There is a paradigm shift of companies moving from Coral Gables to Airport West, and they're saving $12 to $15 [per sf]," she says.
Parker also takes issue with the fact that national press reports lump Miami-Dade in the same South Florida real estate basket as Broward County, which has nearly 13% office vacancy, and Palm Beach County, which is at 18%. Miami's office vacancy remained below double-digit territory through the first half of this year at 9.2%, according to CBRE estimates.
"It is an apple, an orange and a pear," Parker says. "It just grates me when I see an article quoting South Florida statistics because they couldn't be farther from the truth."
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