LeClaire: How will hitting bottom help the market?

Harris: Leasing agents and representatives were plagued by the inability to hit or recognize “true bottom.” Many adopted a “Wild West” attitude to land new tenants, or keep current ones from moving. The inability to negotiate from a position of strength handcuffed the industry as a whole. This greater understanding of where the bottom finally is has had a stabilizing effect for brokers and established a benchmark for negotiating deals as rental rates begin to increase and vacancies fill with greater velocity than before. In 2010, Adler properties’ occupancy rates were in the mid-80%, and are expected to increase to levels nearing the 90th percentile in 2011.

LeClaire: Do you believe South Florida will recover before other markets?

Harris: South Florida’s commercial real estate market—particularly the Miami Airport West submarket—should rebound significantly faster than others in the state. Expansion of the Panama Canal has prompted major improvements at key logistics facilities across the state. The Port of Miami, Port Everglades and Miami International Airport’s cargo facilities are currently undergoing expansion to attract more global distribution routes through this region, consequently driving demand for more warehouses and distribution centers to hold the influx of products. The container terminal expansion at Port of Tampa should have a similar positive effect on Tampa’s industrial real estate market. But Orlando’s highly service-oriented marketplace will continue hindering commercial real estate market recovery there.

LeClaire: What trends do you expect on the leasing front in Florida?

Harris: Tenants are regaining a comfort level with the state of their businesses that is helping reestablishing a demand and desire for long-term occupancy. Brokers witnessed three distinct stages of tenant behavior when it came to leasing in the new economy.

Stage one was fear and worry—concern that their business may not be around in three months prevented tenants from considering multi-year renewal options. Stage two was cockiness—the glut of available space and never-before-seen deals put tenants in a position of strength to “squeeze” landlords into concessions, or make a move to greener pastures, without thought to the future.

Stage three is the bird-in the-hand mentality. With their businesses weathering the economic downturn, rental rates gradually rising, and space at premier commercial properties starting to be gobbled up, tenants are now more apt to make longer lease commitments for quality office, industrial and flex-space before the negotiating pendulum swings back in favor of property owners and landlords.