MIAMI—Palm Beach County's office market is seeing strong growth. Job creation in the South Florida county is growing faster than the overall US rate, driving lower vacancy and higher rents.
GlobeSt.com caught up with Keith O'Donnell, principal with Avison Young, go drill down into one of the most important Palm Beach County office markets: Boca Raton. He shared with me trends he expects to pan out for the remainder of 2015 and into 2016 on the office development and investment sales front.
“Occupancy levels in the Boca Raton office market have risen dramatically—10 to 15% over six months—with quality spaces the first to get absorbed,” O'Donnell says. “This trend is in line with technology, finance and service industry occupiers growing organically and producing jobs within the market—a trend that is expected to continue throughout 2015.”
While office occupancy levels and rental rate increases remain on an upward trend, he says very little development in the sector is being contemplated and most likely won't become an active conversation until 2016. Meanwhile, he explains, retail and multifamily projects are dominating the development scene in the Boca market. That said, office building common area renovations have created more attractive environments to attract the millennial workforce.
“On the sales side, cap rates remain favorable for sellers,” O'Donnell says. “The mid-capital market is particularly strong as the interest level in selling is expected to remain steady in the $6 to $15 million range. These markets are acting faster and showing strength over trophy asset class institutional sales which are not as active as they were in the fourth quarter of 2014.”
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