Plantation Sees More Investment as it Evolves into an Urban Suburb

Investment sales activity in Broward County’s office market continued to gain momentum in first quarter 2019 with $338.5 million in total sales and outperformed both Miami-Dade and Palm Beach Counties during the trailing 12 months ending March 2019. The majority of the sales over the past year in Broward have taken place in suburban submarkets, such as Sawgrass Park, Cypress Creek, and Plantation, as they present a higher return on investment versus the Central Business District.

Plantation has seen a significant resurgence and demand for both office and industrial space due in part to its central location and access to major thoroughfares. According to research by Avison Young, Plantation’s office vacancy rate is 7.37%, and West Broward’s industrial vacancy rate is 2.07%. Both are within the three lowest submarket vacancies for the respective property sectors in Broward County as of first quarter 2019.

In addition to lower asset prices and rental rates compared to the urban core, several factors contribute to the positive fundamentals and attraction to Plantation; most notably, the increased density being provided for by city planners allowing the city to evolve into an urban suburb. New multifamily projects representing just the beginning of the transformation include Broadstone’s 250 residential units, which are now available for lease, Amli’s near-complete 287-unit apartment complex and Cornerstone/Millcreek’s 312 apartment units under construction.

Further underscoring the demand for housing in Plantation and the demand based on the combination of great amenities and centralized location are the mixed-use projects underway. The eagerly anticipated Plantation Walk at the old Fashion Mall property was recently approved and will bring a mix of restaurant, retail, office, a hotel and a total of 700 apartment units to the area in a true integrated mixed-use development. Additionally, the former 400,000-square-foot American Express headquarters will be redeveloped into “Plantation Midtown Square,” which will include 94 townhouses, 481 rental apartments, 11,540 square feet of restaurant space and 10,000 square feet of retail.

The lifestyle real estate development activity coincides with booming economic activity in Plantation, as companies want to be near its vast talent pool. A well-established healthcare sector is being complemented by a growing technology sector. Magic Leap, which backfilled much of Motorola’s former space, is one of the most exciting technology companies in Florida. As their groundbreaking technology becomes mainstream, it will act as a catalyst for even greater economic activity in Plantation.

Over the past year, Avison Young’s Florida Capital Markets Group led by, Michael T. Fay, John Crotty and I, handled five office building sales in Plantation, representing a total of 375,000 square feet and $65 million in total deal value. The team has observed that most of the investors actively eyeing Plantation are seeking stable assets with reliable income streams along with high-barrier-to-entry market conditions.

Plantation Technology Park, Avison Young’s latest offering in Plantation, is a 96,238-square-foot, single-story office/warehouse complex. The park is fully occupied by a mix of tenants that include Broward County Department of Revenue, Brightstar Credit Union and Cadogan Tate. Despite the 100% occupancy, there is significant upside available to investors due to its below-market rental rates and rapidly appreciating market conditions.

Tenant and investor demand in Plantation and suburban Broward overall are outpacing supply. Landlords are taking advantage of the gains in rents and increased asset values. Investment opportunities that come on the market are selling in record time. These trends are projected to persist over the next year and beyond, making Plantation an interesting and rare urban suburb to watch.

David Duckworth is a principal with Avison Young and co-chair of the Florida Capital Markets Group.