The commercial real estate market in South Florida (Miami-Dade, Broward and Palm Beach counties) has continued to perform well through the first quarter of 2022.
Brief Overview of the Current Office Real Estate Market Conditions
Brief Overview of the Current Office Real Estate Market Conditions
With over 268,000 square feet of positive net absorption in Q1 2022, the region had its 3rd consecutive quarter of in demand growth. Although it was less than the previous quarter, it still shows that South Florida has continued its road to recovery from the negative impacts of the pandemic. Palm Beach County is currently leading in demand growth, with Miami-Dade County not far behind. Broward County had a minor setback in 2022 with supply barley outpacing demand at the start of the year. Asking rents for office space continued to rise, with the overall average increasing by $2.21 per square foot compared to the first quarter of 2020. This is the strongest year-over-year increase since mid-year in 2007, just before the financial crisis of the Great Recession.
The Class A segment experienced the strongest growth, with a $1.88 per square foot increase compared to the previous year. Landlords of “trophy” assets continued to raise asking rent prices from quarter to quarter, even with the Class A segment being the most impacted by the pandemic. Experts and analysts have attributed this to “the great migration to Florida,” and this population growth has prompted building owners to raise rents, with an increase in companies leasing office space. Development remained disciplined as no new completions took place and no new projects broke ground, with 1.2 million square feet of new inventory remaining underway.
Pricing Trends & Statistics from the South Florida Office Market Report
- Average Asking Rent for Office Space (price per square foot) = $39.68
- Office Space Vacancy Rate = 14%
- Net Absorption = 268,445 square feet
- Over 1.7 million square feet of negative absorption occurred as a result from the global shutdown
- More than 1.2 million square feet of positive absorption occurred since the second half of 2020
- Class A sector saw over 111,000 square feet of positive net absorption
- Class B segment saw over 150,000 square feet of absorbed office space
- Lower-tier Class C segment saw a modest 6,190 square feet of absorbed office space
Brief Overview of the Current Industrial Real Estate Market Conditions
With over 1.8 million square feet of absorbed space reported during Q1 2022, the industrial real estate market has had a strong start in 2022. This was down from the previous quarter, but still stronger than the 1.5 million square feet of positive net absorption during the same period 1 year ago. Approx. 2.4 million square feet of net inventory was also delivered during the first three months of the year, the 2nd highest on record – slightly down from the 2.8 million square feet delivered at the close of the first quarter of 2021. Despite the robust delivery, the overall vacancy rate in South Florida only increased 10 basis points from the previous quarter but was still down 150 basis points from this time last year.
Miami-Dade held onto the lead for demand within the region, as Broward County also saw another strong quarterly performance. Palm Beach’s industrial market saw another consistent performance of demand outpacing supply. Developers continue to break ground, with 39 buildings totaling approximately 8.0 million square feet of new inventory; this is the highest amount of new industrial product underway in recorded history. Healthy pre-leasing of buildings under construction, coupled with tight market conditions, pushed the overall quoted average asking rate closer to $11.00 per square foot. The $1.64 per square foot increase from one year ago marked an 18.2% rise in the overall average, which was the largest annual increase ever as landlords accelerated asking rents upward and will likely continue to do so throughout 2022.
Pricing Trends & Statistics from the South Florida Industrial Market Report
- Average Asking Rent for Industrial Real Estate (price per square foot) = $10.67
- Office Space Vacancy Rate = 3.5%
- Net Absorption = 1,135,020 square feet
- Over 1.3 million square feet of absorbed space came from the warehouse-distribution segment
- The general industrial sector saw over 482,000 square feet of positive net absorption
- The R&D-flex sector saw a modest 12,130 square feet of absorption