South Florida Office Market Report
| Average Asking Rent (Price/SF) | $37.25 |
| Vacancy Rate (%) | 14.4% |
| Net Absorption (SF) | -272,234 |
The region continued to feel impacts from COVID-19, with over 272,000 square feet of supply returned to the market during the second quarter of 2021. This was an improvement from each of the previous three quarters, as 628,000 square feet of negative absorption occurred throughout South Florida in the first half of this year. Notably, this was below the 1.2 million square feet returned during the second half of 2020, as market corrections appeared to be slowing. Overall vacancy increased 30 basis points from the previous quarter and increased 200 basis points from this time last year to close the second quarter at 14.4%. The Class A segment recorded most of the returned supply this year with 479,000 square feet, while the Class B sector followed with 200,000 square feet of negative absorption. In a rare turn of events, lower-tier Class C office space saw the only improvement, with over 51,000 square feet of absorbed space through the first half of 2021. Asking rents continued to hold strong, with the overall average rate inching upward from the previous quarter and 6.6% higher from the $34.93/SF rate recorded one year ago. This can be attributed to the amount of available Class A office space delivered and returned to the market, coupled with landlords holding asking rents level.
To compare the state of the office sector from the previous economic downturn, the region experienced more than 5.8 million square feet of negative absorption over a two-year span during the Great Recession of 2007. This, coupled with more than 8.5 million square feet of new office inventory from robust construction, pushed vacancy to peak over 20.0% in 2010. Since the start of the pandemic, 1.8 million square feet has been delivered, with another 2.2 million square feet remained underway in South Florida, as speculative development was significantly more disciplined this time around. Although there will likely be lingering impacts to the office segment, the severity should be lessened as Florida’s economy has been aided by population growth and an influx of companies looking to take advantage of the state’s business-friendly benefits and tax policies. During the previous downturn, it took five quarters after the initial onset of the financial crisis before landlords gave way and rates began to move downward. As most office owners are institutional investment firms, significant rent decreases are less likely, with landlords using tenant improvement concessions and free rent as the primary method of keeping existing tenants and enticing new ones.
Download South Florida Office Market Report 2Q21
South Florida Industrial Market Report
| Average Asking Rent (Price/SF) | $9.29 |
| Vacancy Rate (%) | 4.6% |
| Net Absorption (SF) | 2,641,587 |
The region saw another robust quarterly performance, recording over 2.6 million square feet of positive net absorption as demand saw its strongest performance since the second quarter of 2010, when South Florida’s industrial market emerged from the Great Recession. Approximately 4.3 million square feet of industrial space was absorbed during the first half of 2021, just shy of the 4.7 million square feet of total net absorption seen during each of the previous two years. Miami-Dade continued to dominate demand for the region as Broward and Palm Beach both saw moderate gains during the first half of the year. Over 3.9 million square feet of absorbed space came from the warehouse/distribution segment, while R&D/flex space trailed far behind with 172,000 square feet of positive net absorption. General industrial space saw demand outpace supply by 106,000 square feet during the first half of 2021. Twenty-three buildings totaling approximately 4.0 million square feet of new industrial inventory were delivered at the midyear point. Despite vigorous industrial development, robust demand pushed vacancy down 10 basis points to 4.6% from one year ago. Another 24 buildings totaling more than 5.8 million square feet remained under construction, with more than 32.0% pre-leased as developers show no signs of slowing the industrial boom. Tight market conditions, coupled with healthy demand fundamentals, pushed the quoted average asking rent upward to $9.21/SF. Although rent growth slowed over the past year, all three industrial segments still experienced increases from the previous quarter and the same time last year.
Download South Florida Industrial Market Report 2Q21