Miami-Dade Office Market Summary Q1 2019
Core Content
The Miami-Dade office market in the first quarter of 2019 showed a mix of stability and growth, influenced by new construction, shifting tenant preferences, and sector-specific job creation. The market experienced a slight decline in leasing activity compared to the previous year, but continued to see strong co-working demand and new lease signings.
Key Economic Indicators
| Indicator |
Q1 18 |
Q1 19 |
12-Month Forecast |
| Miami-Dade Employment |
1.19M |
1.21M |
▲ |
| Miami-Dade Unemployment |
4.0% |
3.2% |
▼ |
| U.S. Unemployment |
4.1% |
3.8% |
▼ |
- The Miami-Dade unemployment rate decreased by 80 basis points (bps) year-over-year (YOY) to 3.2%.
- The Professional & Business Services sector saw a 4.2% increase in employment over the past 12 months.
- A total of 26,300 jobs were added, resulting in a 2.2% annual increase.
Market Overview
- Rental Rates: Full service asking rents increased by 1.7% to $39.25 psf YOY, while Class A asking rents decreased by 1.0% to $44.48 psf due to competition from new suburban inventory.
- Class C Rental Rates: Increased by 6.2%, indicating a strong demand for lower-cost space.
- Downtown: Led in rent growth, rising by 8.0% to $45.79 psf.
- New Construction: 2.0 million square feet (msf) under construction, with a significant portion in the Biscayne submarket (1.2 msf) in the newly developed Wynwood neighborhood.
Vacancy Rates
| Submarket |
Vacancy Rate (Q1 19) |
YOY Change |
Notes |
| Downtown |
23.0% |
-150 bps |
Improved due to major lease signings |
| Brickell Avenue |
11.8% |
+80 bps |
Increased due to tenant movement to lower-cost areas |
| CBD |
17.7% |
- |
Vacancy rate remains high |
| Suburban |
11.4% |
- |
Vacancy rate stable |
| Overall |
13.3% |
+120 bps |
Increase due to new supply |
- The overall vacancy rate rose to 13.3%, driven by 547,000 sf of new supply delivered over the past year, with 20.0% of that supply remaining vacant.
- The Downtown submarket saw a significant drop in vacancy to 23.0% after major lease signings at Three MiamiCentral.
Leasing Activity
- Total leasing activity in Q1 2019 was 635,000 sf, a 10.4% decrease compared to the same period in 2018.
- Co-working accounted for 27.3% of leasing activity, with notable additions by WeWork and Industrious.
- YTD net absorption was -246,600 sf, primarily due to smaller tenant move-outs.
Submarket Performance
| Submarket |
Inventory (SF) |
Vacancy Rate |
Net Absorption (SF) |
Average Asking Rent (All Classes) |
Average Asking Rent (Class A) |
| Brickell Avenue |
6,525,719 |
11.8% |
-43,670 |
$43.18 |
$49.41 |
| Downtown |
7,242,704 |
23.0% |
+29,136 |
$45.79 |
$52.55 |
| CBD |
13,768,423 |
17.7% |
-14,534 |
$45.07 |
$51.96 |
| Coral Gables |
6,116,773 |
10.5% |
-23,724 |
$39.63 |
$42.53 |
| Airport West |
11,319,646 |
13.3% |
-67,307 |
$33.15 |
$34.70 |
| Coral Way |
626,935 |
6.1% |
-13,808 |
$35.21 |
N/A |
| South Dade |
3,309,014 |
10.5% |
+2,044 |
$31.86 |
$48.74 |
| Northeast Dade |
2,453,613 |
8.4% |
-20,918 |
$38.50 |
$48.84 |
| Biscayne |
1,984,719 |
19.0% |
-65,088 |
$39.10 |
$42.74 |
| Miami Lakes |
1,774,015 |
15.0% |
-20,145 |
$26.31 |
$28.75 |
| Coconut Grove |
835,238 |
6.6% |
+867 |
$43.34 |
$44.27 |
| S. Gables/ S. Miami |
983,309 |
4.5% |
-19,625 |
$40.57 |
$52.16 |
| Miami Beach |
1,910,316 |
6.2% |
-6,409 |
$44.83 |
$55.91 |
| Suburban |
31,888,783 |
11.4% |
-232,066 |
$35.10 |
$38.39 |
- Suburban submarkets showed higher vacancy rates, with tenants seeking lower-cost options.
- Downtown and Miami Beach submarkets had the highest average asking rents.
- The CBD submarket had a vacancy rate of 17.7% and a slight decrease in net absorption.
Key Lease Transactions Q1 2019
| Property |
SF |
Tenant |
Transaction Type |
Submarket |
| 7600 NW 19th Street |
26,261 |
Cable & Wireless Communications, Inc. |
New |
Airport West |
| 9130 S Dadeland Boulevard |
20,268 |
AXA Equitable Life Insurance |
New |
South Dade |
| 2 S Biscayne Boulevard |
13,742 |
Buchanan, Ingersoll, Rooney, P.C. |
New |
Downtown |
| 11410 NW 20th Street |
13,309 |
ADT Security Systems |
New |
Airport West |
Key Sales Transactions Q1 2019
| Property |
SF |
Seller/Buyer |
Price / $PSF |
Submarket |
| 250 Bird Road |
24,238 |
Coral Gables Luxury/Baptist Health |
Portfolio |
Coral Gables |
Market Outlook
- Cushman & Wakefield anticipates that asking rents will stabilize in 2019 due to the competition between new high-priced construction and existing landlords' aggressive pricing.
- Vacancy rates are expected to be more challenging in the CBD, while suburban areas are projected to attract more leasing activity.
- The trend of tenants moving to suburban submarkets is likely to continue due to the availability of quality space at lower costs.
Conclusion
The Miami-Dade office market in Q1 2019 is characterized by a mix of growth and challenges. While rental rates increased in some submarkets, particularly Downtown, the overall vacancy rate rose due to new supply. The Professional & Business Services sector contributed to job growth, and co-working spaces continued to influence leasing trends. Suburban areas are expected to see increased activity as tenants seek more affordable options.
