A recent report published by commercial brokerage company Marcus & Millichap, projects an improved financial environment for owners of office buildings in the second half of the year as a result of lower vacancy and increased rents.
By the end of the fourth quarter, the office vacancy rate in Miami-Dade County is projected to be 16.1%, a decline of 0.8%. Average asking rents will reach $28.13 per square foot, an increase of roughly $8.00 per square foot. The report indicates that the recovery in the office sector is due in large part to stagnant growth in new office construction (as compared to new residential condominium construction, which is expected to add approximately 5,500 new units to the Miami market). Developers will add only 250,000 square feet of office space to the market this year, which will boost inventory by a meager 0.3%.
The largest office project under construction in the metro area currently is Brickell CityCentre, a mixed-use development that broke ground in June 2012 that will span three blocks west of Brickell Avenue to the south of the Miami River. The first phase of the development, expected to be completed by the end of 2015, is expected to add 240,000 square feet of Class-A office space to the heart of Miami’s financial district.
The report also projects that Miami-Dade investment activity will continue to rise as access to capital becomes more available as economic conditions improve and investors take advantage of favorable spreads between cap rates and interest rates.