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South Florida Office Market Report

Average Asking Rent (Price/SF)    $33.73
Vacancy Rate (%)       11.2%
Net Absorption (SF)   185,799

The second quarter of 2019 saw vacancy remain level from the previous quarter while dropping 70 basis points from one year ago to settle at 11.2%. Over the past seven years, the South Florida office market has seen demand outpace supply while only having one quarter where negative net absorption was recorded back in the fourth quarter of 2018. The 185,000 square feet absorbed in second-quarter 2019 brings year-to-date absorption to just under 327,000 square feet. This is a 63.3% uptick from the 200,000 square feet recorded one year ago. The need for higher-end space fell during the quarter, as the Class B sector led with almost 122,000 square feet of positive net absorption, compared with Class A properties' quarterly performance of 51,500 square feet. However, the Class A sector led in demand for the first half of 2019 with more than 221,500 square feet of positive net absorption, compared with lower-tier Class B and Class C properties combined total of 115,500 square feet of absorbed space. However, as asking rents in Class A buildings have increased significantly over the past 36 months, the lead has fluctuated between the upper- and lower-tier property classes, indicating that a shift from quality to cost could be on the horizon. The overall average asking rent continued to climb upward at a steady pace, with a year-over-year increase of $1.29/SF to $33.73/SF, another record level. Class A properties also climbed upward and ended the quarter just shy of the $40.00/SF mark, increasing $0.59/SF to $39.90/SF from one year ago. This is the highest average recorded, pushing past the previous 2008 peak level of $35.62/SF by just over 12.0%.

South Florida Industrial Market Report

Average Asking Rent (Price/SF)           $8.97
Vacancy Rate (%)             4.0%
Net Absorption (SF)       543,741

The second quarter of 2019 saw consistent growth in demand from the previous quarter, as positive net absorption exceeded 543,000 square feet, bringing midyear net absorption to 1.1 million square feet. This represents a decrease of roughly 60.0% from one year ago and was the most modest decline from prior midyear performances since 2010, when the recovery began. The development of 4.3 million square feet of new supply over the past 12 months barely impacted the market, as vacancy ticked up 30 basis points to 4.0%. This is a sign that demand fundamentals still held strong, as companies still desire newer warehouse/distribution space. Robust construction activity throughout South Florida has increased vacancies from new developments to such an extent that they have begun to impact average rents. Nevertheless, the quoted average asking rent remained practically level from the first quarter of 2019, as the region's tight market conditions translated into a gain of $0.68/SF from this time last year to $8.97/SF. Warehouse/distribution rents saw the largest year-over-year increase, to $8.22/SF from $7.36/SF.



South Florida Office Market Report
2Q19
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South Florida Industrial Market Report
2Q19
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