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South Florida Office Market Report

Average Asking Rent (Price/SF)    $32.59
Vacancy Rate (%)     12.2%
Net Absorption (SF)    53,077

The market showed signs of slowing during the second quarter of 2018, as demand barely outpaced supply, while year-to-date absorption remained negative as a result of the first quarter's slight correction. The vacancy rate dipped 10 basis points from one year ago to 12.2% but rose 30 basis points from the low of 11.8% recorded at year-end 2017. Growth for higher-end space continued to lead the market, as the Class A sector turned in the only positive absorption through the first half of 2018, totaling over 298,000 square feet. The other market segments struggled, as over 310,000 square feet of vacant Class B office space returned to the market, while the market has negatively absorbed nearly 26,000 square feet of Class C space so far this year. This is in contrast to the 632,000 square feet of year-to-date positive net absorption recorded one year ago, signaling more of a balance in market conditions. Landlords continued to take advantage of lower vacancy and the lack of new office construction, as the overall average asking rate increased $0.92/SF to $32.50/SF during the second quarter. Miami held on to the lowest vacancy in the region with Broward County following closely behind, as both markets saw a stronger second-quarter performance. Palm Beach's woes continued, as supply outpaced occupations for a second consecutive quarter, the first time this has happened in five years.

South Florida Industrial Market Report

Average Asking Rent (Price/SF)              $8.22
Vacancy Rate (%)                4.0%
Net Absorption (SF)        1,423,387

The second quarter of 2018 saw substantial growth in demand over the previous quarter, as positive net absorption totaled 1.4 million square feet, bringing midyear net absorption to just under 2.3 million square feet. This can be attributed to Miami's strong second-quarter performance, highlighted by Amazon's occupation of its new 836,000-square-foot distribution center. South Florida's robust development kept vacancy level over the past 12 months, decreasing only 10 basis points to 4.0%. More than 5.1 million square feet of new industrial inventory has delivered in the past year, a 17.0% increase from the 4.3 million square feet delivered during the same period up to the close of second-quarter 2017. In spite of unprecedented construction activity, demand growth has kept occupancy hovering around the 96.0% mark. The region's tight market conditions and unwavering demand for new higher-end distribution space translated into a gain of $0.24/SF from this time last year to $8.22/SF, inching closer to the $8.54/SF record set back in 2007. General industrial space saw the largest year-over-year year increase, to $8.34/SF from $7.84/SF, followed by warehouse distribution space, which increased to $7.31/SF from $7.16/SF during the same time period. The robust leasing activity in new developments throughout South Florida hinders significant jumps in rent averages, as lower-tier vacancies have a greater impact and are cheaper.



South Florida Office Market Report
2Q18
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South Florida Industrial Market Report
2Q18
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