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South Florida Office Market Report

Average Asking Rent (Price/SF)    $32.87
Vacancy Rate (%)     12.1%
Net Absorption (SF)   283,738

The third quarter of 2018 saw vacancy remain unchanged from the previous quarter while recording the strongest absorption since the year began. This performance can be attributed to the two construction completions totaling 221,000 square feet with over 76.0% unoccupied at the time of delivery. The new construction space combined with the almost 284,000 square feet of net absorbed space held vacancy level from second-quarter 2018. Nine buildings totaling over 926,000 square feet were delivered over the past 12 months. Although leasing activity was strong with only 35.0% still available, slowing demand growth was still unable to counteract the new speculative construction, as vacancy rose 20 basis points from one year ago to 12.1%. The need for higher-end space diminished during third-quarter 2018, as the Class B sector led with 209,201 square feet of positive net absorption compared with Class A properties' quarterly performance of 119,537 square feet. Whereas the Class A sector dominated demand continuously from 2012 to 2015, the lead has fluctuated between the two classes over the past 36 months, as significant increases in Class A asking rents have apparently hastened a shift from quality to cost. The overall average asking rent continued to climb upward, with the largest year-over-year increase of $1.80/SF to $32.87/SF. This is the highest average recorded, surpassing by 8.0% the previous peak of $30.38/SF reached in 2008.

South Florida Industrial Market Report

Average Asking Rent (Price/SF)              $8.43
Vacancy Rate (%)                3.9%
Net Absorption (SF)          778,146

The third quarter of 2018 marked more than eight years of growth for South Florida's industrial market, as demand outpaced supply for the 34th consecutive quarter. Although demand slowed, starting from first quarter of 2017, more than 3.2 million square feet of positive absorption held vacancy level from one year ago to settle at 3.9%, despite more than 4.5 million square feet of new industrial inventory added over the last year. Vacancy has only risen 20 basis points from the record low of 3.7% recorded at the end of 2017. In a two-year span, sturdy demand has accounted for more than 7.3 million square feet of positive absorption, although this is less than the 13.1 million square feet absorbed in 2015 and 2016. Almost 4.4 million square feet of new inventory is currently under construction, with more projected to break ground over the next 12 months. Will the strong leasing of new buildings continue, or could the market see vacancies begin to rise if economic conditions slow in the near future? Either way, market fundamentals and strong ties to Latin American and Caribbean Island distribution should lessen the impact if a future slowdown is in store. The tightening market translated into an asking average rental rate of $8.43/SF, an increase of $0.45/SF from the average recorded one year ago and slightly shy of the $8.53/SF record set back in the second quarter of 2007. The third quarter of 2018 marked more than eight years of growth for South Florida's industrial market, as demand outpaced supply for the 34th consecutive quarter. Although demand slowed, starting from first quarter of 2017, more than 3.2 million square feet of positive absorption held vacancy level from one year ago to settle at 3.9%, despite more than 4.5 million square feet of new industrial inventory added over the last year. Vacancy has only risen 20 basis points from the record low of 3.7% recorded at the end of 2017. In a two-year span, sturdy demand has accounted for more than 7.3 million square feet of positive absorption, although this is less than the 13.1 million square feet absorbed in 2015 and 2016. Almost 4.4 million square feet of new inventory is currently under construction, with more projected to break ground over the next 12 months. Will the strong leasing of new buildings continue, or could the market see vacancies begin to rise if economic conditions slow in the near future? Either way, market fundamentals and strong ties to Latin American and Caribbean Island distribution should lessen the impact if a future slowdown is in store. The tightening market translated into an asking average rental rate of $8.43/SF, an increase of $0.45/SF from the average recorded one year ago and slightly shy of the $8.53/SF record set back in the second quarter of 2007.



South Florida Office Market Report
3Q18
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South Florida Industrial Market Report
3Q18
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