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South Florida Office Market Report

Average Asking Rent (Price/SF)    $33.28
Vacancy Rate (%)       11.4%
Net Absorption (SF)   118,345

South Florida's office market performed modestly during the first quarter of 2019, bouncing back from its first quarterly correction in seven years. Demand outpaced supply with more than 118,000 square feet of positive net absorption as the vacancy rate dipped 50 basis points on both a quarterly and an annual basis. Overall vacant space has dropped to its lowest amount since the Great Recession began in 2007. This can be attributed to two factors. First, two major office complexes, the former American Express headquarters in Plantation and the old Office Depot office buildings in Delray Beach, were removed from the market for redevelopment into mixed-use residential space. These buildings had together accounted for more than 910,000 square feet of the market's inventory and vacancy. Second, no speculative office construction completed in first-quarter 2019. Together, these factors helped push vacancy downward in South Florida, despite the slowdown in demand. Broward County continued to lead the region in demand, while Miami-Dade saw more of a balance between with moderate positive absorption. The Palm Beach sector continued to struggle, as its supply surpassed demand for a second consecutive quarter. The Class A sector outperformed the rest of the market, with more than 139,000 square feet of positive net absorption. Class C office space trailed behind with 6,700 square feet, while the Class B segment saw a return of supply with 27,878 square feet of negative net absorption. The overall average asking rent increased by $0.44/SF to $33.28/SF during the first quarter, as the removal of lower-tier Class B inventory and vacancy allowed higher-end rents to have more of an impact on the average.

South Florida Industrial Market Report

Average Asking Rent (Price/SF)              $8.92
Vacancy Rate (%)                4.1%
Net Absorption (SF)          419,115

The South Florida industrial market saw demand outpace supply at a more modest pace, as 419,000 square feet of positive net absorption was posted in the first quarter of 2019, compared with 1.0 million square feet one year ago. Despite continued demand growth, robust construction activity pushed vacancy up 20 basis points from one year ago to settle at 4.1%. This was a minimal increase compared with the more than 5.3 million square feet of new inventory that has been delivered in South Florida since the start of 2018. Strong market conditions pushed the quoted average asking rent to new record highs and climbed 10.8% from last year at this time. South Florida's tight market conditions coupled with the delivery of higher-end distribution space translated into the average asking rate approaching the $9.00/SF mark for the region. Warehouse/distribution space saw the largest year-over-year increase, to $8.25/SF from $7.15/SF, followed closely by general industrial space, which saw rents rise to $8.78/SF from $7.98/SF during the same time period. Rents will likely increase throughout the remainder of the year. More than 5.7 million square feet of new inventory was under construction at the close of the first quarter, the most ever recorded in South Florida's history, as developers are bullish on the health of the industrial market.



South Florida Office Market Report
1Q19
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South Florida Industrial Market Report
1Q19
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