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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)              $8.92
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
2Q19
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South Florida Industrial Market Report
1Q19
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