Even when they're typing away at computers, it appears Miamians still want a waterfront view and luxury amenities. That's the conclusion of two studies of the Miami office tenant market core, highlighting a bias toward prime buildings that is driving somewhat counterintuitive trends.
The reports by brokerage firms JLL and Savills Studley find the prices tenants are paying for trophy buildings in central Miami are up, with rent increases outpacing the rest of the market even as growth in demand slackens.
Yet concessions being provided by landlords in the form of build-outs and other improvements are not decreasing as would be expected when the pendulum swings in their favor. That results in a market where rents appear to be hitting the peaks of the last cycle but are not quite the boon they were for landlords a decade ago.
That trend is best illustrated by Savills Studley's review of so-called effective rents in South Florida. The study looks at office rents inked by the end of last year and finds average leases signed at $40.55 a square foot for "larger, long-term direct leases signed in higher-caliber Class A properties located in Brickell, Coral Gables and downtown Miami." That price closely matches the $40.50 in rents tenants agreed to in 2006, near the apex of the last real estate boom...Duh! Studies Find Miami Office Tenants Seek Views, Amenities
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National Office Sector Report (Q1 2015)