The report, authored by Cushman & Wakefield Florida Research Manager Chris Owen and Research Analyst Gareth Watson, highlights Class A office market rental fundamentals in Florida’s major markets (Broward County, Jacksonville, Miami, Orlando, Palm Beach County and Tampa Bay) and compares the current quarter’s rates to those at the height of the last real estate cycle (2008–09).
Key findings in the report include:
- Statewide, full-service asking rental rates for Class A office space increased 6.2 percent over the past year to $34.28 with all markets showing increases in asking rents.
- The latest jobs report shows a 2.7 percent increase, or the addition of 226,200 new jobs, over the past year, enhancing demand for office space.
- Overall, higher rental rates were not driven by increased levels of new construction, but by heightened leasing demand and absorption.
- Four out of the six major Florida markets had rental gains of 4 percent or more over the past four quarters with the Broward and Palm Beach office markets leading the way at 18.2 and 12.6 percent, respectively.
- Full-service asking rents for Class A space, from a statewide basis, have surpassed rent peaks from the last cycle by 16.0 percent.
“Broad-based job growth in Florida led to another solid quarter in rent increases for the office sector,” said Owen. “Continued gains in rents and occupancy could provide the key incentives for developers to break ground on several large-scale speculative projects proposed this year.”
Orlando was the lone market to not see rents surpass previous rent levels, still down by 5.3 percent from rent heights in the last cycle. However, year-over-year analysis revealed rent growth of 1.8 percent in Orlando, a development that may spur optimism for new construction.
“Even though Orlando still lags the other markets in terms of peak rent this cycle, we have seen significant rent growth over the past year in conjunction with falling vacancy rates,” said Jeff Sweeney, Senior Director of Office Leasing. “We are excited to see that confidence spill over into additional new speculative construction. We anticipate a couple of new projects in Orlando to potentially break ground by the end of the year.”
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