Despite High Office Vacancy Rates, South Florida Poised For Growth as Class A Projects Increase
“Miami is now a megacity, ” said Commercial Industrial Association of South Florida president Sebastian Juncadella.
The COVID-19 vaccine rollout means companies are getting back to the workplace and creating more jobs in South Florida, according to the Commercial Industrial Association of South Florida’s office market report, which has projected nearly 12% in employment growth for Miami-Dade and Palm Beach counties from 2021 to 2025.
It’s a sign that Miami is becoming a megacity on a macro level, according to CIASF President Sebastian Juncadella, a broker at Fairchild Partners, a commercial real estate agency in Miami. Sebastian Juncadella. Sebastian Juncadella, CIASF President.
He said many people are relocating to South Florida from South America and a variety of U.S. cities, including Gainesville, New York, Boston, Chicago, Hartford, Washington D.C., Los Angeles, and San Francisco.
Health care, life sciences, and financial technology are all emerging industries in the Miami area. Companies such as Blackstone, Spotify, Citadel, and Windstar Cruises are just some of the many new businesses that have relocated to South Florida.
And while 10 years ago it was uncommon for families with school-aged children to move to the region, Juncadella said now it’s the norm.
“Families are feeling comfortable moving to Miami since they know that there are great companies here,” Juncadella said. “ If their job doesn’t work out, there are two or three other companies that they can potentially work for … a very talented individual in tech or the finance industry can feel comfortable moving their family and having a backup.”
Adding gyms, cafes and other wellness-related amenities to office space is a trend employers hope will attract new tenants. What’s more, Juncadella said Miami is not a self-contained city, but rather a region connected by its strong ties to New York and the Brightline rail system. What about vacant office space?
In Fort Lauderdale, the office space vacancy rate rose 2 0 % during the COVID -19 pandemic. In Miami, there was a 15 % increase and a 17 % increase in West Palm Beach. Juncadella said the increase in Class A office building projects will help those rates go back down, but they could drop even more if owners invest in talent, updates, amenities, and the community.
“1.3 million square feet has been delivered, so that will kind of contribute to it. The newer type of office product, these new buildings, are going to be gaining a lot of the absorption as compared to the older type of buildings, the Class B and C,” Juncadella said. “Without offering the amenities, without offering these great environments for larger companies, those are the ones that are going to suffer.”
According to the report, there is currently 3.5 million square feet of office space under construction across Miami-Dade county in 26 projects. Of that, 1.4 million square feet is scheduled to be delivered this year.
“Miami just holistically is a great environment, but even further, the office buildings themselves have to cater to that, and one of the big trends we see is with all these people now realizing this is a great place to be,” Juncadella said. “Miami is now a megacity. It’s very well connected to the tri-county area, and other places, such as Latin America and New York, and high-quality tenants are going to come into town and our office market should benefit from that tremendously.”
The CIASF’s annual report highlights new trends, key learnings, comprehensive outlooks and statistics in the commercial real estate space.