Office-building development in the Miami area has reached its highest level since 2009.
After a decade of restraint and modest growth during the financial recovery, Miami’s developers are now looking to pick up the pace and take advantage of the rise in occupancy and rents over the last five years. According to a recent report by CBRE, nearly 2 million square feet are expected to be developed over the next two years. By comparison, less than 500,000 square feet were in the pipeline in 2011.
“Demand for space is being fueled by corporations expanding their Latin American trade operations, growing tech companies, law firms and high-earning newcomers escaping high-tax states,” writes the Wall Street Journal.
When 830 Brickell opens in 2021, it will be the first new office tower in Miami in over a decade–WeWork is taking 146K square feet in the 1M square foot tower. Other notable projects that have broken ground recently include 850 Le Jeune I (113K SF) and X Biscayne in Downtown Miami (48K SF). All three buildings will be mixed use, with 830 Brickell slated to feature a sky lobby, and a rooftop restaurant and bar.
As for concerns of overconstruction, there’s little reason to worry: more than half of the office space under construction in Miami is leased, according to data firm CoStar Group. CoStar also reports that asking rents for office space in Miami grew 26% between Q2 2014 and Q2 2019, and vacancy rates dropped from 11.8% to 8.8% in that same period.
All of this development comes on the heels of reports about Miami’s strengthening job market and technology sector, which has grown about 40% in the last six years. Banking and finance jobs also rose 7% in that same period.
Investors credit much of Miami’s appeal to Florida’s attractive tax laws, which are continuing to lure firms from Silicon Valley and the Northeast. “The appeal got even greater in the wake of the Trump administration’s 2017 tax reform that capped federal deductions for state and local taxes,” the Journal writes. Florida has no state income tax.
ComReal is your go-to resource for South Florida CRE news. Contact us for any of your sales or leasing needs today.