Cushman & Wakefield’s Florida Research Team has published a mid-year review of rental rates for Class A office space in key Florida markets. The report shows that increased employment across major metro areas has sparked significant rent and occupancy gains across the state. In Part 1 of our blog series on the report, we take a look at mid-year asking rates compared to this time last year. The graphic below shows how rents have change year over year.
In a significant departure from the past few years, the Central and North Florida office markets of Tampa, Orlando, and Jacksonville led the state at mid-year with rent growth well above 3.0% for each market, while South Florida markets saw increases below 3.0%. However, rents in Central and North Florida markets remained 40% lower compared to rents in South Florida.
The upward push in rents was driven by several factors, which differed from market to market. In Tampa and Jacksonville, strong tenant demand and limited availabilities bolstered landlords’ confidence to set record high asking rates in nearly every submarket. With new construction expected to deliver in both markets in the next 12 to 24 months, rental rates are expected to increase. In contrast, rent gains in Orlando and South Florida were predominantly due to the 2.2 million square feet under construction, which are expected to come to market at peak rents.
“Florida’s office markets are being sustained by strong tenant demand and solid economic fundamentals,” said Larry Richey,
Managing Principal for Florida. “Most markets are seeing new construction, especially in the CBDs and core submarkets, meeting the needs of existing tenants in the market for new space options. Critically important in this cycle has been the restraint by developers to add new product, which has a lot to do with the preleasing required for financing to close.”
Read the full Q2-2018 Florida Rental Report here.
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