Cushman & Wakefield’s Q2 Florida Rental Report analyzes office rental rates for Class A space in key markets throughout the state. The report shows that increased employment across major metro areas has sparked significant rent and occupancy gains across Florida. In Part 2 of our blog series on the report, we look at mid-year asking rates compared to peak rents in the last cycle.
As shown in the graphic above, for the first time this cycle, Class A rents in every major market have surpassed peak rents from the previous cycle (2008-2009). In contrast to the year-over-year comparison (which you can read more about in Part 1 of this series), the South Florida markets have seen significant rental gains when compared to the height of the last real estate cycle. Palm Beach County leads the state with a 20.5% rise, mostly due to the market catering to small office tenants, which provides landlords leverage to push rates more aggressively than in other markets. The driving force behind rental gains in Miami-Dade is directly tied to significant construction deliveries: 4.1 million square feet since 2010.
The North Florida markets have been late to the office construction party and in terms of rental rate recovery from the recession. Prior to Q2, Orlando had been the only major market in the state that had not yet surpassed the last cycle’s peak rents. New office construction in the three northern markets did not pick up until 2017 and was predominately build-to-suits. The lack of new product caused some historically low vacancy rates in key submarkets such as Westshore in Tampa Bay, Maitland in Orlando, and Deerwood Center in Jacksonville.
Read the full Q2-2018 Florida Rental Report here.
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