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2Q2011 Miami Marketview Report


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2Q2011 Miami Marketview Report

  1. 1. CB RICHARD ELLIS Miami Office www cbre com/research Second Quarter 2011 Through mid-year 2011, the Miami office market most buildings are expected to remain competitive. continued its slow march toward recovery as Year-over-year, vacancy increased 40 basis points vacancy declined slightly, net absorption was to 18.3% causing the average direct asking lease positive in the second quarter and year-to-date rate to decline $0.48 PSF to $30.03 PSF FullQuick Stats office sales surpassed 2010 gross figures. Service Gross (FSG). Change from last Leasing activity was stable with more than Miami currently has three office buildings under Current Yr. Qtr. Total Vacancy 18.3% 700,000 SF of space signed this quarter. Tenant construction totaling 832,000 SF, all of which will movement within submarkets and to neighboring be delivered by year-end. 600 Brickell at Brickell Avg Dir Asking Lse Rate $30.03 submarkets remains the overriding theme in World Plaza signed its first tenant, Credit Agricole Qtr Net Absorption 83 K leasing activity, making it challenging to bring to a 20,137 SF lease. Upon completion in Under Construction 832 K down the overall vacancy. Berger Singerman y g g September, IFB will move from its current space at p , p Completions 0K announced it will move from Southeast Financial 801 Brickell to its new building near 8th Street and * The arrows are trend indicators over the specified time period and do not Center in Downtown to 1450 Brickell. The move Douglas Road to occupy 30,000 SF leaving represent a positive or negative value. will have little effect on the overall market, as they 15,000 SF for lease. 396 Alhambra Circle is set to (e.g., absorption could be negative, but still represent a positive trend over a will occupy the same amount of space. deliver in December. specified period.) Transactions such as Morgan Stanley Smith Sales of office buildings picked up substantially Barney’s 19,000 SF expansion at Miami Center over first quarter numbers with major transactions and Dade Medical College’s 39,971 SF new at Miami Herald HQ for $236 million, Suntrust location at Miami Lakes Business Center will be International Center for $80 million and One key to the ongoing recovery as they absorb space.Hot Topics Turnberry Place in Aventura for $53 million. In However, until Miami achieves steady, solid job total, 2,432,779 SF of office product sold in the• Pre-certified LEED Platinum Brickell growth, the high unemployment rate will continue second quarter with the average price per square World Plaza signed its first tenant, to slow the office market’s recovery. foot at $290. Total transactional volume was $493 $ $ Credit Agricole to a 20,137 SF lease 20 137 lease. There were no construction deliveries in the second million with second quarter sales accounting for• Miami-Dade unemployment reached quarter. With supply set to increase with the 93%. Increased sales can be attributed to lender 13.7% making it the highest in delivery of three Class A buildings by year-end and and buyer confidence and low interest rates. South Florida and the second highest Class A vacancy currently at 17.6%, lease rates in in Florida. Vacancy Rate 18.3% Total Vacancy vs. Average Asking Lease Rate (FSG) Average Direct Asking Lease Rate $30.03• Investment in Miami infrastructure is 20% $35 on the rise with the Port of Miami expansion and Miami International $30 16% Airport light rail link to the CBD. $25 12% $20• Genting Group announced Resorts World Miami, an entertainment 8% $15 complex on the current Miami Herald $10 $ site. 4% $5 0% $0 2006 2007 2008 2009 2010 2011 YTD © 2011, CB Richard Ellis, Inc.
  2. 2. MarketView MiaMarket Statistics Direct Total YTD Net Under Avg Dir Asking Submarket Building SF Vacancy % Vacancy % Absorption Construction Lse Rate (FSG) ami Office Airport W A West 9,714,426 9 714 426 17.9 17 9 18.5 18 5 (24,712) (24 712) 0 $25.29 $25 29 Aventura 1,269,746 11.9 12.6 26,809 0 $33.19 Biscayne Blvd. 1,214,469 42.6 42.6 (16,157) 0 $26.14 Brickell 6,536,894 17.0 17.5 99,179 614,908 $35.25 Coconut Grove 1,073,406 11.4 11.4 (8,369) 0 $30.30 Coral Gables 6,119,932 15.0 16.3 16,498 217,276 $33.69 Downtown Miami 7,442,092 20.9 21.7 (118,465) 0 $34.04 Kendall 3,444,388 11.6 12.0 30,161 0 $27.42 Miami Beach 1,903,532 10.0 11.3 (41,473) 0 $29.68 Miami Lakes 1,509,462 27.7 28.3 (18,333) 0 $23.58 North Miami 1,337,635 18.2 20.2 9,688 0 $23.76 Residual 1,502,668 13.5 13.5 (18,063 ) 0 $20.75 South Dade 499,756 18.6 18.6 (36,112) 0 $22.18 CBD Total t 13,978,986 19.1 19.7 (19,286) 614,908 $34.57 Suburban Total 29,589,420 16.9 17.6 (80,063) 217,276 $27.36 Overall Total 43,568,406 17.6 18.3 (99,349) 832,184 $30.03 Class A Total 19,456,767 16.5 17.3 13,054 832,184 $36.31 Class B Total 18,316,532 19.3 20.0 (135,915) 0 $26.56 Class C Total 5,795,107 15.7 15.8 23,512 0 $22.34t The Miami Central Business District is a combination of the Brickell and Downtown Miami submarkets. Miami-Dade 13.7% Florida 10.5% The national unemployment rate decreased from 9.3% recorded lastUnemployment Rate United States 8.7% year at this time to the current rate of 8.7%. The state of Florida’s unemployment rate decreased 0.4 percentage points to 10.5% from 14% second quarter 2010 after reaching a three decade high of 12.2% 12% during that timeframe. The statewide figure is the lowest reported number since August 2009. Miami-Dade County was the only South g y y 10% Florida market to report a net increase in unemployment over the past 8% year with an increase of 1.6 percentage points. At 13.7%, Miamis 6% unemployment rate is the highest in South Florida and remains significantly higher than the national average, but Moodys forecasters 4% have predicted a drop of 330 basis points through 2012 to 10.4%. 2% Since the same time last year the unemployment rate in Broward y p y Sec 0% cond Quarter 2011 2006 2007 2008 2009 2010 2011 YTD County fell 0.5 percentage points to 9.0% while Palm Beach County’s jobless rate of 10.2% was a decrease of 0.8 percentage points over Source: Bureau of Labor Statistics (non-seasonally adjusted) the same period. Page 2 © 2011, CB Richard Ellis, Inc.
  3. 3. MarketView Mia Class A $36.31 Class B $26.56Direct Asking Lease Rate (FSG) Class C $22.34 $40 $35 With vacancy seeing little change since first quarter, overall average ami Office asking lease rates predictably remained constant. While the Miami- $30 Dade Class A rate did not change from the previous quarter, year-over- $25 year the asking lease rate declined $0.97 PSF to $36.31. Class B and $20 C lease rates saw minimal changes year-over-year. Stabilized $15 buildings with high occupancy are offering fewer concessions and sticking to asking lease rates. Over the last year, landlords focused on $10 blend and extend deals to try to keep occupancy high and reduce cash $5 $ outlay for TIs, however this strategy is now less common. $0 2006 2007 2008 2009 2010 2011 YTDNet Absorption 2011 YTD (99) KThousands of SFTh d f 1,600 Miami posted a positive net absorption with 83,230 SF in the second 1,100 quarter, although YTD net absorption remains negative. Brickell, Downtown and Airport West each posted positive net absorption 600 upwards of 30,000 SF. Most of the smaller submarkets accounted for much of the negative absorption due to tenants taking advantage of 100 aggressive lease rates in other submarkets. After signing in January, (400) Progressive Insurance moved into their 16,000 SF space at Flagler Station in Airport West and Apex USA moved into its 10,000 SF space (900) at Miami Center in Downtown. 2006 2007 2008 2009 2010 2011 YTD Under Construction 832 KUnder Construction and Completions YTD Delivered 0 Plans for new office development were announced for the first time inThousands of SF several quarters. Swire Properties plans to develop Brickell CitiCentre, 4,000 a 4.6 MSF mixed use proposal that includes 900,000 SF of office. 3,500 Procacci Development is in the planning stages for its next 85,000 SF, 3,000 hurricane-resistant building at Crossroads at Dolphin Commerce Center. In Coconut Grove, Pointe Group Advisors announced plans to 2,500 develop a 750 000 SF mixed use development that will include 750,000 2,000 225,500 SF of office to be built in phase II. Construction will take five 1,500 to seven years. 1,000 Notable Under Construction Projects: 500 Building Submarket SF 0 600 Brickell Ave. Brickell 614,908 Sec 2006 2007 2008 2009 2010 2011 YTD 396 Alhambra Circle North Coral Gables 172,276 172 276 cond Quarter 2011 IFB Headquarters Coral Gables 45,000 Page 3 © 2011, CB Richard Ellis, Inc.
  4. 4. MarketView Miami Office Available Square Feet Available building area which is either physicallyTop Transactions vacant or occupied. Size (SF) Tenant Address Average Direct Asking Lease Rate Rate determined by multiplying the asking net lease 41,892 Morgan Stanley Smith Barney 201 South Biscayne Boulevard rate ffor each building by its available space, h b ildi b i il bl *39,000 Dade Medical College 5875 Northwest 163rd Street summing the products, then dividing by the sum of the available space with net leases for all buildings in 35,000 IATA 703 Waterford Way the summary. Size (SF) Buyer Address Sales Price Building SF The gross building square footage minus the elevator 750,000 Genting Group 1 Herald Plaza $236 million core, flues, pipe shafts, vertical ducts, balconies, and stairwell areas. 424,767 Crocker Partners 1 Southeast 3rd Avenue $80 million Direct Vacancy % Di t V *135,000 Triarch Capital Group 19495 Biscayne Boulevard $53 million Vacant building area excluding sublease space * Denotes a CB Richard Ellis transaction divided by the Building SF.Miami Submarket Map Full Service Lease A lease in which the stated rent includes the operating expenses and taxes for the building. Market Coverage Includes all competitive office buildings 30,000 square ffeet and greater in size in Miami-Dade t d t i i i Mi i D d County, excluding single tenant, government and medical office buildings. Net Absorption The change in occupied square feet from one period to the next. Net Leases Includes all lease types whereby the tenant pays an agreed rent plus most or all, of the operating most, all expenses and taxes for the property, including utilities, insurance and/or maintenance expenses. Normalization Due to a reclassification of the market, the base, number and square footage of buildings of previous quarters have been adjusted to match the current base. Availability and Vacancy figures for those buildings have been adjusted in previous quarters. Total Availability % Available Square Feet divided by the Net Rentable Area. Total Vacancy % Vacant building area including sublease space divided by the Building SF. Under Construction Buildings which have begun construction as evidenced by site excavation or foundation work. Vacant Square Feet Existing building area which is physically vacant or immediately available. For more information regarding the © Copyright 2011. CB Richard Ellis (CBRE) Statistics contained herein may represent a different data set than that used MarketView, please contact: to generate National Vacancy and Availability Index statistics published by CB Richard Ellis’ Corporate Communications Alex Vargas Vila, Researcher Department or CB Richard Ellis’ research and Econometric Forecasting unit, Torto Wheaton Research. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it CB Richard Ellis and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its 777 Brickell Ave, #900 accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CB Richard T. 305.428.6345 Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis.