April 2011 Office Notes


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April 2011 Office Notes

  1. 1. CB Richard Ellis777 Brickell Ave, Suite 900Miami, FL 33131OfficeNOTESNews on the state of the Miami-Dade Office Market...
  2. 2. CB RICHARD ELLIS :: MIAMI-DADE OfficeNotes April 2011THE WINDOW OF OPPORTUNITY IS CLOSING Transaction volume has picked up so real estate the pendulum swings the other way. We are showing that professionals are optimistic that the bad times are behind increased competition from the availability of Class A and us. You have to love a real estate broker – we are the Class B product continues to place pressure on Class C world’s eternal optimistic. At CBRE, we office to be more competitive. are seeing trends that tenants still have ALTHOUGH we have a negative Another positive sign is that unemployment is opportunities to take advantage of absorption of 118,065 sf, this was beginning to drop. Last year Miami hit 13%. market conditions, however, the great expected as several large tenants We have now dropped to 11.8%. Florida is concessions being offered last year are physically moved into their new at 11.0% but we are still lagging behind the fading away. Now is the time to act if locations. national unemployment which is at 9.8%. Our you can. research department theorizes that some of Our first quarter numbers are showing that the Miami this decline in unemployment is due to people no longer office market has finally stabilized. Although we have filing or qualifying for unemployment benefits. a negative absorption of 118,065 sf, this was expected Indicators are showing that Miami is emerging from as several large tenants physically moved into their new the other side of the Great Recession. With the exciting locations. Downtown Miami was hardest hit by this event. expansion of the Port of Miami, the Miami economy Our asking rent average is an interesting number because should continue to recover and prosper. Is your company it’s the average price of the vacant space. So if we have poised for this? Call me to discuss creative ideas on how lots of vacant Class A and Class B space, the number is to grow your business without increasing your real estate skewed that way. If the vacant space is mostly Class C, costs. ELIZABETH SANTOS FIRST QUARTER 2011 Office Specialist TOP LEASE TRANSACTIONS elizabeth.santos@cbre.com T 305.779.3133 CB Richard Ellis, Inc. | Licensed Real Estate Broker SF Tenant Submarket Elizabeth Santos has over 18 years of experience in office leasing with over $150 32,000 FIU Brickell million of lease transactions during that time. Her primary focus is tenant representation. Elizabeth is currently on the Leadership Council for Take 22,526 Regus Brickell Stock in Children and a member of both the Doral Business Council and The Commonwealth Institute. She is the 2009 Rising Star for CBRE’s 18,000 Astra Zeneca Coral Gables Miami Office and Top 25 for CBRE Florida Source: www.cbre.com/research © 2011, CB Richard Ellis, Inc.
  3. 3. FIRST QUARTER 2011 MARKET STATISTICS OfifceNotes Avg Asking Dir Direct Total YTD Net Under Submarket Building SF Lse Rate ($/SF/Yr) Vacancy % Vacancy % Absorption Construction Full Service Gross Airport West 9,886,510 18.6 19.2 $24.83 (68,725) 0 Brickell 6,536,894 19.1 19.5 $35.59 7,861 614,908 Coral Gables 6,119,932 15.6 16.8 $33.40 12,008 217,276 Downtown Miami 7,605,092 20.1 20.6 $33.69 (117,957) 0 CBD Total 14,141,986 19.7 20.1 $34.58 (110,096) 605,886 Suburban Total 29,761,504 17.0 17.5 $27.37 (7,969) 217,276 Overall Total 43,903,490 17.9 18.4 $30.02 (118,0650 823,162 Class A Total 19,456,767 16.7 17.3 $36.29 (19,895) 823,162 Class B Total 18,313,879 19.7 20.2 $26.75 (99,807) 0 Class C Total 6,132,844 16.1 16.3 $22.12 1,637 0 Source: www.cbre.com/research For the full First Quarter 2011 MarketView visit http://gkc3.cbre.com This Port trade surplus. In addition, experts believe the Deep Dredge of Miami’s project alone will allow the Port to double cargo output and D e e p create up to 33,000 new jobs. Dredge To compliment the Deep Dredge project, the Port of project Miami anticipates completing its tunnel project by Spring has the 2014. This tunnel will provide trucks (and passengers) potential direct interstate access between the Port of Miami and of shifting I-395 thus enabling the Port to increase truck movementsPORT OF MIAMI’S U.S. trade with East to twice today’s capacity. In addition, the U.S. DepartmentDEEP DREDGE of Transportation awarded the Port of Miami with a $22.7 Asia from million grant to restore rail service between the Port and U.S. Pacific the Florida East Coast Rail Yard in Hialeah. This provides ports to direct cargo access to the national rail system, furtherAtlantic ports. If you have been following the local business enhancing our Port’s intermodal capacities. The rail projectnews of late, you know that Governor Rick Scott approved is scheduled to be completed in 2013.$77 million for the Port of Miami to deepen the channel tominus 50 feet so larger ships can gain access to the port. “This is a solid first step toward enhancing Florida’sThe Port’s Deep Dredge project is timed to coincide with the infrastructure and getting our state ready for a new CB RICHARD ELLIS :: MIAMI-DADEopening of an expanded Panama Canal in 2014. There generation of international trade with South Americaare only three other Atlantic Seaboard ports that will have and beyond,” said Governor Scott. As the second largestour capabilities – Norfolk, New York and Halifax. Miami economic engine in Miami-Dade County, the Port currentlyis the closest major U.S. port to the Panama Canal, so it is accounts for $18 billion in economic impact annually andpositioned as the first port of call for the next generation of 176,000 jobs. This project should solidify trade as a majorfully-laden post-Panamax vessels. business source for South Florida.The industrial brokers in my office are thrilled. Why theexcitement? These post-Panamax ships can carry almost PORT OF MIAMI FACTS AT A GLANCEfour times the TEU’s (20-foot equivalent units) of our • Largest container port in Florida - 807,000+TEU’Scurrent Panamax vessels. More cargo means more • 11th largest port in the nationdistribution space could be needed. Trade is king in Miami. • Closest US port to the Panama CanalIn 2010, the Miami Customs District produced the largest • Largest US cruise port - serves over 4 million cruise ship passengers annuallytrade surplus of any area in the nation. We exported FOUR • Serves 20 shipping lines that call on 100 countries and 250 portstimes the national average – that’s an over $20 billion April 2011
  4. 4. OfifceNotes GETTING IN THE GAME VS. CLOSING THE DEAL BY: SENIOR MANAGING DIECTOR, JOHATHAN SANGSTERThe doldrums of the 2007 Recession continue to affect Key Strategic Drivers - Infrastructure, workforce, and taxmost regional and State economies. Budget deficits, lack of climate are on the top of the list. Following these items areemployment growth, consolidations, and little to no economic availability & cost of real estate and regulatory concerns.development prospect activity are plaguing large community. Overall, relative to all items most corporate real estateState policymakers, Mayor’s offices, and regional economic executives consider, economic incentives tend to be one ofdevelopment marketing groups are starting to question their the final factors in a location decision. Incentives can becomerecruiting strategies and, more specifically, policies toward more decisive when competing markets have relatively similareconomic incentives. Some states are far behind the eight labor costs & skill levels as well as State & local taxes.ball when it comes to economic development. Communitiesin the middle of the country (Nebraska south to Texas) to the CLOSING THE DEALMidwest (Ohio, Indiana, Illinois, Michigan) to the Southeast As companies become more and more mobile and indifferent(Louisiana, Arkansas, Georgia, Florida) are much more to location, economic incentives can make the differenceevolved at economic development and have instituted policies between winning and losing. Economic incentives are intendedand incentives programs to tap into when a strong prospect to lure businesses that will significantly expand the tax base,comes looking. At the end of the day, the discussion of better employ local residents, have a catalytic effect on local suppliers,competing for quality jobs and capital investment comes down are in a job-growing mode, and creates local wealth.to “getting in the game” and “closing the deal.” Incentives are the most persuasive when location factors are relatively equal between locations and can either level theGETTING IN THE GAME playing field or be the deciding factor among a short list ofThe primary role of a State’s economic development policy is to locations. The net effects of meaningful incentive programssupport business recruitment and retention. Firms considering are to lower startup investment and reduce on-going operatingrelocation or expansion almost always evaluate how state costs. If an incentives package hits neither of these hot buttons,economic development assistance might affect their total cost a business and site selection consultant will immediately writeof doing business in a particular location. In order to effectively off the projected savings.and efficiently target economic development policies, a clearunderstanding is needed of what questions a CEO asks when ECONOMIC DEVELOPMENT & TAX POLICYmaking a location decision. Consistent economic development policies and incentives tools can help on the margin to better diversify a State’s economy. IfBusiness Climate Rankings - Company executives, targeted strategically and effectively, these policies will have aeconomic development agencies, and site selection consultants significant impact on a State’s ability to grow better by creatingkeep a close eye on a state’s business climate ranking. Whether high quality jobs and inducing significant capital investmentto confirm a perception or satisfy curiosity, business climate that otherwise would not happen.rankings tend to be one of the first items of business whenconsidering new operations. A number of business climate States and communities can either sit or wait for businessrankings are periodically published by Site Selection Magazine, activity to happen or they can control their own destiny. In aBusiness Facilities, CNBC, Forbes, Chief Executive Magazine, world where communities cannot control labor costs, real estate CB RICHARD ELLIS :: MIAMI-DADEand IBM Global Business Services just to name a few. pricing, and geography, economic incentives can sometimes be the only thing controllable in recruiting new business to the State. A special thank you to Jonathan for sharing his knowledge and expertise. Do you think South Florida is sitting and waiting or actively courting new companies to move here? We havent seen many new large businesses move here during the recession, but with a slow recovery beginning, perhaps this can change. If you are considering adding jobs, the Beacon Council and South Florida Workforce may be able to provide some assistance. Contact me for details on my experiences with these organizations.PERSONAL NOTE In 2009, we renovated the patio area of my home. The screen enclosure came down, the pool was re-tiled and re-surfaced and we painted the house a bright tropical color. Welcome to Club Santos! This year we have added a combo pool table/ping pong table. It’s a great place to spend a lazy Sunday afternoon. My husband recently gave me a fantastic gift – a $10 Home Depot mister that April 2011 sprays a refreshing mist while I lounge by the pool. He knows me so well! © 2011 CB Richard Ellis, Inc. CB Richard Ellis statistics contained herein may represent a different data set than that used to generate National Vacancy and Availability Index statistics published by CB Richard Ellis’ Corporate Communications Department or CB Richard Ellis’ research and econometric forecasting unit, CB Richard Ellis—Econometric Advisors. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its 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 Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis.