CB RICHARD ELLIS




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MarketView Miami Office
Market Statistics
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MarketView Miami Office
                                                                          Class A      $36.87
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MarketView Miami Office


Top Lease Transactions
Size (Sq. Ft.)                      Tenant                               ...
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Market View 1Q2010

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CBRE Miami\'s Office Report for 1Q2010

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Market View 1Q2010

  1. 1. CB RICHARD ELLIS Miami Office www.cbre.com/research First Quarter 2010 The Miami office market, in short, remains 50% of the project pre-leased. 1450 in a state of flux as the local economy Brickell Ave. completed construction in the continues to struggle alongside the Brickell submarket bringing 570,000 SF of housing downturn. Last year, companies new inventory to the market. The project is were reluctant to make real estate 70% vacant with only one major tenant decisions, echoing the uncertainty being committed to the building. This is the first realized in the financial markets. As of first of three major buildings to come to market Quick Stats quarter, real estate professionals in Miami in the Central Business District (CBD). Met are noticing companies are now taking II is anticipated to deliver later this year Change from last action by renewing their current leases or and is currently 71% available. Brickell Current Yr. Qtr. offering space to the sublease market. Financial Centre is currently planning on Total Vacancy Rate 16.5% delivering sometime in 2011 and is 100% Vacancy rate increases have been reported Direct Asking Lease Rates $30.12 available. across the entire Miami-Dade market, Net Absorption (25) K most noticeably Biscayne Blvd. Corridor, The three new buildings in the CBD are all North Miami, Airport West and Brickell. pre-certified with LEED ratings. This is also Under Construction 1.5 M These submarkets have had large a new trend with existing buildings well as Completions 730 K increases due to vacant space in new they try to keep pace with new product. buildings. In total, there was 2.3 million Wachovia Financial Center and 355 *The arrows indicate a trend and do not represent a positive or negative value for the square feet (SF) of new inventory added to Alhambra Circle recently announced they underlying statistic (e.g. Net Absorption could be negative, but still represent a positive trend the market in 2009 and first quarter 2010. received LEED Gold Certification for over the time period). These buildings have a total vacancy rate Existing Buildings. The increase in market of 56.5%, well above the county average vacancy is causing landlords to look at Hot Topics of 16.5%. Two buildings completed ways to allow their property to stand out construction in first quarter of 2010 that from the inventory. Renovations, energy • The commercial property sector contributed to the increase in total efficiencies, and LEED certifications are continues to focus on energy efficiency vacancy. Causeway Square, a 160,000 SF attractive to tenants who are looking for and LEED certification. Miami ranks 19th mixed-use project in the North Miami lower operating costs and higher image in the US for Energy Star buildings and submarket completed construction with and sustainability profiles. two existing office buildings are LEED certified Gold. Vacancy Rate 16.5% Total Vacancy vs. Average Asking Lease Rate (FSG) Asking Lease Rate $30.12 • Miami is one of the affordable big cities to do business according to a study done by KPMG. 20% $35 $30 • Unemployment levels in Miami-Dade 16% County continue to increase to the $25 current rate of 11.2%. 12% $20 8% $15 $10 4% $5 0% $0 2004 2005 2006 2007 2008 2009 2010 YTD © 2010, CB Richard Ellis, Inc.
  2. 2. MarketView Miami Office Market Statistics Avg Asking Dir Total Total Lse Rate ($/SF/Yr) YTD Net Construction Under Submarket Building SF Absorption Availability % Vacancy % Full Service Gross Completions Construction Airport West 9,913,271 22.6% 18.8% $23.96 (95,673) 0 150,000 Aventura 1,269,746 22.4% 14.6% $31.03 (7,473) 0 0 Biscayne Blvd. 1,214,469 39.2% 37.2% $28.09 (22,039) 0 0 Brickell* 5,963,596 27.9% 20.4% $38.33 134,997 570,000 605,886 Coconut Grove 1,073,406 21.8% 14.9% $31.57 13,041 0 0 Coral Gables 6,111,150 21.3% 12.6% $34.60 (48,318) 0 0 Downtown 6,905,092 22.4% 15.3% $30.90 (109,580) 0 700,000 Kendall 3,330,817 19.6% 13.4% $26.38 29,404 0 0 Miami Beach 1,903,532 16.5% 10.2% $32.69 16,533 0 0 Miami Lakes 1,363,551 27.8% 24.1% $25.16 2,022 0 0 North Miami* 1,337,635 25.1% 16.1% $23.97 79,540 160,000 0 Residual 1,542,668 17.1% 11.7% $23.45 (17,615) 0 0 South Dade 539,756 21.4% 8.0% $26.01 0 0 0 Miami—CBD t 13,438,688 23.9% 16.9% $34.60 25,417 570,000 1,305,886 Non-CBD 29,560,001 22.3% 16.4% $27.65 (50,578) 160,000 150,000 Total 42,998,689 22.8% 16.5% $30.12 (25,161) 730,000 1,455,886 Class A Total 18,895,111 22.6% 17.1% $36.87 51,606 730,000 1,455,886 Class B Total 17,765,996 23.2% 16.6% $26.97 (54,824) 0 0 Class C Total 6,337,582 22.4% 14.8% $22.88 (21,943) 0 0 * Represents a quarterly change in inventory due to construction completion. t The Miami Central Business District is a combination of the Brickell and Downtown Miami submarkets. Miami-Dade 11.2% The national unemployment rate now stands at 10.4%, an Florida 12.2% Unemployment Rate United States 10.4% increase of 100 basis points from this time last quarter. The state of Florida continues to demonstrate the effects of the economic downturn with a higher than the national average for unemployment of 12.2%. Miami-Dade County has 14% reported an 11.2% unemployment rate, an increase of 70 12% basis points. Broward County has an unemployment rate of 10.8%. Palm Beach County currently has the highest 10% unemployment rate in South Florida at 12.4%. Construction layoffs continue to be the source of much of the 8% unemployment increases. 22,400 construction jobs were lost in South Florida from January 2009 to January 2010 6% according to the Associated General Contractors Association. 4% With unemployment continuing to rise, consumer confidence 2% and spending remain low. The US average for consumer spending (excluding mortgage and rent) was $37,782, but 0% Florida came in at $36,455, 27th in the nation. Other grants First Quarter 2009 2004 2005 2006 2007 2008 2009 2010 have been awarded to the state, including funding to build a YTD high speed transit line in central Florida. Page 2 © 2010, CB Richard Ellis, Inc.
  3. 3. MarketView Miami Office Class A $36.87 Class B $26.97 Direct Asking Lease Rates (FSG) Class C $22.88 The overall average asking direct lease rate declined by $0.55 per SF $40 from first quarter 2009 to $30.19 per SF full service gross (FSG). The $35 decline was most significant in Class C products, which experienced an average decline of $2.41 per SF from the previous year. The Biscayne $30 Boulevard Corridor, Airport West, and Brickell submarkets saw the $25 largest declines in Class C average rental rates. The Class B average saw $20 a decline of $1.17 per SF from the previous year. Submarkets such as $15 Downtown Miami, Brickell and Airport West have seen asking rates decline between $1.25 to $2.50 in the Class B rates. Biscayne Blvd $10 Corridor saw an increase in asking rates in the past year with the $5 addition of Class B space at the Omni coming to the market when the $0 building completed construction. Class A rates remain unchanged from 2004 2005 2006 2007 2008 2009 2010 first quarter of last year due to new high end space coming to the market YTD in recently delivered product asking higher asking rates. Net Absorption 2010 YTD (25,161) SF During first quarter the Miami office market has experienced 25,161 SF 1,600 of negative absorption. Smaller businesses, which primarily occupy Class B and C product types, have been hit hard by the economic downturn and 1,100 are giving back space. A handful of submarkets did experience positive absorption this quarter. Kendall saw 29,404 SF of positive absorption SF in Thousands 600 due to the sale of Town and Country Corporate Center to Baptist Health South, a tenant in the building, who plans to occupy the remainder of the 100 34,465 SF. The North Miami submarket had 79,540 SF of positive absorption as a result of the delivery of Causeway Square, which had -400 80,000 SF preleased. Brickell saw 150,778 SF of positive absorption due to the completion of 1450 Brickell Ave. The Downtown Miami submarket -900 experienced 109,580 SF of negative absorption in large part to large blocks of space becoming vacant as Bank of America consolidates their 2004 2005 2006 2007 2008 2009 2010 YTD operations into their current location in the Brickell submarket. Under Construction 1.5 M Construction and Deliveries YTD Delivered 730 K Notable Under Construction Projects 4,000 Building Submarket Square Footage 3,500 Met II Downtown 750,000 3,000 Brickell Financial Centre Phase I Brickell 605,886 SF in Thousands 2,500 Miami Lakes Business Center Miami Lakes 144,000 Downtown Doral Airport West 150,000 2,000 1,500 Notable Planned Projects 1,000 Building Submarket Square Footage 500 One Bayfront Downtown 2,000,000 SF 0 396 Alhambra Circle Phase II Coral Gables 185,000 SF 2004 2005 2006 2007 2008 2009 2010 First Quarter 2009 YTD Page 3 © 2010, CB Richard Ellis, Inc.
  4. 4. MarketView Miami Office Top Lease Transactions Size (Sq. Ft.) Tenant Address Average Asking Lease Rate 75,000* Vitas 100 S Biscayne Blvd. Rate determined by multiplying the asking net 65,000* Hunton & Williams 1111 Brickell Ave. lease rate for each building by its available space, summing the products, then dividing by 24,369* General Electric 7600 Corporate Center Drive the sum of the available space with net leases *Denotes renewal for all buildings in the summary. Net Leases Miami Submarket Map Includes all lease types whereby the tenant pays an agreed rent plus most, or all, of the operating expenses and taxes for the property, including utilities, insurance and/or maintenance expenses. Market Coverage Includes all competitive office buildings 30,000 sq. ft. and greater, non-medical, non- government. Net Absorption The change in occupied square feet from one period to the next. Net Rentable Area The gross building square footage minus the elevator core, flues, pipe shafts, vertical ducts, balconies, and stairwell areas. Occupied Square Feet Building area not considered vacant. Under Construction Buildings which have begun construction as evidenced by site excavation or foundation work. Available Square Feet Available Building Area which is either physically vacant or occupied. Availability Rate Available Square Feet divided by the Net Rentable Area. Vacant Square Feet Existing Building Area which is physically vacant or immediately available. Vacancy Rate Vacant Building Feet divided by the Net Rentable Area. 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 MIAMI-DOWNTOWN BROWARD BOCA RATON NORTH PALM BEACH figures for those buildings have been adjusted in 777 Brickell Avenue 200 E. Las Olas Boulevard 5355 Town Center Road 4400 PGA Boulevard previous quarters. Suite 900 Suite 1620 Suite 701 Suite 102 Miami, FL 33131 Ft. Lauderdale, FL 33301 Boca Raton, FL 33486 Palm Beach Gardens, FL 33410 Tel 305.374.1000 954.462.5655 Tel 561.394.2100 Tel 561.227.1800 For more information regarding the MarketView, please contact: © Copyright 2010 CB Richard Ellis (CBRE) 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 Suzanne McDonough, Research Coordinator Department or CB Richard Ellis’ research and Econometric Forecasting unit, Torto Wheaton Research. Information herein CB Richard Ellis 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 777 Brickell Ave, #900 completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the T. 305.381.6432 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. suzanne.mcdonough@cbre.com

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