DEMAND GROWTH HELD WITH SIGNS OF BALANCE ON THE HORIZON
South Florida’s office market performed modestly in 2019, as demand just outpaced supply in the fourth quarter to bring year-to-date net absorption to more than 585,000 square feet. This was a slight decrease from the 636,000 square feet of net absorption from 2018. Broward County led South Florida in demand, contributing to 75.0% of total net absorption, while Palm Beach County’s office market experienced its first year-over-year correction. The region’s vacancy rate rose 20 basis points from the previous quarter, but fell 30 basis points year-over- year to 11.2%. The office market showed signs of continued growth, marking a full decade of improved fundamentals after the Great Recession.
- South Florida continued to see modest demand growth as the office sector appeared to be leveling off.
- Higher-tier space still led demand despite record breaking asking rents for Class A Space, meanwhile Class B space following closely behind in growth.
- Broward County continued to lead the region in demand for the sixth consecutive quarter.
- Asking rates ticked upward from the previous quarter, as the Class A segment pushed past the $40/SF mark.
- Two construction completions in the region ticked vacancy upward with another 3.0 million square feet underway in South Florida, the market will likely see vacancy fluctuations from quarter to quarter.