As the banking and finance sector continues recovering from the Great Recession, there’s been a shift in recent leasing activity with banks and financial services seeking reductions in their office and retail footprints, according to a new JLL report. JLL’s 2015 North American Banking & Financial Outlook Report shows nearly half of the office transactions in 2014 in the United State and Canada were relocations compared to 24.8 percent renewal rate.
Across the Sunshine State, we’re seeing consolidation and increasing density as part of relocation strategies. Here’s a breakdown of the banking and financial industry trends you want to know about in Florida’s six major real estate markets:
NORTHEAST AND CENTRAL FLORIDA
The Jacksonville market is becoming an attractive hub for many national and international banks relocating their back office operations, such as servicing centers. Deutsche Bank became one of the largest bank tenants in the market by increasing their back office operations and adding front office jobs when they opened a new international branch in Jacksonville. We expect this market to continue to attract large operations in the banking industry. Tenants currently in the market for space include Bank of America, Citigroup, and Merrill Lynch & Co.
Banking activity has been slow to recover in Orlando and with a number of leases expiring, we’re seeing the tenants that occupy a significant amount of space in the market choose to renew and contract their footprints, rather than expand. We can expect firms to continue shedding excess real estate as they improve space efficiencies through modern design options and new technologies.
As the economy continues to recover, we can expect Tampa’s financial services industry to remain strong and even improve in some submarkets. We are seeing a shift in the market as banks migrate to the Westshore submarket due to the limited availability in Tampa’s CBD. The Downtown submarket is still strong, however the options for contiguous blocks larger than 30,000 square feet are limited to just four. In the once beleaguered I-75 Corridor, the growth of back office operations from financial institutions is fueling a revival.
More than half of the city’s banking community calls Miami’s CBD home, with a majority of these institutions located in trophy buildings. Renewals and expansions accounted for most of Miami’s largest transactions last year, with relocations occurring mostly within the same submarket, including a 43,000-square-foot relocation by PricewaterhouseCoopers (PwC) within the CBD—from Brickell to Downtown—and a 7,800-square-foot relocation by Investors Trust, moving from Downtown to Brickell. Staying in place within their respective CBD locations, Morgan Stanley renewed and expanded for 55,000 square feet in Downtown while National Union Fire Insurance (AIG) renewed their office space for 23,000 square feet in Brickell.
As the gateway to Latin America, Miami will continue to be at the forefront of the international banking and finance industry in the years ahead.
While most of Fort Lauderdale’s financial services firms are located in the Downtown submarket along Las Olas Boulevard, we’re starting to see firms consider the suburbs. Companies in search of 20,000 square feet or greater have few choices in Downtown. In fact, some of the largest leases signed over the past 12 months were financial services firms either relocating or expanding back office operations in the suburbs.
West Palm Beach
The concentration of high wealth households and retirees with wealth management needs in Palm Beach County is a significant draw for financial services firms and institutions. While the sector was hit hard during the recession, more financial services firms are re-entering the market, and in the CBD, vacancy has dropped 400 basis points to 16.4 percent year over year. Trophy space in the Central Business District is limited and affluent suburban areas are becoming an attractive option for firms needing office space.