Miami’s maturity as an international city makes it a very attractive place where companies, particularly with Latin American connections, want to have an office or regional presence. But its emergence as an international gateway also makes it vulnerable to global economic turmoil.
With so much economic instability abroad, particularly in countries such as Brazil, we sat down with Don Cartwright, Managing Director, to get his insight on Miami’s office market.
JLL: What kind of tenants are moving into the Miami office market?
Cartwright: Miami’s office market continues to see companies operating in the international arena establishing offices in areas such as the Central Business District, particularly global insurance and reinsurance companies, technology firms, hospitality brands, financial institutions and international law firms. Some examples include, BTG Pactual, a giant Brazilian investment bank taking the 54th floor of Southeast Financial Center, as well as global reinsurance firms such as QBE Insurance, SCOR and Berkley Insurance leasing space on Brickell Avenue at 801, 701 and 600 Brickell, respectively. We’re also seeing a number of alternative investment companies, such as XP Securities, Moto Capital and Richmond Global Investors relocating to Miami’s Brickell Financial District, in large part due to the state’s no income, estate and capital gains tax climate.
JLL: By what factors has office demand been driven this year?
Cartwright: While renewals and expansions dominated the region’s office market last year, relocations are driving office demand so far this year – signifying a small correction in the market. Miami’s Central Business District is seeing significant deal activity, but not as much absorption as the previous year as a result of musical chairs in the office market. Many of the lease transactions being inked are existing companies in the office market that are relocating from one space to another, taking up the same amount office space or a reduced amount than what they previously occupied.
Take Akerman as an example. The law firm will move from SunTrust International Tower, where it leases 116,000 square feet of office space on seven floors, to the mega mixed-use project Brickell City Centre currently under development in the Brickell area. The law firm will take 108,000 square feet of space on six floors. Similarly, Florida based law firm Shutts & Bowen is moving into 69,100 square feet at Southeast Financial Center, but leaving approximately the same amount of space at Miami Center.
JLL: What economic dynamics do you foresee will play a role in Miami’s office market in 2016?
Cartwright: From uncertainty surrounding the 2016 presidential election and political turmoil in Brazil to the impact of the Federal Reserve deciding to not raise interest rates, confidence in Miami’s office market remains high in the face of a number of unknown economic and political variables. While economic instability abroad isn’t swaying top office-using tenants from expanding or relocating, we are seeing office tenants being especially deliberate in their decision-making process when deciding the amount of space they need and where to place their business address. But despite the economic jitters, the atmosphere remains positive for South Florida’s key office markets as the supply of new office space is moderate, signaling that market fundamentals should remain strong over the next six to 12 months.
For more information on the dynamics of the Miami Real Estate Market, please contact:
Don Cartwright: Don.Cartwright@am.jll.com