So much goes into the shaping of a city’s skyline: years of planning, financing, construction and adjusting to unpredictable economic trends. Iconic skylines are defined over time by the collection of top tier buildings or trophy assets, that make it memorable. By taking a deeper look into each city’s office market trends, we can predict if or how their skylines may evolve in the future.
JLL recently launched its 2017 Skyline, a comprehensive report that analyzes supply, demand, rent and investment data across the country’s urban cores, with 3 of the profiled Skylines in South Florida. The Office Skyline report focuses on the upper crust of the office market and looks at some of the most iconic and highest-rent properties within each city’s downtown. These “trophy towers” provide insights into the trends that shape our skylines.
Landing itself at number 9 on the list of the most expensive skylines in the country, Miami has an impressive one to boast. Miami renters may be experiencing sky-high prices, but that hasn’t slowed the demand. This year’s research shows that strong demand in Downtown Miami’s office market has led to a steady rate of absorption among tenants in the Brickell and Downtown submarkets, despite higher rental rates. The Q1 2017 net change in occupied space, also called net absorption, totaled 45,000 square feet – already roughly one-third of last year’s total annual net absorption.
According to JLL Managing Director, Don Cartwright: “There’s been a steady rate of absorption among tenants in the Brickell and Downtown submarkets within the Miami CBD. Prime space with higher views, that have long commanded the highest rental rates, is scarce but we expect plenty of inventory (including several large blocks) to satisfy the normal demand for space for several years.”
Downtown Fort Lauderdale has reached peak investment activity. New ownership among the assets that recently sold have increased base rents by 13.5% compared with this time last year, pushing asking rates to $30.19 per square foot.
“With investment expected to continue, the outlook for Fort Lauderdale’s office market remains strong,” says Vice President Brady Titcomb.
West Palm Beach’s trophy assets are thriving. The Skyline report indicates that the lack of new office construction has helped propel the office market in downtown West Palm Beach, particularity within the trophy assets where minimal availability has given landlords the opportunity to continue to push rates. Now sitting at a record high for the market, rental rates are as high as $50 per square foot, while the vacancy rate stands at 12.4%.
With few spaces available for tenants with large requirements within trophy buildings, talk of new development looms once again. The potential for new deliveries in the near term is limited, but multiple projects are in the preliminary planning stages.