Writer: Gabriela Enamorado
2 min read November 2022 — While Miami-Dade and Palm Beach County’s office market was slightly ahead for most of 2022, Broward County is finally catching up. In recent reports, Greater Fort Lauderdale area’s office spaces have experienced an uptake in office building leasing activity during the third quarter of 2022. According to a recent report by Avison Young, the Greater Fort Lauderdale office market finished Q3 on a strong note, with urban offices in Fort Lauderdale experiencing an increase of 62.3%.
“As companies continue the post-Labor Day push for employees to return to the workplace, office visitor volumes have been steadily increasing in Fort Lauderdale,” said the report by Avison Young.
Coming out of the pandemic, workers across the country have been returning to the office either full-time or in a hybrid work model. Florida as a state had been experiencing an influx of new movers post-pandemic, causing the South Florida real estate market to flourish and grow. New residents bring in new workers and businesses. The office vacancy rate in Broward County has decreased 70 basis points and is down to 11.2%, according to a Colliers third quarter 2022. report. This compares to 11.9% in quarter three of 2021. This is indicative of the continued demand from tenants in the market as the back-to-office momentum continues.
Class-A office buildings, the highest quality buildings with valuable locations and amenities, have been the most sought after, accounting for 75% of all leasing activity in the Downtown Fort Lauderdale area, according to Colliers. This Comes from the demand for quality as employers and companies try to make returning to the office more attractive, trading in older office assets for a class-A workspace.
“We have already seen a flight to quality with class-A properties outperforming class-B and C products,” Principal David Duckworth of Avison Young, told Invest: earlier this year. “Expect to see more of a focus on amenities and spaces that make it more conducive for the employees to have a split schedule, working certain days in the office and other days working from home.”
Significant class-A buildings that have had an increase in sales and lease activity include the recently built The Main Las Olas, which is now 98% leased, according to the South Florida Business Journal. Park Center, One Financial Plaza, 200 East Las Olas, and Sawgrass Pointe I are also class-A buildings that have had significant lease activity, with Sawgrass Centre seeing the most significant lease of 61,717 square feet by health insurance agency Enhance Health, according to Colliers. The largest sale of the quarter was the portfolio sale of a former Keiser University building in the Cypress Creek submarket to Everglades College Inc. for $57.6 million.
Broward County’s average ask rate rent was at an all-time high of $38.47, according to the Avison Young report, up $0.53 from the second quarter. The ask rate for class-A buildings was $41.52, which is lower than neighboring Miami-Dade and Palm Beach but an increase of 3.52% from the previous year.
“South Florida has done particularly well as compared to other places around the country,” Duckworth said. “The political climate here is great for business and as COVID forced people to reassess their business and their lives, we are seeing massive migration into Florida. Much of that migration has been from high-net-worth individuals and business owners, which will continue to fuel economic growth going forward.”
As businesses and wealth continue to migrate to South Florida, there seems to be no signs of office leasing activity slowing down, with demand remaining steady and office vacancies shrinking.
“The continued influx of new-to-market tenants and the decline in unemployment are major contributing factors to South Florida’s strong office market fundamentals, which are forecasted to persist throughout the remainder of 2022,” said the Colliers report.
