Downtown Ft. Lauderdale Office Rents Heading North

It’s getting more expensive to lease space in downtown Fort Lauderdale’s signature office buildings.
Asking rents for 14 high-end buildings in the Fort Lauderdale skyline continue to increase, while vacancies are on a steady decline, according to a report from JLL.
The average rental rate is $36.34 per square foot, up from $35.23 a year ago and $33.74 in 2014, JLL said.
Vacancies totaled 13.7 percent, down from 16.3 percent a year earlier and 19.8 percent in 2014.
 

“With strengthening economic conditions, the downtown skyline has experienced robust growth over the past 24 months,” JLL said in the report.

The brokerage cited an increase in demand from businesses moving from the suburbs and existing tenants choosing to renew and expand to lock in rental rates before they rise again.
The 14 skyline buildings are the major downtown office properties in and near Las Olas Boulevard, including New River Center, the AutoNation Building and Tower 101.
Investors, meanwhile, are taking note of the robust office market.
Earlier this year, Greenwich, Conn.-based Ivy Realty acquired the 228,000-square-foot Tower 101 at 101 NE Third Ave. for $56.3 million. JLL and other commercial real estate brokers expect more deals this year as the market strengthens.
 

“Buildings are being sold 90 to 95 percent stabilized, so what [investors] are hoping for in buying them is rent growth,” said Peter Reed, of Commercial Florida Realty Services in Boca Raton. “The appetite just hasn’t subsided.”

Office construction all but stopped following the financial crisis of 2008. New office buildings have been slow to emerge as developers focus on adding downtown apartments.
The 550 Building, a 70,000-square-foot office tower at 550 S. Andrews Ave., is scheduled to open in 2017, according to its developer, Blackhawk Properties & Investments. It reportedly will be the largest office property built in Fort Lauderdale since AutoNation opened in 2008.
Two Financial Plaza, another downtown office project in the pipeline, is planned for Broward Boulevard. But it’s not likely to break ground until an anchor tenant signs a lease, according to JLL.
A lack of office construction is increasing demand at existing buildings, as landlords continue to have the upper hand in lease negotiations, the brokerage said.
 

“We expect skyline rent growth to continue in 2016 with a void of new inventory driving increased competition for office space,” Ilyssa Shacter, a JLL research analyst, said in a statement.

 

Source:  SunSentinel

 

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