On Thursday, Cushman & Wakefield announced the release of its Year-End 2015 Florida Statewide Rental Report (FLRR). This report highlights current office asking rates in major markets across the state and compares them to rates documented at the height of the last real estate cycle (2008–09).
Key findings in the Year-End 2015 FLRR include:
- Statewide, asking rental rates for Class A office space increased 5.0 percent over the past year on strong leasing activity and absorption. All major markets had solid increases in asking rents.
- Asking rents in Miami/Dade and Broward had the highest percentage jumps year-over-year with rents rising by 6.3 percent in both markets.
- Asking rates in Miami/Dade continue to rise and ended the year 7.0 percent higher than the high water mark for rents in the last real estate cycle. Vacancy for Class A space has dropped 7.0 percentage points over the past five years.
- Rents in markets in the northern part of the state continue to improve but have yet to surpass the rent peaks from the last cycle. Tampa, Orlando and Jacksonville were off by 4.2 percent, 8.1 percent and 5.3 percent, respectively. Further increases in occupancies on limited new construction indicate that demand going forward could potentially move rental rates higher in the short term.
“The office markets in Florida ended 2015 on a high note, ” said Larry Richey, Cushman & Wakefield Senior Managing Director and Florida Market Leader. “Rents grew across the board with the vacancy rates approaching levels not seen since before the financial crisis. New construction, particularly in South Florida, is being fed by strong confidence in the positive market fundamentals. Rents in South Florida and the Tampa CBD are comparable or slightly higher than what we saw during the last cycle, while in Orlando and Jacksonville, there is still significant upside.”
Florida Research Manager Chris Owen believes the market will remain positive in 2016.
“Across the state, we are seeing new projects on the heels of rising tenant demand and a lack of functional high-tech space that tenants today desire,” said Owen. “New office construction started in markets that have largest increases in rents, and it’s starting to trickle to other markets as vacancy drops to pre-recession levels.”
The Florida Statewide Rental Report is intended to provide market intelligence for property owners, occupiers and prospects.
The report documents the gross average asking rate for the market and a short-term indicator noting the year-over-year change in that rate. Historical market performance is clearly delineated by a clear and concise up or down indicator. This indicator shows rental rate growth as a percentage as well as the highest asking rent achieved in each market during the last real estate cycle.
All rates are based on Class A properties. The index gives a macro view of the overall markets and how they compare. It also provides a statewide rental figure and its fluctuation over the past 12 months.
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