The number of companies migrating to South Florida has slowed, but will reaccelerate as the region’s inventory of new office space expands, according to panelists who spoke Wednesday at The Real Deal South Florida Real Estate Forum.
“Relocation activity has moderated partly because we don’t have enough high-quality office space,” said Jeremy Larkin, a founding principal and co-chairman of commercial brokerage NAI Miami | Fort Lauderdale, whose panel addressed the question, “Is Miami Immune to the Office Doom Loop?” Larkin cited strong demand for newer office space in South Florida. “Anything built since the 2000s is 90 percent leased,” he said.
About 3 million square feet of office space is in the development pipeline in the tri-county region, said Juan Arias, South Florida director of market analytics for CoStar and a member of the office market panel. The total includes 1.7 million square feet of non-medical office developments in Miami-Dade County, Arias said.
“We need it. I generally believe that, as soon as this new product is delivered, we’re going to have another significant wave of [commercial] migration to Miami,” said Tere Blanca, founder, chairman and CEO of Blanca Commercial Real Estate, another panelist. “I am convinced that the flight to Florida and the flight to quality will continue.”
Demand for office space in the Miami area surged during the pandemic among technology companies. But the area hasn’t become a tech hub comparable to California’s Silicon Valley, Larkin said. “I think the market is over-exuberant,” he said. “We’re not Silicon Beach yet.”
“Technology companies in Broward County and Fort Lauderdale have a larger footprint than in Miami-Dade County,” Blanca said.
Many companies in South Florida are opting for smaller but better office space, the panelists said. “Tenants are downsizing to higher-quality space,” Larkin said.
The panelists also said obstacles to commercial migration to South Florida include traffic congestion, high-cost housing, and a shortage of private schools for students in kindergarten through 12th grade.
“We need to have affordable housing” close to employment centers, Larkin said, citing the time and money that long commutes entail. “We are quickly moving toward a New York environment.”