Outside Miami’s Brickell neighborhood and downtown West Palm Beach, office landlords in South Florida faced troubling trends in the fourth quarter of last year. Older office buildings sold at discounts from previous sale prices, while some property owners faced foreclosure.
While average asking rents and vacancy rates in Miami-Dade, Broward and Palm Beach counties have held steady, year-over-year, the total amount of square footage leased in 2024 dropped across South Florida compared to the previous year, an Avison Young report shows.
Total sales volume rose in Miami-Dade and Broward, but fell in Palm Beach County, when comparing 2024 to 2023, the report shows.
San Antonio, Texas-based Affinus Capital is among South Florida office landlords hit with a foreclosure lawsuit in the fourth quarter of last year. In October, an affiliate of Minneapolis-based global investment firm Värde Partners sued an Affinus entity that owns Columbus Center, an office complex in Coral Gables. Värde alleged that Affinus defaulted on a $68.9 million loan.
Meanwhile, a handful of discounted deals occurred in Aventura, Miami Beach and Sunrise during the fourth quarter. In November, New York-based Stonecutter Capital Management sold an office complex in Aventura to Adam Neumann’s Flow and Israeli real estate firm Canada Global for $116.2 million, representing a 17 percent haircut from the previous sale price in 2021.
Last month, Foundry Commercial sold a three-story office building in Sunrise to Hallandale Beach-based Accesso Partners for $36.5 million, $20.9 million less than Orlando-based firm had paid for it in 2017. Also in December, South Miami-based Market Street Real Estate Partners sold a six-story Miami Beach office building to Brickell-based Valoro Capital for $22.7 million, a slight discount of $300,000 from the previous sale price in 2015.
Miami-Dade County
Office landlords in Miami-Dade County pushed up the average asking rent to $61.49 a square foot in the fourth quarter of last year, compared to $57.28 per square foot during the same period in 2023, the report shows. The vacancy rate was practically unchanged at 15.1 percent during the last quarter of 2024, compared to 15.8 percent during the same period of the previous year.
However, roughly 3.7 million square feet of office space was leased in Miami-Dade for the 12 months ending in December. That’s a 24 percent drop compared to the total square footage leased in 2023, Avison Young found. New construction also dipped by 45 percent, year-over-year, with 964,000 square feet delivered in 2024.
Office investment sales reached $878 million in 2024, representing a 23 percent increase compared to the previous year, the report states.
Among the fourth quarter’s notable leases in Miami-Dade, Danish software company Monta moved its North America headquarters into a 5,500-square-foot office building in Miami’s Wynwood neighborhood.
Broward County
Office tenants in Broward also experienced an increase in the average asking rent, which rose to $40.18 a square foot in the fourth quarter of last year, compared to $38.34 a square foot during the same period of 2023. The vacancy rate fell to 14.5 percent in the last quarter of 2024, compared to 16.8 percent during the same period of the previous year.
A total of 2.4 million square feet of Broward office space was leased in 2024, representing a decline of 27 percent compared to the previous year, the report shows.
Yet, overall sales volume last year hit $259 million, surpassing 2023 by 75 percent. The largest office deal in Broward involved software company Citrix selling its corporate headquarters for $37 million.
Among notable lease signings during the fourth quarter, Harrison, New York-based accounting firm PKF O’Connor Davies is opening a new 5,000-square-foot office at 200 East Las Olas Boulevard in Fort Lauderdale.
Palm Beach County
Office landlords in Palm Beach County experienced some softening in the fourth quarter of last year, as the average asking rent dipped to $49.08 a square foot, compared to $49.23 a square foot during the same period in 2023, Avison Young found. The vacancy rate rose to 14.1 percent in the last three months of 2024, compared to 12.5 percent during the same period of the previous year.
Palm Beach County office landlords leased a total of 2.3 million square feet in 2024, representing a 16 percent decline compared to the previous year. Sales volume also dropped by 9 percent, year-over-year, to $268 million, the report shows.
Notable lease deals in Palm Beach during the fourth quarter included wealth management firm Edward Jones signing for 10,000 square feet at the Banyan & Olive mixed-use project in downtown West Palm Beach.