Mike DiBlasi had a pretty sweet work set-up. Corner office on a high floor in a downtown Tampa office tower with a view overlooking the Hillsborough River. As CBRE’s senior managing director for advisory and transaction services in North Florida, DiBlasi sometimes helps businesses figure out the right, best place to set up operations. When it was time for CBRE’s Tampa office to make such decisions for itself, it opted to move just north of downtown into a smaller space in new ground-floor suites with a specially designed open floor plan.
No more corner office and no more high floor view. And he couldn’t be happier.
DiBlasi now works among the other 120 people in an office that has no assigned offices or seating. Rather, people choose a spot on bench-style seating.
He believes many issues employees encounter could be easily resolved if they spent more time together in person. “A lot of what we do is a team sport — every company is different — but there is a lot of value in people working sideby- side and being near one another. I could see companies recognizing that wasn’t working as well with everybody being at home all of the time. It’s much harder for the leaders of the office when people aren’t around, but that’s not a reason per se to have people come in. You want them to see the value of being in the office as well.”
Nearly five years after the COVID-19 pandemic sent most office workers home, reports about the death of office space appear to be greatly exaggerated. National companies are demanding their people come back to the office for at least part of the week, with Amazon mandating a full five-day in office workweek.
DiBlasi’s move in many ways reflects how businesses are trying to get their people excited to return. Office design and amenities are reaching depths unimaginable just a decade ago. 830 Brickell, downtown Miami’s shiny new 57-story office tower that opened last fall, is fully rented. It offers concierge services, dry cleaning with pickup and delivery service, a 30th floor sky lobby where workers can access a 2,500-sq.-ft. gym overlooking downtown Miami and Biscayne Bay, a café and collaborative space. Rents go as high as $200 per square foot.
“Trophy” buildings like 830 Brickell fill up quickly. Investors in older Class A commercial real estate stock sometimes spend millions on renovations, trying to position themselves as viable alternatives, with reasonable success. That’s a key reason why central business district offices in Florida’s main markets — Miami, Fort Lauderdale, West Palm Beach, Jacksonville, Orlando and Tampa — tend to be more than 90% occupied. The highest vacancy rates are in suburban office parks spread out over lots of land but lacking most of the goodies available in city centers.
Many will be razed and replaced by multifamily housing or industrial uses, analysts say, but it varies.
A relatively few office buildings are in foreclosure, but overall, “all six of the major Florida markets are still performing well compared to the Southeast and even on a national level,” says Jason Steele, regional Florida lead for commercial real estate broker Avison Young. Vacancy rates are in the mid-teens or lower, even with disproportionate empty offices in suburban areas.
“We’re seeing more companies call people back into the office and I think that’s just going to be a trickle-down effect. It’s not just going to happen overnight, like when people went home,” Steele says, “but as you get more of these national companies that have their footprints in these given markets — you get a couple of those to implement returning to the office — then you get more of the regional companies fall in line and replicate that same policy.”
Miami and West Palm Beach are the state’s hottest markets, each fueled by business relocations lured by trophy towers with smaller footprints, open designs and a raft of amenities. While Florida’s cost of living has increased, it still looks vastly more affordable to finance and tech workers following their employers south from New York, Boston or Chicago, says Andrew Dance, managing partner with Brand Atlantic Real Estate. Dance, who still lives in New York, spent 16 years with the Related Cos.
As a result, West Palm Beach emerged from COVID shutdowns as an attractive operating base rather than its past role as “a beachhead office for snowbirds.” But the market is consistent with most other major cities, he says, creating “a tale of two office products. There’s the stuff that’s been built in the last maybe seven years which is setting record rents and there’s not enough square footage to lease. And then there’s everybody else.”
Until that new generation of office buildings emerged, there had been very little innovation in office development in 100 years, Dance says. And those innovations might have included adding “a lobby café and a two-star hotel gym.”
New builds, he says, have triggered “an incredible arms race over the last 25 years of creating new amenities.” For his first foray into office development, Dance found opportunity to live in both the old and new worlds. He gutted a historic 89-year-old, three-story building in downtown West Palm Beach, preserving its Art Moderne design with rounded corners and a flat roof but redesigning its interior to accommodate modern needs, including a trend toward smaller suite sizes.
On an adjacent property, he built a 12-story tower with glass walls to showcase panoramic water views. Banyan & Olive amenities include an indoor-outdoor “hub of wellness” that includes a gym and fitness training space, a TrackMan Golf Simulator Suite along with a rooftop bar and ground floor dining.
The amenities are nice, but the buildings work because of design innovations, he says. To get employees excited about leaving their houses and coming into the office, he says, “you need to have office space that’s inviting.” Absent those elements, demanding people return to commuting and spending their days at the office could prompt some to dust off their resumes and look for other remote work opportunities.
“Talent retention is the name of the game,” Dance says. It can be expensive to train people only to see them leave and have to do it again. He’s confident that Banyan & Olive creates the right excitement. Located on West Palm Beach’s Clematis Street waterfront, Dance saw opportunity in recent $20-million city improvements to the streets, sidewalks and a park, along with its proximity to a Brightline stop.
It opened last September with rents at $110 per square foot. He expects both buildings to be leased out this spring.
His former boss Stephen Ross, meanwhile, is drawing up plans to add nearly 1 million square feet of new office and retail space at 10 City Place and 15 City Place in West Palm Beach. A 68-story tower in downtown Miami, One Brickell City Centre promises “Porte-Cochère Vehicle Drop-Off, Dedicated Fitness & Wellness Suites … Dedicated Outdoor Space on Every Floor” and a rooftop helipad when it opens in 2028.
Next in Line
Not everyone can afford to build new trophy towers, and only so many law firms or other companies are willing to pay $100 or more per square foot.
“When the new construction is gone, we’re the next-in-line product,” says Larry Feldman, president and CEO of St. Petersburg-based Feldman Equities. The firm has renovated office towers in Orlando, Tampa, St. Petersburg and Sarasota.
It’s a relatively simple formula: When the economy gets rocky, Feldman looks to buy office buildings with high vacancies or outdated designs and infrastructure on the cheap. If the location is right, he then invests in what he calls a “living room-ification” renovation that adds light, new lobbies, collaborative space and high-end gym equipment.
Most recently, Feldman invested $20 million for “a top-to-bottom renovation” at Tampa’s Park Tower, a 36-story office building that opened in 1973. He bought it through a REIT for just under $80 million in 2016 even though “it really was one of the uglier buildings in downtown,” he says. Now it has new elevators, new air conditioning systems, and a new roof to go along with the bright, modern lobby and the requisite state-of-the-art gym.
Like Dance, Feldman says the new office must be designed for collaboration. “The old way is everybody was siloed. People working from home, they’re siloed. If you’re going to do a modern office, you might as well make it function as one unit where everybody can see each other and it feels like people are working together as a team,” he says. “Glass helps that. When we used to have offices with a solid wall, I wouldn’t even know who was there and who wasn’t. It didn’t feel like a team.”
His own office sits atop another renovated building, the 17-story Morgan Stanley Tower in downtown St. Petersburg. Feldman updated all the bathrooms, replaced the elevators and updated the lobby. Adjustable LED lighting brighten the offices.
On a clear day, he can look out his window and see downtown Tampa’s skyline across Tampa Bay or look south to see small planes take off and land at nearby St. Petersburg’s Albert Whitted Airport. Outer office walls were replaced with glass.
“I learned early on that when you do just a cosmetic paint and brush job, where you just try to do the minimum, it never works,” he says. “I learned the hard way, when we’ve done minimal renovations where we didn’t go all of the way, those projects failed.”
As a result, Feldman says demand for his space post-COVID is strong. “In the middle of ‘Office Armageddon,’ we’re seeing 10% rent increases in our 1980s product because we’ve done the right job renovating them.”
His experience is consistent with statewide trends, says Avison Young’s Jason Steele. “The best quality stuff is still being eaten up by tenants. It’s more of the suburban tenant that’s making that (vacancy) number kind of beefy.”
Parking Perks
Owners have few choices — they can cut rents, or in many cases, it’s time to determine the highest and best use of an older suburban office. Given their acreage, that might mean razing what’s there to make room for industrial use or multifamily housing.
Older suburban offices can still succeed, says Darcie Lunsford, a Colliers senior vice president for Palm Beach and Broward County office properties. It depends on the market. Because South Florida is so densely populated, properties close to the interstates or Florida’s Turnpike might find a lighter commute can be attractive to tenants.
“I’ll tell you what saved us: We have parking,” Lunsford says. “While everybody wants to be downtown — if you take a look at the CBDs in West Palm Beach, downtown Fort Lauderdale, downtown Miami — parking is something that is challenging and it’s expensive. So the suburban product that would be a little more challenged just because it’s not as well amenitized, it does have the parking and the ease of access.”
Suburban office parks used to be hubs for call centers that now sit empty, driving up vacancy rates. Some of those spaces could be useful for corporate accounting and human resource staffers who don’t need to be in a central business district, CBRE’s DeBlasi says. “There are some significant users closing in on opportunities in our region that will be very noteworthy and will also bring back that user base that a lot of people thought had disappeared.”
Suburban assets do have a future, he and Lunsford say. She points to the old Office Depot headquarters in Boca Raton. Office Depot sold nearly 29 acres of land to South Florida developers EBB Enterprises and the BH Group for $104 million in 2023, leasing back about a third of the space it used to control for a decade. Some of the vacated space was converted into smaller spec suites capped at 7,000 square feet.
The new owners are adding a 500-unit apartment complex, restaurants and a commercial gym to the property.
“You have to get creative,” Lunsford says. “You can’t believe in problems; you have to look at everything as an opportunity. The office is not going the way of the dodo. We didn’t build America by remote work. We built America by coming together and putting the best brains and most creative talent” together.
Moving Out
Finance and law firms are paying top dollar to set up inside one of Miami’s shimmering new office towers. But all that growth leads to lane closures and other construction-related disruptions. And it puts thousands of new people, and their vehicles, on already congested streets.
Those headaches built over time for the law firm Podhurst Orseck, hitting a breaking point with news that a 104-story building would be going up across the street. The firm recently decided to leave downtown, where it has been based since the 1960s, for space on Ponce De Leon Boulevard in Coral Gables.
“So far, thank God, there hasn’t been a single downside,” says Managing Partner Steven Marks. “Everything has been better.”
Commute times have been slashed, he says, with most of the firm’s 60 attorneys and staffers spending 90 minutes to two hours less time in traffic every day. That contributes to better moods and makes it easier to deal with family needs, doctors’ appointments and more.
“It’s surprising how wonderful this move has been … and how (much) happier everybody is,” he says. The 22,000 square feet the firm leased is about 20% bigger than it had downtown, for about the same price.
And Coral Gables is prettier, feels safer, is close to the airport and has a host of top restaurants within walking distance. It has proven to be “a tremendous, efficient and profitable move.”
Office Market Snapshot: Get the latest on vacancy rates, Class A rents and expert insights from six key markets across the state at floridatrend.com/officemarkets