Activity Gauge
Avison Young created a “busyness index” that measures “the degree or intensity of activity within an office environment.” In other words, daily foot traffic. It’s a way to gauge how many workers have returned to the office. Nationally, offices were about 62% as busy in Q3 2024 as they were in Q3 2019 months before the COVID pandemic. None of Florida’s six main markets has returned to pre-COVID levels, but West Palm Beach, Miami, Orlando and Fort Lauderdale easily beat the national average. Law, retail and engineering firms lead the way by industry in office returns.
The Six Markets
Commercial real estate brokers issue monthly and quarterly reports on office markets throughout the United States.
The following snapshots come from Q3 2024 reports.
Miami
14.3% Direct Vacancy Rate (not including subleases)
$55.85 Average Class A rent per square foot
What analysts say: “Every major submarket experienced positive rent growth,” CBRE reports. “Class A Brickell rates continue to tick up and increased 5.6% year-over-year to $100.58 (per square foot). Second in commanding the highest rents was Miami Beach, up 29.9% year-over-year to $100.21 (per square foot). Such a sharp jump is predominantly due to this year’s delivery of Eighteen Sunset with asking rents in the $190s (per square foot).”
Fort Lauderdale
14.6% Direct Vacancy Rate
$37.42 Average Class A rent per square foot
What analysts say: Cushman & Wakefield notes that “Broward was one of two Florida markets to record a vacancy decrease and now boasts the second lowest rate in the state. … Rents in Downtown Fort Lauderdale had the largest 12-month increase, up 9.0% to $53.56 (per square foot).” Avison Young reports that “93% of the leasing activity in 2024 [was] under 10,000 square feet. In response, landlords are focusing on delivering spec suites and subdividing full-floor vacancies to meet demand for move-in ready spaces in desirable buildings.”
West Palm Beach
11.9% Direct Vacancy Rate
$52.43 Average Class A rent per square foot
What analysts say: “The flight-to-quality trend continues in West Palm Beach, with tenant demand still focused on top-tier trophy buildings,” Avison Young reports. “Availability in these properties stands at 13.2%, or approximately 215,000 square feet. As trophy space becomes scarce, demand is expected to shift toward high-quality class A buildings. … Office asking rates have softened for the first time in years, dropping 5% year over year to $48.70 per square foot full service. Despite this trend, trophy properties continue to achieve premium rates, reaching $140 per square foot — a 7% increase.”
Jacksonville
16.2% Direct Vacancy Rate
$24.61 Average Class A rent per square foot
What analysts say: “After five consecutive quarterly increases, overall vacancy fell 20 bps quarter-over-quarter (QOQ) ending Q3 at 21.7%. This decrease was attributed to the removal of three lower-quality vacant office buildings, which were taken off the market for multifamily conversions,” Cushman & Wakefield reports. In a bit of anomaly, “Suburban submarkets far outpaced CBD leasing activity, accounting for 94.1% of new deals signed in Q3.”
Orlando
13.5% Direct Vacancy Rate
$29.82 Average Class A rent per square foot
What analysts say: Avison Young says Orlando’s “office market has seen a continuous decline in leasing activity since 2022. Through the first three quarters, leasing activity declined by 9% compared to last year, and 23% when compared to 2022.” CBRE notes, “The lack of new construction is encouraging landlords to be creative with currently available space and amenities to make it enticing for companies to return to office.”
Tampa
15.7% Direct Vacancy Rate
$34.83 Average Class A rent per square foot
What analysts say: The Tampa market “has shown strong resiliency,” CBRE’s third quarter report says. Rents increased slightly. Avison Young notes: “Demand for smaller office spaces in Tampa continues to grow, with 85% of all leases signed in the first three quarters of 2024 being under 10,000 square feet.” However, more than half of the 7 million square feet of leases due to expire in the next two years are larger than 20,000 square feet, which “will prompt many landlords to consider offering discounted rents and increased concessions.”