The South Florida commercial office landscape continues to capture the attention of investors, developers, and businesses alike. Despite economic headwinds such as rapidly rising interest rates, the market has experienced a fair amount of activity, setting new benchmarks and defying expectations. From the bustling streets of Miami to the expanding horizons of Fort Lauderdale and West Palm Beach, South Florida has proven to be a resilient powerhouse in the commercial office sector.
In this article you will find a number of key performance metrics that were provided by the National Association of Realtors® as well as significant transactions that have defined the South Florida office market in 2023. We will also take a look at how the market is expected to perform in 2024.
South Florida Office Market – 2023
The office market in South Florida continues to grow with a number of new properties under construction. During 2023, demand was stronger than the national average and overall vacancy rates was considerably lower than most markets nationwide.
Sales volume during the year was staggering, up almost 100% from 2022 to $396 million. Despite a rapidly rising interest rate environment, average cap rates remained fairly stable at 6.9%.
| Inventory | Vacancy | Rent PSF | 12 Mo Rent Growth | 12 Mo Net Absorption SF | Sales Volume | Cap Rate | |
| Q4 ’22 | 115.39M sf | 8.8% | $46 | 10.30% | 1,326,040 | $194M | 6.5% |
| Q4 ’23 | 115.62M sf | 8.6% | $49 | 4.80% | 520,136 | $396M | 6.9% |
Significant Transactions for 2023
- 801 Brickell Avenue – $250,000,000
- Office Depot Campus – $104,000,000
- 355 Alhambra Circle – $90,000,000
- 125 Worth Avenue – $83,000,000
- Museum Tower – $73,750,000
- 5505 Waterford – $68,000,000
- South City Plaza – $51,500,000
- 110 East Broward Boulevard – $38,768,112
How will the South Florida Office Market perform in 2024?
As we turn towards 2024, the South Florida commercial office market is anticipated to remain strong despite uncertainty from an number of major metro office markets across the nation. While lenders may exercise increased selectivity, the overall commercial office climate is anticipated to be conducive to growth.
Bolstered by a robust local economy and favorable demographic trends, the region is poised for a surge in demand for office space. Many industry analysts expect the market is expected to experience measured growth, as developers and investors alike capitalize on the opportunities presented by the Live Local Act, which promises to invigorate metropolitan developments.
Overall, while specific performance can vary based on a multitude of factors, including economic policies, interest rates, and global economic conditions, the South Florida commercial office market is poised for sustained growth and activity in 2024.
