3Q2022 Office Market Summary

To track what’s driving greater Miami and South Florida’s continued growth across the commercial real estate sector, a quote rings true: “Follow the money.”

Since before the pandemic, the region saw inbound migration of national and global companies launching new offices or relocating their corporate headquarters to Miami and South Florida. Since then, the arrival of financiers, bankers, cryptocurrency firms and family offices has, in turn, lured lawyers, accountants, other professional service providers and countless high-skilled talent following their clients, prospects and jobs into a state that enjoys among the lowest taxes and costs of living – and highest quality of life – in the nation.

As a result, from its urban core to regional submarkets, the Greater Miami MDA continues to enjoy a burgeoning commercial real estate sector in a region known as a global hub of innovation. At the same time, community leaders are creating a sustainable business market designed for the long haul.

For developers and property owners, the continued influx of tenants is driving demand, rising rents – in some cases outpacing national rates – and new product development across the Class A office, multifamily residential, warehouse / logistics and other commercial categories for the foreseeable future.

Financiers include such financial players as Ken Griffin’s Citadel and Citadel Securities; Andreessen Horowitz / a16z;  equity firm Thoma Bravo; A-CAP, a $6 billion insurance and financial services company; BlackRock in Miami and West Palm Beach; Brookfield; and EFG Capital. Tech firms include Belong, a protech firm arriving from San Mateo, California; FundKite; Blockchain.com; renewable energy startup Spearmint Energy and blockchain and cryptocurrency firm Ripple; and trading data provider Finsight Group, a new arrival to the airport submarket.

Professional services providers, including multiple AM Law 100 firms and various accounting services firms, have followed. Whether serving existing clients, scouting new work, or looking for a place on the hemispheric crossroads that makes Miami the “gateway to the Americas,” arrivals include Atlanta-based Taylor English Duma LLP; Winston & Strawn;  Kirkland & Ellis; and Sidley Austin; as well as accounting and advisory firm CohnReznick; “Uber for taxes” platform Taxfyle.

Such traffic highlights strong and growing demand for office space, as new-to-market entrants compete with existing tenants. Record demand continues to push the vacancy rate down, decreasing regionally another 20 basis points in Q3. Any signs of a potential economic slowdown are not reflected in asking rates for office product across Miami-Dade.

Meanwhile, multifamily is an equally hot commodity; sales regionally neared $5 billion in the first half of 2022, with 367 assets trading, notes Commercial Observer.

Many believe the region’s solid fundamentals point to longevity beyond the initial pandemic-driven relocations.

However, infrastructure must rise to meet the market’s needs, a reality not lost on local government and civic leaders and key employers. Miami-Dade government is developing 14,000 units and putting in place protections against rising rents. A partnership between the county and Brightline will create additional commuter rail stops between Miami Central and Aventura, augmenting service from regional commuter rail line TriRail.

Beyond the talent migration that drove a 104% increase in tech job openings in the first half of 2022 versus the same time in 2021, and private sector jobs that have grown by 339,000 over the last two years, how can civic and academic leaders ensure the workforce is job-ready – especially for the tech sector? Educators are partnering with the likes of Amazon Web Services, IBM, Microsoft, NASA, the National Science Foundation, Google and Tesla, and regional nonprofits like the Knight Foundation, to build out innovation centers and career development programs.

From building and development, to creating an enduring model for the 21st century economy, Miami’s boom is bucking downward trends found elsewhere. While office rents across the region are among the highest globally as newcomers and existing tenants pursue the flight to quality, the greater community is working to ensure workplace and workforce align to serve the region’s shared future.