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Cranes Again Dotting the Skyline in Miami, Fort Lauderdale Metros

CoStar Market Insights: The Three South Florida Submarkets Seeing Most New Office Construction
April 27, 2018

The Miami metro has clearly led new office deliveries over the last three years.

While new office construction has been mostly muted over the current economic cycle, it has started to pick up across the Miami and Fort Lauderdale metros over the past three years or so.

As of the second quarter of this year, the Miami metro is a clear leader in new construction, with 2 million square feet of office space underway. Miami should significantly outpace the Fort Lauderdale and Palm Beach County metros in terms of 2018 deliveries.

Two of the top three submarkets for new construction in South Florida are within the Miami metro. The Coral Gables submarket has the most square footage underway by far – at 528,000 square feet. This is more than the Downtown and Brickell submarkets combined.

Coral Gables had almost 300,000 square feet break ground in the first quarter of 2018. This was all one building, the North Tower at Plaza Coral Gables. The submarket also saw a high number of construction starts in 2016. Some of those projects have now delivered or are almost completed, including the West Tower at 2222 Ponce, 1515 Sunset Dr. and Offizzina.

Coral Gables is a high-income area that has been attractive for office development, not just because of its walkability and desirable retail offerings but also because it is less congested than the Downtown and Brickell areas. The majority of new construction has been near the Miracle Mile, which is currently undergoing a facelift and should increase the attractiveness of the area even further.

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The Miami submarket, which includes areas outlying the urban core, has the next-most activity, with 254,000 square feet underway. The majority of projects underway in the Miami submarket are located in the Wynwood neighborhood or near the Design District.

The Wynwood neighborhood has been gentrifying rapidly, and due to recent zoning changes, it’s seeing a boom in both office and multifamily construction. The individual projects are of a somewhat smaller scale, the largest being CUBE Wynwd, an 89,000-square-foot speculative office tower in Wynwood.

Since Wynwood and the Design District are already established as hotspots for art, fashion and design, a lot of the newer buildings lean toward offering creative office and loft space. There are no signs of office development slowing down there either. Wynwood and surrounding neighborhoods have more office projects in the proposal stage than any other submarket in Miami.

Also active is the Southwest Broward submarket in the Fort Lauderdale metro. It’s not surprising that Southwest Broward is a popular submarket for office development, as it already has several business parks within its boundaries.

Four projects totaling 184,000 square feet are under construction there. They include a three-story mid-sized office building at 3150 SW 145th, the Miramar Tech Center on Monarch Lakes Blvd. and a new claims center for Progressive Insurance.

Over the past three years, office development in the Miami metro has taken off much more dramatically than the other two South Florida metros, and 2018 is shaping up to be an exceptional year.

Despite the supply-side pressure, absorption has been strong in Miami and the new deliveries are expected to have minimal impact on fundamentals. Even though the Palm Beach metro has remained a laggard in terms of new deliveries, it has as many projects in the proposal pipeline as Fort Lauderdale and Miami. Construction starts picked up there in 2017, and deliveries are expected to increase over the next few years.

CoStar Market Insights provides a snapshot of recent real estate trends. The CoStar Market Analytics team monitors commercial and multifamily real estate across 390 metro areas, with a granular understanding of the projects, players and economic trends that move these markets.

Learn how CoStar Market Analytics can add to your market knowledge, helping to minimize risk and maximize returns.

Pamela Stergios, market analyst covering the South Florida market.

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