Miami Office Transactions Take Flight in Q1

The Miami office market continued to perform well through the first three months of the year, with sales volume increasing, in comparison with the same period last year. The metro’s development pipeline is in line with the national trend of lowered demand in office space.

As of March, Miami’s office market had some 3.8 million square feet under construction across 26 properties, representing 4.7 percent of existing stock, well above the national figure of 1.5 percent.

When compared to the peer markets’ percentage of stock, Miami outperformed Chicago (0.5 percent), Los Angeles (0.9 percent), Manhattan (1.3 percent), San Francisco (3.0 percent) and Seattle (3.8 percent), but was outpaced by Boston’s 5.0 percent.

In terms of under-construction office space volume, Miami’s pipeline exceeded only that of Los Angeles (2.9 million square feet) and Chicago (1.9 million square feet), while Boston led the ranking with 14.4 million square feet.

Miami office projects under development

One of the most significant office projects currently underway remains the Class A+ office tower at 830 Brickell, that will total 638,355 square feet upon its estimated September 2024 completion. OKO Group and Cain International topped out the project at 55 stories and 724 feet in June 2022. The same year, the developers inked a 115,000-square-foot lease with Kirkland & Ellis, marking the largest new-to-market office lease in Miami.

Another notable project taking shape in the metro is Royal Caribbean’s new headquarters, that will total 380,000 square feet in Miami’s Central Business District. The Class A, 10-story office building was expected to come online in 2020, but pandemic-induced construction woes pushed the completion date to 2026.

UHealth Medical Center at SoLé Mia, developed by Turnberry and LeFrak Organization, is also among the significant projects currently under development in Miami. The 363,000-square-foot Class A medical office building’s delivery date has been pushed to June 2025.

As of March, only 102,808 square feet of office space broke ground in the market. In January, Sterling Bay unveiled its plans to develop 848 Brickell, a 51-story Class A office tower proposed for downtown Miami’s Brickell submarket. The company teamed up with Key International for the more than 750,000-square-foot office project that received zoning approvals from Miami-Dade County.

First quarter investment activity increased in 2024

Year-to-date through March, Miami’s office investment volume reached $207 million. Deals picked up, compared to the first quarter of 2023, when the metro registered only $100 million in sales.

Office properties changed hands in Miami at an average of $153 per square foot, outpacing San Francisco ($123 per square foot) and Washington, D.C. ($92 per square foot). Across other markets, Manhattan led with $999 per square foot, followed by Seattle ($608 per square foot), Chicago ($542 per square foot), Boston ($209 per square foot) and Los Angeles ($163 per square foot).

One of the largest office deals since the start of 2024 closed in March, when Colonnade Properties acquired Douglas Entrance North and South Executive Towers, two buildings in Coral Gables, Fla., that traded in a $59 million deal. The 217,587-square-foot North Tower is at 800 S. Douglas Road, while the 160,102-square-foot South Tower is at 806 S. Douglas Road. Banyan Street Capital was the seller.

Another significant investment recorded in March was The Kolter Group’s $31.3 million acquisition of Biscayne Medical Plaza, a 44,804-square-foot medical office building in the Design District. Originally built in 1963, the three-story facility at 3801 Biscayne Blvd. was converted to office use in 2003.

Leasing activity in Miami

Notable office leases signed in Miami since the start of 2024 included DigitalBridge’s 79,141-square-foot headquarters relocation agreement at Sundy Village, an upcoming 180,000-square-foot Class A office complex in Delray Beach, Fla. The owner, Pebb Capital, expects to complete the $240 million master-planned office project in the third quarter of this year.

Another significant deal was DWS’ 22,000-square-foot renewal with law firm Gunster at Las Olas Centre I, a 210,225-square-foot office property in Fort Lauderdale, Fla. Gunster was a tenant at the 15-story office building for almost two decades and will continue to use the space for another 11 years.

As of March, Miami’s coworking sector comprised 1.6 million square feet of shared space, outperforming Seattle’s 1.3 million square feet. Across other gateway markets, Manhattan led with 9.3 million square feet, followed by Los Angeles (4.2 million square feet), Washington, D.C. (3.3 million square feet), Chicago (2.9 million square feet) and Boston (2.6 million square feet).

Miami’s coworking space volume represented 3.7 percent of all leasable office space in the market, the highest across peer markets and above the national figure of 1.8 percent.

Year-to-date through March, Regus continued to maintain its position as the flex office provider with the largest footprint in Miami, with operations totaling 336,424 square feet. The company was followed by Spaces (263,927 square feet), Quest Workspaces (228,574 square feet), Industrious (215,000 square feet) and WeWork, with 195,369 square feet.