As it has historically been, Miami Beach remains a boutique market with very little office space available, sparse parking and no new office construction on the horizon, experts say.
According to a first quarter 2016 report by JLL, the island contains 1.9 million square feet of office space, compared to 15 million square feet in the central business district (comprising downtown and Brickell) and 6 million square feet in Coral Gables. Rents hover around $42 per square foot for class A space: $36 per square foot is the asking rent for class B space.
Land on Miami Beach is “way too expensive” for office construction and is generally earmarked for the sought-after residential and hotel uses, said Steven Hurwitz, a principal of CREC.
“It’s a very specific, unique market,” he said. “There’s a certain demographic of users who want to be there. They are middle-to high-net-worth people who live on Miami Beach and do not want to go downtown or over a bridge. There is not a tremendous amount of institutional users – some brokers, real estate firms, those kings of things – and then there are the entrepreneurial types, some advertising and talent agencies. It’s sort of always been that way.”
Scarce parking has not dimmed the demand, Mr. Hurwitz said. “A lot of these users; employees are South Beach dwellers who bike to work.”
“There’s not much available, and rents are increasing,” said Tom Farmer, director of agency leasing, office and industrial services for Franklin Street. “There is a definite need for space.”
Some building owners are creatively repurposing existing space to maximize use, he said, and there has been an increase in co-working space, like that in the 350 Lincoln Road building.
Waiting lists for parking spaces in municipal and private garages, he said, prompt some workers to take a cab or ride-sharing services like Uber to work.
The situation has had the unintended consequence of creating new office “micro-markets” in Wynwood, the Design District and on Biscayne Boulevard, from about Northeast 36th to 79th streets, he said.
“Growth in these micro-markets is fueled by lack of space on Miami Beach,” Mr. Farmer said. “Tenants quickly realize that if they’re near a causeway, it doesn’t take that long to get to Miami Beach. It’s really not that big a deal.”