With 27 million square feet of existing inventory, the Broward County general purpose, multi-tenant office market, heavily concentrated in the city of Fort Lauderdale and the Plantation area, is dwarfed by the large Miami market to its south. Construction, all the same, played an active role in this market for an extended period. When the recession arrived, exacerbating the negative net absorption already in place for two years and extending it through three more (through 2010), the chickens came home to roost: the vacancy rate neared 21.0%, and rents suffered persistent declines.
While there is no quick fix for this market, the data describe a gradual, if uneven, recovery under way. Construction has virtually disappeared, and absorption, excepting some recurrent downturns, turned positive last year. “Recent improvement” in the county economy “has been encouraging,” states Cushman & Wakefield in a second-quarter report. Still, the road ahead likely will be bumpy. Alongside no new supply deliveries, Reis counts net absorption through the first half of 2012 at negative 50,000 square feet, following a positive total of 188,000 in 2011. While the total for second quarter 2012 alone was plus 93,000 square feet, July followed with a loss on the order of 27,000. Positive activity, however, is expected to hold sway over the remainder of the year, even as no new supply delivers. Vacancy ended the latest quarter at 20.3%, down 30 basis points for the quarter, down 20 year-over-year. Rents appear to be in the beginning stages of a turn toward positive growth. At $25.50 psf and $20.06 psf, asking and effective averages for second quarter were unchanged from the quarter before and were up slightly since year-end. While gains are expected for the remainder of the year as a whole, each rate lost a cent in July. The vacancy rate remained unchanged at month’s
end.With the exception of a large courthouse in Fort Lauderdale classified as a government office project, current construction consists solely of the 70,000-square-foot Building 1 of the Professional Center at Riviera Point complex in Miramar. Construction began in March and is expected to complete in February 2013. A same-size second phase is planned. No other project starts appear to be imminent.
A positive turn should result in net absorption for the year as a whole of nearly 50,000 square feet as the vacancy rate slips under 20.0%. Growth at close to 1.0% is anticipated for both average rents for the year as a whole. New construction will come slowly.