Office rents in Miami-Dade and Palm Beach counties saw declines in the third quarter, reflecting ongoing challenges in South Florida’s office market, according to a report from JLL. The report shows that average asking rents fell as demand for office space remained steady compared to the same period last year.
Several property owners have responded to the shifting market by selling assets. Developer Michael Shvo recently sold his properties at 1656-1680 Alton Road in Miami Beach, including the former Epicure Gourmet Market & Cafe building, for $28.2 million to Infinity Collective, a firm based in New York. Shvo had purchased these properties for $39.3 million in 2022 with plans to build The Alton, a six-story structure featuring office space and apartments. “The office project was ‘no longer the highest and best use for this site,'” Shvo told The Real Deal.
Distress is also evident elsewhere. R&B Realty of New York lost ownership of Gateway at Wynwood, a 12-story building at 2916 North Miami Avenue, after failing to refinance a mortgage of nearly $113 million. Cire Equity from San Diego acquired the property by purchasing an $89.6 million credit bid from A10 Capital following a bankruptcy auction.
There were some positive developments during the quarter. Playboy signed a lease for a 20,000-square-foot penthouse at The Rivani in Miami Beach and plans to move its headquarters from Beverly Hills to South Beach next year. However, this relocation depends on receiving $800,000 in incentives from the city; without it, Playboy can cancel the deal.
The JLL report notes that average asking rent in Miami-Dade County dropped slightly to $65.89 per square foot from $66.33 per square foot last year. The vacancy rate stayed mostly unchanged at 15.8 percent compared with 15.5 percent a year ago. New construction activity slowed with 971,000 square feet underway versus 1.1 million square feet under construction during the same period last year.
Among major leases in Miami-Dade was law firm Stearns Weaver Miller Weissler Alhadeff & Sitterson renewing its agreement for 96,800 square feet at Museum Tower in downtown Miami, which is owned by Moishe Mana. In Wynwood, OKO Group led by Vlad Doronin leased 25,200 square feet at Wynwood Plaza.
In Broward County, landlords saw average asking rents rise to $48.54 per square foot from $42.93 per square foot last year, while vacancy rates remained stable at 15.9 percent and new construction stayed flat with about 340,000 square feet underway—similar to last year’s numbers.
While there were no significant lease signings reported in Broward during the quarter, several companies opted to purchase office space instead of leasing it. One notable transaction was Lennox Industries’ acquisition of a 30,000-square-foot building in Fort Lauderdale for $16 million to serve as its Southeast U.S. headquarters.
Palm Beach County also experienced slowing momentum despite previous growth driven by Steve Ross’ investments in West Palm Beach’s office sector. Average asking rent declined from $70.69 per square foot last year to $68.81 per square foot this quarter; vacancy rates increased from 13.2 percent to 14.4 percent over the same period but new development remained strong with 1.1 million square feet under construction—the same as one year ago.
A key lease signing took place at 10 CityPlace—a new office tower developed by Related Ross—where ServiceNow agreed to occupy nearly half of the building with a lease covering 200,000 square feet.
