Year-End 2016 / Office Market Report
Broward County
Market Facts
32.5 MSF
Total office inventory in the
Broward County office market
1,116,392 SF
Direct net absorption
for 2016
12.24%
Overall Vacancy
$32.40 PSF
Average rental rate for class A
space in Broward County on a
full-service basis
Partnership. Performance. Tightening Market Conditions Fuel Competitive Office
Environment
Regional Economic Activity
Local economic factors continue to
fuel healthy leasing activity and a
competitive investment market in
Broward County. Positive net absorption
has continued to support declining
vacancy rates and incremental gains in
lease rates throughout the county. As
these market conditions continue to
tighten, developers are capitalizing on
this opportunity in the development of
high quality office space, most notably
in the Southwest Broward submarket.
Investors are also playing an active
role as demonstrated by the sale of Las
Olas City Centre in the Downtown Fort
Lauderdale submarket.
Broward continues to experience
positive economic activity as indicated
by the 4.6% local unemployment rate,
which has remained steady over the
trailing 12 months ending November
2016. Market fundamentals are relatively
strong with positive net absorption,
limited speculative construction and an
increase in nonagricultural employment
by nearly 29,000 jobs in that same
period.
Southwest Broward Continues to
Experience Leasing Activity
A multitude of large lease deals
continued to strengthen the Broward
County office market in 2016. The
Southwest Broward submarket was the
strongest performer of this past year,
accounting for numerous large lease
deals and nearly thirty percent of the
market's total net absorption.
Major lease activity for the year was led
by Comcast, which leased over 90,000
sf at Miramar Center Business Park. The
building was completed in 2000 and
contains features such as a raised call
center floor, gym, cafeteria, backup
generator and 650 parking spaces.
avisonyoung.com
Broward County Office Market Report
The Southwest Broward submarket
was the strongest performer of this
past year, accounting for multiple
large lease deals and nearly thirty
percent of the market's total net
absorption.
5
600,000
4
500,000
400,000
3
300,000
2
200,000
1
100,000
0
2013
2014
2015
Jul-05
Buildings
SF
Vacancy Rate
18.0%
0.8%
17.0%
16.0%
0.4%
15.0%
14.0%
0.5%
16.8%
13.0%
15.1%
12.0%
13.8%
11.0%
0.9%
11.4%
10.0%
2013
2014
Direct
2015
2016
Sublet
YTD Net Absorption (SF)
1,200,000
1,000,000
585,469
800,000
567,684
600,000
400,000
200,000
0
17,785
186,925
CBD
343,998
Non-CBD
Class A
530,923
Total
Deliveries in SF
Total Buildings
Total Deliveries
Year-End 2016
When its build-out is completed,
the space will also include techoriented training rooms and labs.
Other notable leases for the year
include AT&T’s 58,000-sf renewal at
Sawgrass Lake Center and Convey
Health Solutions’ 52,000 sf renewal
at Miramar Park of Commerce. In
Cypress Creek, Hotwire Technology
Center experienced notable leasing
activity as Colliers signed Liberty
Power for nearly 40,000 sf and State
Farm Insurance for approximately
16,000 sf in December.
Downtown Fort Lauderdale
Preparing for Future
Development
As market conditions continue
to tighten, new construction
continues in moderation in the
urban and suburban submarkets
alike. Although there was a relative
lack of new product delivered
in 2016, there is approximately
134,000 sf of development
projected to deliver in 2017 with a
major project likely to commence
in 2017.
Stiles Corp. ("Stiles") is preparing
to begin the planning and
development of a 350,000-sf class
A office building in Downtown Fort
Lauderdale. Stiles plans to build
the proposed office building on
the recently purchased Bank of
America drive-through facility, as
well as on adjacent land that the
company is attempting to lease
from Broward County. This would
be the first major development
since the delivery of The
AutoNation Building in 2008, which
is also a Stiles development.
Rising Interest Rates Indicate
Fed’s Confidence in National
Economy
The Federal Reserve recently raised
key interest rates by 25 bps in
December 2016. While this may
only mark the second increase for
short-term interest rates in the
last ten years, many economists,
including Federal Reserve
chairwoman Janet Yellen, are
optimistic in regard to the national
economy’s performance.
Florida’s economy has experienced
tremendous growth since the
last recession and is projected to
expand at an average annualized
rate of 2.7% through 2019 in
terms of Gross Domestic Product,
according to the University of
Central Florida’s Institute for
Economic Competitiveness. The
economic strength of the state has
already been demonstrated in the
South Florida markets, specifically
in Broward County. For the 12
months ending November 2016,
Broward County experienced a
notable increase in nonagricultural
employment, which was was most
evident in the Trade, Transportation
and Utilities Industry which
expanded by over 9,300 jobs,
representing a 3.0% increase.
Looking Ahead
Broward County experienced much
positive growth in 2016 which is
projected to continue into the new
year. Investor confidence is fueled
by robust leasing activity, albeit at
a slower pace due to tightening
market conditions. That being said,
recent investment activity could
indicate future opportunity for
institutional-grade clients.
Class B
Partnership. Performance. avisonyoung.com
Broward County Office Market Report
Year-End 2016
BROWARD COUNTY OFFICE MARKET STATISTICS
4th Quarter 2016
BROWARD COUNTY MSA TOTAL
Class Breakdown
Class A
Class B
Broward MSA Total
Total RSF
13,362,537
19,140,440
32,502,977
Direct Vacant
1,259,843
2,440,019
3,699,862
Sublet Vacant Asking Rent PSF
193,939
$32.40
83,775
$25.15
277,714
$27.62
Class Breakdown
Class A
Class B
Downtown / CBD Total
Total RSF
4,019,964
1,064,631
5,084,595
Direct Vacant
347,344
49,050
396,394
Sublet Vacant Asking Rent PSF
41,161
$40.10
21,070
$28.08
62,231
$38.62
Class Breakdown
Class A
Class B
Suburban / Non-CBD Total
Total RSF
9,342,573
18,075,809
27,418,382
Direct Vacant
912,499
2,390,969
3,303,468
Sublet Vacant Asking Rent PSF
152,778
$29.46
62,705
$25.09
215,483
$26.30
Class Breakdown
Class A
Class B
Cypress Creek Total
Total RSF
2,867,128
3,368,823
6,235,951
Direct Vacant
431,403
766,580
1,197,983
Sublet Vacant Asking Rent PSF
43,840
$27.11
8,509
$23.54
52,349
$24.82
Class Breakdown
Class A
Class B
Downtown Fort Lauderdale Total
Total RSF
4,019,964
1,064,631
5,084,595
Direct Vacant
347,344
49,050
396,394
Sublet Vacant Asking Rent PSF
41,161
$40.10
21,070
$28.08
62,231
$38.62
Class Breakdown
Class A
Class B
Central Broward Unincorporated Total
Total RSF
52,120
3,553,226
3,605,346
Direct Vacant
3,000
501,399
504,399
Sublet Vacant Asking Rent PSF
0
$25.57
9,524
$27.43
9,524
$27.42
Class Breakdown
Class A
Class B
Hallandale Total
Total RSF
0
472,611
472,611
Direct Vacant
0
5,476
5,476
Sublet Vacant Asking Rent PSF
0
$0.00
0
$29.45
0
$29.45
Class Breakdown
Class A
Class B
Hollywood Total
Total RSF
281,600
1,475,581
1,757,181
Direct Vacant
26,044
105,985
132,029
Sublet Vacant Asking Rent PSF
420
$35.24
0
$29.81
420
$30.88
Class Breakdown
Class A
Class B
Northwest Broward / Coral Springs Total
Total RSF
505,504
1,235,973
1,741,477
Direct Vacant
70,854
177,993
248,847
Sublet Vacant Asking Rent PSF
12,254
$26.51
0
$23.17
12,254
$24.12
Class Breakdown
Class A
Class B
Plantation Total
Total RSF
1,290,094
2,364,688
3,654,782
Direct Vacant
84,449
297,846
382,295
Sublet Vacant Asking Rent PSF
8,193
$32.65
37,577
$25.16
45,770
$26.81
Class Breakdown
Class A
Class B
Northeast Broward Total
Total RSF
288,624
2,421,318
2,709,942
Direct Vacant
40,206
253,645
293,851
Sublet Vacant Asking Rent PSF
16,498
$28.30
2,538
$21.34
19,036
$22.29
Class Breakdown
Class A
Class B
Sawgrass Park Total
Total RSF
1,689,146
1,228,718
2,917,864
Direct Vacant
91,631
105,245
196,876
Sublet Vacant Asking Rent PSF
39,448
$30.50
0
$28.25
39,448
$29.30
Class Breakdown
Class A
Class B
Southwest Broward Total
Total RSF
2,368,357
1,954,871
4,323,228
Direct Vacant
164,912
176,800
341,712
Sublet Vacant Asking Rent PSF
32,125
$34.10
4,557
$27.52
36,682
$30.70
% Occupied
90.57%
87.25%
88.62%
Downtown / CBD
% Occupied
91.36%
95.39%
92.20%
Suburban / Non-CBD
% Occupied
90.23%
86.77%
87.95%
Cypress Creek
% Occupied
84.95%
77.24%
80.79%
Downtown Fort Lauderdale
% Occupied
91.36%
95.39%
92.20%
% Vacant % Sublet Vacant
9.43%
1.45%
12.75%
0.44%
11.38%
0.85%
% Total Vacancy
10.88%
13.19%
12.24%
Under Construction
67,429
76,216
143,645
YTD Absorption
530,923
585,469
1,116,392
% Vacant % Sublet Vacant
8.64%
1.02%
4.61%
1.98%
7.80%
1.22%
% Total Vacancy
9.66%
6.59%
9.02%
Under Construction
0
36,216
36,216
YTD Absorption
186,925
17,785
204,710
% Vacant % Sublet Vacant
9.77%
1.64%
13.23%
0.35%
12.05%
0.79%
% Total Vacancy
11.40%
13.57%
12.83%
Under Construction
67,429
40,000
107,429
YTD Absorption
343,998
567,684
911,682
% Vacant % Sublet Vacant
15.05%
1.53%
22.76%
0.25%
19.21%
0.84%
% Total Vacancy
16.58%
23.01%
20.05%
Under Construction
0
0
0
YTD Absorption
27,481
6,623
34,104
% Vacant % Sublet Vacant
8.64%
1.02%
4.61%
1.98%
7.80%
1.22%
% Total Vacancy
9.66%
6.59%
9.02%
Under Construction
0
36,216
36,216
YTD Absorption
186,925
17,785
204,710
% Vacant % Sublet Vacant
5.76%
0.00%
14.11%
0.27%
13.99%
0.26%
% Total Vacancy
5.76%
14.38%
14.25%
Under Construction
0
0
0
YTD Absorption
(828)
39,395
38,567
% Vacant % Sublet Vacant
0.00%
0.00%
1.16%
0.00%
1.16%
0.00%
% Total Vacancy
0.00%
1.16%
1.16%
Under Construction
0
40,000
40,000
YTD Absorption
0
22,448
22,448
% Vacant % Sublet Vacant
9.25%
0.15%
7.18%
0.00%
7.51%
0.02%
% Total Vacancy
9.40%
7.18%
7.54%
Under Construction
0
0
0
YTD Absorption
(13,198)
111,989
98,791
% Vacant % Sublet Vacant
14.02%
2.42%
14.40%
0.00%
14.29%
0.70%
% Total Vacancy
16.44%
14.40%
14.99%
Under Construction
0
0
0
YTD Absorption
42,412
26,503
68,915
% Vacant % Sublet Vacant
6.55%
0.64%
12.60%
1.59%
10.46%
1.25%
% Total Vacancy
7.18%
14.18%
11.71%
Under Construction
0
0
0
YTD Absorption
28,351
40,443
68,794
% Vacant % Sublet Vacant
13.93%
5.72%
10.48%
0.10%
10.84%
0.70%
% Total Vacancy
19.65%
10.58%
11.55%
Under Construction
0
0
0
YTD Absorption
5,624
84,511
90,135
% Vacant % Sublet Vacant
5.42%
2.34%
8.57%
0.00%
6.75%
1.35%
% Total Vacancy
7.76%
8.57%
8.10%
Under Construction
0
0
0
YTD Absorption
79,380
88,761
168,141
% Vacant % Sublet Vacant
6.96%
1.36%
9.04%
0.23%
7.90%
0.85%
% Total Vacancy
8.32%
9.28%
8.75%
Under Construction
67,429
0
67,429
YTD Absorption
174,776
147,011
321,787
Central Broward Unincorporated
% Occupied
94.24%
85.89%
86.01%
Hallandale
% Occupied
0.00%
98.84%
98.84%
Hollywood
% Occupied
90.75%
92.82%
92.49%
Northwest Broward / Coral Springs
% Occupied
85.98%
85.60%
85.71%
Plantation
% Occupied
93.45%
87.40%
89.54%
Northeast Broward
% Occupied
86.07%
89.52%
89.16%
Sawgrass Park
% Occupied
94.58%
91.43%
93.25%
Southwest Broward
% Occupied
93.04%
90.96%
92.10%
Reporting Methodology: This report includes all class 'A' and 'B' office buildings and parks 20,000 SF and greater in the Broward MSA that are not owner occupied, office medical, or government owned. All rents are reported on a full-service gross basis. The information in this
report has been collected by the Avison Young research team via sources that are deemed reliable but is not guaranteed.
Partnership. Performance. avisonyoung.com
Broward County Office Market Report
Broward County experienced much
positive growth in 2016 which is
projected to continue into the new
year. Investor confidence is fueled
by robust leasing activity, albeit at
a slower pace due to tightening
market conditions.
Year-End 2016
Broward County Q4 Leading Indicators
Vacancy
Rate
2016 Net
Absorption
Average Asking
Rate (FS)
New
Construction
South FL
Job Growth
12.2%
1,116,392 SF
$27.62/SF
143,645
2.87 MM
Florida's Economic Outlook Through 2019
A report recently released by the University of Central Florida's Institute for Economic Competitiveness concluded that over the period
between 2016 and 2019, average growth in Real Gross State Product is expected to expand at an average annual rate of 2.7%, which will
be 0.7 percentage points faster than the forecasted average growth for U.S. Real Gross Domestic Product over the same period. Payroll
growth is expected to remain strong and should continue to outpace national job growth. The sectors expected to have the strongest
job growth over the next three years are construction (4.9%), professional and business services (3.7%), leisure and hospitality(2.0%),
education and health services (2.0%), and trade, transportation and utilities (1.8%). Housing starts should increase moving forward but
not at a fast enough pace to meet the near-term demand for single-family housing.
Significant 2016 Lease Transactions - Sorted by SF
Tenant
Property
Type
SF
Qtr
Leased
Submarket
New Lease
91,872
1Q16
Southwest Broward
Comcast
Miramar Centre Business Park
AT&T
Sawgrass Lake Center
Renewal
58,379
3Q16
Sawgrass Park
Convey Health Solutions
Miramar Park of Commerce
Renewal
51,863
4Q16
Southwest Broward
Core Logic
Sawgrass Technology Park
Renewal
39,813
2Q16
Sawgrass Park
Confidential*
Sawgrass Pointe
Expansion
39,605
3Q16
Sawgrass Park
Liberty Power Corp.
Hotwire Technology Center
New Lease
39,250
4Q16
Cypress Creek
Fidelity National Information Services
Sawgrass Corporate Center III
Renewal
38,037
2Q16
Sawgrass Park
MEDNAX
Sunset Plaza
New Lease
37,209
1Q16
Sawgrass Park
Carnival
Huntington Square III
Expansion
36,423
3Q16
Southwest Broward
GMMI, Inc.
Pembroke Pointe 880
New Lease
36,300
2Q16
Southwest Broward
Carnival
Huntington Square III
Expansion
30,519
2Q16
Southwest Broward
Hamilton Group Funding
Sawgrass Corporate Center
New Lease
24,523
4Q16
Sawgrass Park
EnvisionRx
BayView Corporate Tower
New Lease
23,026
2Q16
Cypress Creek
Quest Workspaces*
Sabadell Financial Center
New Lease
22,649
2Q16
Plantation
Trinity International University*
3700 Lakeside Drive
New Lease
21,835
3Q16
Southwest Broward
Automated HealthCare Solutions*
Sawgrass Court
New Lease
19,330
3Q16
Sawgrass Park
* Avison Young handled this transaction
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© 2017 Avison Young - Florida, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be
correct, is not guaranteed by Avison Young.
Broward County Office Market Report
Year-End 2016
Notable Sales in Downtown Fort Lauderdale
Sales by Total $ Volume
Investment sales throughout the year have been comprised principally of private and
institutional investors accounting for 82% of the capital flow, followed by cross-border
capital accounting for 16% of the total, public listed/REITs accounting for 1% of the total and
users accounting for 1% of the total. During 2016, over $1.1 billion in total volume traded
for $213 per square foot on average. This represents a 24% increase in the average price per
square foot compared to the prior year.
(in millions)
The most significant sale of the year was Deutsche Bank’s purchase of Las Olas City Centre
in Downtown Fort Lauderdale, which closed during the third quarter and sold for $220
million, or $539 per sf. The 408,079-sf Bank of America-anchored tower previously sold in
2011 for $164 million, resulting in a gain of 34% in five years. Other notable transactions for
the year include the sale of Weston Pointe I – IV for $114,789,292 ($296 per sf), 110 Tower for
$112,900,000 ($288 per sf) and SunTrust Center for $90,000,000 ($333 per sf).
Rolling 12-Mo Total
Qtrly Volume
Significant 2016 Sales Transactions - Sorted by Sale Price
SF
Sale Price
Price/
SF
Cap
Rate
Buyer
Qtr
Sold
Submarket
Las Olas City Centre
408,079
$220,000,000
$539
N/A
Deutsche AWM
3Q16
Downtown Fort
Lauderdale
Weston Pointe I - IV
388,112
$114,789,292
$296
6.4%
New York Life
1Q16
Southwest Broward
110 Tower
391,473
$112,900,000
$288
N/A
IP Capital Partners
4Q16
Downtown Fort
Lauderdale
SunTrust Center
270,000
$90,000,000
$333
N/A
Steelbridge Capital
2Q16
Downtown Fort
Lauderdale
Huntington Square I - III*
393,818
$65,851,141
$167
N/A
Workspace Property Trust /
Safanad / Square Mile Capital
3Q16
Southwest Broward
BayView Corporate Tower
418,713
$56,300,000
$134
N/A
Fairlead CRE
3Q16
Cypress Creek
Tower 101
230,238
$53,760,130
$233
N/A
Ivy Realty
1Q16
Downtown Fort
Lauderdale
Plaza 100
165,757
$46,408,333
$280
N/A
ZURN
3Q16
Downtown Fort
Lauderdale
Cypress Park West I & II
225,757
$43,050,000
$191
N/A
Naya USA Investment &
Management
3Q16
Cypress Creek
Hotwire Technology Center
189,000
$26,500,000
$140
N/A
University City Housing
1Q16
Cypress Creek
Property
*Indicates part of Workspace Property Trust portfolio transaction which also included 3100 SW 145th Avenue, Lakeshore Plaza at Sawgrass, Sawgrass International and
13630 - 13650 NW 8th Street.
Contact Information
Greg Martin
Principal
500 W Cypress Creek Rd, Suite 350
Fort Lauderdale, FL 33309
954.903.1815
[email protected]
David Duckworth
Principal
500 W Cypress Creek Rd, Suite 350
Fort Lauderdale, FL 33309
954.938.1806
[email protected]
Ryan Sharpe
Research Analyst
500 W Cypress Creek Rd, Suite 350
Fort Lauderdale, FL 33309
954.903.3705
[email protected]
avisonyoung.com
© 2017 Avison Young - Florida, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be
correct, is not guaranteed by Avison Young.