Office rents in Miami-Dade and Palm Beach counties fell in the third quarter, according to a report from JLL. The decline in asking rents reflects a slowdown in demand for office space compared to the same period last year. Some landlords and developers are now looking for ways to exit the market.
In Miami Beach, developer Michael Shvo sold his properties at 1656-1680 Alton Road, including the former Epicure Gourmet Market & Cafe building, for $28.2 million to Infinity Collective, a New York-based firm. Shvo had acquired the properties in 2022 for $39.3 million with plans to redevelop them into The Alton, a six-story building with office space and apartments. Shvo told The Real Deal, “the office project was ‘no longer the highest and best use for this site.’”
Another example of distress in the market involved R&B Realty of New York, which lost the Gateway at Wynwood office and retail building after failing to refinance a delinquent $112.9 million mortgage. Cire Equity, based in San Diego, acquired the property by purchasing an $89.6 million credit bid from A10 Capital, which had won the building at a bankruptcy auction.
Despite these challenges, there were some significant leases signed in the third quarter. Playboy signed a lease for a 20,000-square-foot penthouse at The Rivani in Miami Beach, owned by Robert Rivani. Playboy plans to move its headquarters from Beverly Hills to South Beach next year, but the deal depends on Miami Beach providing $800,000 in incentives. If the incentives are not granted, Playboy can cancel the lease.
The average asking rent in Miami-Dade County dropped to $65.89 per square foot in the third quarter, down from $66.33 per square foot during the same period last year. The vacancy rate stayed about the same at 15.8 percent, compared to 15.5 percent last year. New construction slowed slightly, with 971,000 square feet underway compared to 1.1 million square feet last year.
The largest lease in Miami-Dade during the third quarter was Stearns Weaver Miller Weissler Alhadeff & Sitterson renewing for 96,800 square feet at Museum Tower in downtown Miami, owned by Moishe Mana. In Wynwood, OKO Group led by Vlad Doronin signed for 25,200 square feet at Wynwood Plaza.
In Broward County, landlords saw the average asking rent rise to $48.54 per square foot in the third quarter, up from $42.93 last year, according to JLL. The vacancy rate remained unchanged at 15.9 percent. Construction activity was also steady, with 340,000 square feet under construction compared to 354,000 square feet last year.
Broward County did not have any major lease signings in the third quarter but saw several companies buying office space instead of leasing. Lennox Industries of Richardson, Texas purchased a 30,000-square-foot building in Fort Lauderdale for $16 million for its Southeast U.S. headquarters.
Palm Beach County also experienced a slowdown despite previous growth driven by investments such as those from billionaire Steve Ross in West Palm Beach’s office market. The average asking rent fell to $68.81 per square foot in the third quarter from $70.69 last year. The vacancy rate increased to 14.4 percent from 13.2 percent last year. However, the development pipeline remains active with 1.1 million square feet under construction.
The most notable lease in Palm Beach County was ServiceNow’s agreement to occupy 200,000 square feet at 10 CityPlace, a new office tower developed by Related Ross in West Palm Beach.
