Healthcare has become an important part of many office markets around the US, including South Florida. This occupier group has been especially attracted to suburban locations within easy reach of knowledge infrastructure.
The Scripps Research Institute, the Max Planck Institute and nearby Florida Atlantic University have all been instrumental in anchoring life sciences in the region.
Momentum should help sustain leasing activity in the coming years as the region strives to become less dependent on its cyclical core sectors such as housing, construction and international banking.
Despite increasing optimism on the part of landlords, there has been limited new speculative development in the office sector.
This is in stark contrast to the boom in new condominium developments that Miami has experienced in recent years, fuelled by investment from Latin America. Those office developments that are in the pipeline are generally a component of larger, mixed-use schemes.
With cap rates plummeting in markets such as Manhattan, San Francisco and Los Angeles, many investors are turning to secondary markets such as South Florida, where yields are higher (5.5%-6% for the type of space monitored here).
In the investment market, volumes are up 64.6% on 2013, with $1.6 billion of big-ticket deals undertaken last year. Major cross-border investment has come from Hong Kong, Germany and Brazil, although in far smaller volume than the foreign investment seen in the city’s residential sector.