With new tower online, Brickell office vacancy nears 25%
By Marilyn Bowden
600 Brickell at Brickell World Plaza, the last of the new buildings to come to Brickell, is now on the market, adding 487,000 square feet to the Brickell office inventory and shooting vacancy up to between 23% and 25%.
The Studley 25 Index for July-August puts direct vacancy at 24.7% in the class A and class B competitive buildings the firm tracks in the financial district. Available sublease space in these properties adds up to 263,606 square feet.
"The increased vacancy is due in large part to the addition of 600 Brickell Ave.," said Chris Lovell, Studley's senior managing director.
The only tenant announced so far, he said, is Crédit Agricole Miami Private Bank, which leased the entire 37th floor, or about 19,500 square feet.
"As pressure of increased vacancy hangs on the market, several notable potential transactions are causing building owners to keep their pencils well honed," Mr. Lovell said.
Despite high vacancies across all classes, Brickell's existing class A buildings constitute the most successful of major office markets in South Florida, said Jonathan Kingsley, a senior vice president at Jones Lang LaSalle.
"They're over 90% leased and occupied, with a very good amount of activity, including lots of expansions," he said. "So it's an interesting dynamic."
Among recent leases are Willis Florida's 19,000-square-foot transaction at 1450 Brickell and the renewal of Aon and British Consulate General leases at 1001 Brickell Bay Drive.
"Dialing out 600 Brickell," Mr. Kingsley said, "all this activity is starting to signal stabilization. Concessions are beginning to curb."
Leasing at 1450 Brickell, opened a year ago, is reportedly at 70%.
"They did a great job on the front end," Mr. Kingsley said, "but on balance it looks like Brickell is thriving partially because landlords are being very aggressive in rates and concessions, and partly because tenants are seeing that the window of opportunity is closing."
Jack Lowell, a vice president at Flagler Real Estate Services, said CoStar computes Brickell vacancy including 600 Brickell at about 23%, indicating a pick-up in actual leasing.
"We do have some signs of positive activity," he said, "and some people are starting to ask for expansions. Shadow and sublet space are certainly declining.
"The hospitality business is doing great, and that may chew off some space, but it will take a while to work it off."
"The residential market has recovered so well along Brickell Avenue," Mr. Lovell said, "and the increased residency, increased foot traffic and nightlife has invigorated the market. That excitement carries over to the office market as well.
"Despite the activity, however, service firms in Miami and throughout the country continue to tighten their operations, and major accounting, insurance and law firms are looking for improved efficiencies and improved infrastructure.
"Newer buildings may offer more efficient design capabilities and direct fiber access points, forcing existing landlords to not only sharpen their pencils but to put on their overalls and focus on building renovations as well."
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