Cushman & Wakefield has arranged a new long-term lease totaling 12,149 square feet for Office Evolution and Venture X at the District Pointe office building in West Palm Beach.
Office Evolution and Venture X will lease the fifth floor and create a superior coworking space that offers a community of entrepreneurs, established businesses, and startups a flexible workspace and opportunities for professional collaborations.
Anthony Librizzi and Tara England of Cushman & Wakefield represented the landlord, District Pointe, LLC, in the lease negotiations. Derek Baker of Colliers represented the tenant.
“This transaction reflects the on-going trend of flexible office providers growing at a break-neck pace here in South Florida,” said Librizzi, Managing Director at Cushman & Wakefield. “The offerings provided by these flex space operators are meeting the demands of many small and start-up companies here in South Florida. And District Pointe, with its complete renovation of the interior and exterior of the building, is attracting significant interest from a number of industries in our market.”
Owner District Pointe, LLC is a joint venture between Verdex Construction and Index Investment Group that was formed to purchase the property in November 2021. As part of the acquisition, the building was rebranded as District Pointe and Verdex Construction announced plans to occupy a floor for their new U.S. headquarters.
“We welcome Office Evolution and Venture X to this building, that will be part of a larger redevelopment occurring around Centrepark Boulevard and Belvedere Road to create a great environment for live-work-play with additional apartments, restaurants, retail, and sports facilities being built,” added Bjarne Borg, CEO of Index Investment Group.
District Pointe is located at 1501 Belvedere Rd. and sits directly across from Palm Beach International Airport. Recently made available for multi-tenant use, the office building allows tenants to benefit from close proximity to the airport and Interstate 95 as well as the amenities offered at the Warehouse District. The office building will soon offer additional amenities including a structured parking garage, on-site restaurant, and pickle and Padel ball courts as part of a massive interior/exterior renovation project currently underway.
00SFOBA STAFFhttps://dev.sfoba.com/wp-content/uploads/2026/08/SFOBA-logo-sharpened-transparent.pngSFOBA STAFF2023-06-25 11:22:442023-06-25 11:22:44Cushman & Wakefield Arranges 12,000-SF Office Lease For Largest Privately-Owned Global Coworking Franchisor
Brand Atlantic Real Estate Partners and Wheelock Street Capital have completed the redevelopment of 111 Olive, a boutique office building in downtown West Palm Beach. The building is the first phase of Banyan & Olive, a Class A mixed-use development within the city’s Clematis Waterfront District.
111 Olive features newly renovated offices with 14-foot ceilings and pine timber wood ceilings. The building offers two 9,000-square feet suites and two 5,000-square feet suites, with one of the smaller suites fully built out for immediate move-in.
Tenant amenities include a golf simulator lounge and clubroom seating; art installations throughout the main lobby, elevator lobby lounges and office corridors; shower cabana changing rooms with private lockers and towel service; dedicated parking at 300 Banyan garage with direct connection from the main lobby; concierge attendant at main lobby desk for security, guest registry, mail, package storage and tenant requests; and club-level amenities at 300 Banyan, featuring an indoor/outdoor fitness center, open-air lounge and reservable outdoor event space.
00SFOBA STAFFhttps://dev.sfoba.com/wp-content/uploads/2026/08/SFOBA-logo-sharpened-transparent.pngSFOBA STAFF2023-06-18 20:01:422023-06-18 20:01:42Brand Atlantic, Wheelock Street Capital Complete Redevelopment Of West Palm Office Building
South Florida’s commercial real estate market for the first time demonstrated signs that it may be starting to feel the impacts of the Fed’s interest rate hikes to restrict inflation that began in March 2022.
The region’s office supply barely outpaced demand in South Florida as a whole, but results differed across asset type, location and in urban versus suburban areas, with Class A office in Miami’s central business district outperforming most of the region’s benchmarks.
Overall, the South Florida office market recorded 57,000 square feet of negative absorption in the first quarter of 2023. This was noticeably down from the nearly 383,000 square feet absorbed during the same period one year ago.
Vacancy also ticked upward 10 basis points from the previous quarter, but was down from the 15.3 percent reported at the close of the first quarter last year. New lease deals declined, totaling 1 million square feet of activity, down from the 1.6 million square feet transacted in the previous quarter and well below the 2.2 million square feet leased through the first three months of 2022. Broken out by county, Miami-Dade and Palm Beach counties both saw a similar drop with leasing activity falling just under the 50 percent mark from one year ago to 566,000 square feet and 249,000 square feet, respectively. Broward County had the sharpest drop as new deals were down 64 percent from one year ago to 204,000 square feet for the first quarter of 2023.
It’s no surprise that Miami-Dade County continued to make headlines and lead office demand throughout the tri-county area with nearly 125,000 square feet of positive absorption as vacancy fell 30 basis points year-over-year. This marked one of the strongest performances in the country — Miami recorded greater quarterly occupancy gains than any market in the South or West.
Broward County on the other hand experienced a more balanced performance, returning a minuscule 27,000 square feet of increased office space back to the market during the first quarter with vacancy only rising 10 basis points from the previous quarter. During 2022, Broward recorded a more substantial rise in vacancy when construction completed on the state’s largest project of the year, the 277,000-square-foot Optima Onyx Tower which remained almost 90 percent vacant in the first quarter of 2023.
Palm Beach was the county that took the biggest hit, with 144,000 square feet of net occupancy losses, the majority of which came from the exit of Newell, which vacated 100,000 square feet at in a Boca Raton submarket. The county’s vacancy stood at 11 percent, up 30 basis points from the previous quarter’s record-low rate, but still down 130 basis points year-over-year.
Top of the class
Two trends that have held throughout South Florida’s office sector overall included the flight-to-quality and desire for proximity to a downtown location. Class A space dominated in new leasing activity in the first quarter of 2023 with over 700,000 square feet of deals signed for high-end space, making up over 70 percent of South Florida’s office leasing transactions. Demand for these spaces continued to outpace supply within the region’s central business districts by a modest 20,000 square feet during this year’s first quarter.
Notably, Miami-Dade County’s central business district led in demand performance with nearly 79,000 square feet of absorbed space. Broward County’s central business district followed suit with 26,691 square feet of positive net absorption, while Palm Beach’s downtown submarket was, again, the only central business district to see a return of 17,735 square feet in supply. At first glance, it appears as if the downtown submarkets are seeing a slowdown in demand growth, but these modest numbers are more indicative of the lack of available space within key trophy buildings in the region’s central business districts. Downtown Miami led all submarkets in Class A leasing activity with over 168,000 square feet of deals signed during the first quarter. Downtown Fort Lauderdale also led in Broward County and followed closely behind Miami’s downtown area with 69,000 square feet.
Like leasing activity in the region’s key central business districts, office vacancy rates in the first quarter of 2023 also fluctuated by submarket and asset type. West Palm Beach’s downtown vacancy rate of 11.3 percent was the lowest throughout the region, while Class A space vacancy stood at 9.1 percent and is projected to hold until new construction is completed, which will be in 2024 at the earliest.
Miami’s overall vacancy rate of 13.3 percent in the central business district’s Class A office sector includes secondary older buildings that may not be considered “trophy.” When removing the A-minus buildings out of the inventory set, vacancy falls to around the 10 percent mark, and if isolating that figure to depict only the Brickell submarket, it falls even further to 9.1 percent. Broward County held the highest vacancy rate for any of the central business districts in the region with 18 percent at the close of the first quarter, but vacant space in the Las Olas Corridor fell to the 14 percent mark. Demand for high-end inventory pushed first-quarter asking rents past the $100-per-square-foot mark for both Miami-Dade and Palm Beach Counties while downtown Fort Lauderdale asking rents peaked over the $70-per-square-foot mark for the first time in recorded history.
Suburbia
Suburban submarkets told a slightly different story for office and continued to see a stronger return of supply with 77,000 square feet of negative absorption throughout the region at the close of the first quarter. Broward County’s suburban submarkets totaled over 54,000 square feet of negative absorption in the form of smaller tenants downsizing or moving out. Miami’s suburban sector was the only one to record positive net absorption in the first quarter, combining for more than 113,000 square feet, with the Airport West submarket making up over 60 percent of that total. This aided in allowing the 15.7 percent vacancy rate throughout the South Florida region’s suburban areas to hold level from the previous quarter and year-over-year. First-quarter leasing activity totaled over 772,000 square feet in South Florida’s suburban submarkets, a noticeable decrease from the nearly 1.6 million square feet leased during the same period one year ago.
What’s coming
The construction pipeline for office product is also beginning to dissipate across much of the country, but more than 2.3 million square feet of construction remained underway across South Florida at the close of 2023’s first quarter. Nearly two-thirds of this product was in Miami-Dade County — almost 40 percent of which came from 830 Brickell — and the remainder in Palm Beach County. The limited amount of new supply should keep vacancy well below the 20 percent threshold, signifying a more friendly tenant market during lease negotiations.
Ask and you shall receive
Finally, asking rents continued their record climbs, with all counties experiencing new peaks. South Florida’s overall average asking rate increased 3.4 percent year-over-year to $44.32 per square foot full service at the close of the first quarter in 2023. Palm Beach County led the region in growth, escalating 6.4 percent to $44.40 per square foot full service, while Broward County followed suit with a 4.8 percent year-over-year hike to $38.04 per square foot full service. Miami-Dade County’s growth noticeably slowed in comparison to the past three years, with a 3.3 percent increase year-over-year to $48.89 per square foot full service and can be attributed to the limited amount of available space in higher-tier Class A buildings. This allowed asking rents from lower-tier Class A and Class B office buildings to have more of an impact on average rates than previous quarters.
While many of the region’s office market fundamentals saw a slight shift this quarter, the numbers along with the region’s continued popularity as a spot to live, play and work all contribute to a favorable outlook for South Florida’s performance throughout the second half of 2023.
00SFOBA STAFFhttps://dev.sfoba.com/wp-content/uploads/2026/08/SFOBA-logo-sharpened-transparent.pngSFOBA STAFF2023-06-04 12:19:312023-06-04 12:19:31South Florida’s Office Sector May Be Cooling Off, But the Forecast Remains Sunny
If you asked me what makes Florida unique, I would probably say our reputation for strange and unusual news stories. But today, I’d like to focus on something completely different affecting business in our State. Florida is also unique as the only state charging sales tax on commercial leases. It should also be noted that we are one of only eight states with no state income tax. But the sales tax does put Florida at a competitive disadvantage when it comes to attracting corporate relocations.
That is about to change. Two years ago, on April 19, 2021, our governor signed Senate Bill 50. The bill expanded sales tax on online purchases, but also plotted a path to reduce the state sales tax on rent from the current 5.5 percent to 2 percent (plus a 1% surtax in Miami-Dade, Broward and Palm Beach counties). That is projected to save Florida businesses approximately $1 billion per year.
Just as I was about to post this article, it changed again. On May 5, 2023, the State House and Senate unanimously passed HouseBill 7063, which upon approval from the Governor, will reduce the tax from 5.5% to 4.5% effective December 2023.
But the $1 billion question remains: When will the full reduction to 2% take effect? As a commercial tenant representation specialist, I am very interested in anything that will save my clients money. But after an extensive search, I couldn’t find an answer. So, as a former market research guru, I rolled out my yoga mat and did the investigation myself.
The reduction in SB50 is tied to the Florida Unemployment Compensation Trust Fund. As of March 2020, the state had $4.07 billion in the Fund. But unemployment benefits due to COVID drained the fund to a low of $623 million in April 2021. Senate Bill 50 stipulates that the sales tax reduction will commence 2 months after the fund balance exceeds the pre-COVID level of $4,071,519,600 .
Are we there yet? Not quite, but according to my research, in addition to the 1 percent reduction this December, Florida commercial tenants will see an additional 2.5% reduction on their rent bills around August of 2024.
Upon passage of Senate Bill 50, the State began to apply funds from the online sales tax to the Fund. I spoke to the economist in charge of fund projections at the Florida Legislature, Office of Economic and Demographic Research. She referred me to the results of the State’s Consensus Estimating Conferences which are posted online. The most recent forecast was published on March 2, 2023. It showed that the fund balance had increased to $2.56 million and that the State will be allocating $90 million to the fund every month. According to the March forecast, the balance will cross the $4.07 billion mark in May 2024, which means that the reduction would take effect in August. Last week, I called my contact in Tallahassee and confirmed that my interpretation was correct.
But is that projection accurate? At the moment, there are more jobs than applicants in Florida indicating that the state should not be paying out a lot of unemployment claims. While no one could have predicted COVID and there is the potential for an economic downturn or even a natural disaster, it would take some unforeseen event to significantly alter the state’s projections. I also confirmed that the projected December tax reduction will not affect the projections from March 2nd.
When I first started researching this topic back in January, the latest forecast was from August 2022. The August forecast projected a balance in March 2023 of $2.52 billion and showed it crossing the $4.07 billion threshold in May 2024 with a balance of $4.2 billion. The state economist told me to watch for the upcoming March 2023 forecast (above) which I recently downloaded and reviewed.
As of March 2023, the balance was at $2.56 billion, 1.02% higher than the August 2022 forecast. More importantly, it showed that my friends at the State were highly accurate with their projections. I am therefore reasonably confident in the March forecast, which projects that the 2% state sales tax on commercial rents will take effect in August 2024.
Ken Silberling is Senior Vice President of Brokerage and Tenant Representation at Levy RealtyAdvisors, LLC and South Florida Regional Partner for TenantBase. He specializes in tenant and buyer representation for office and industrial properties in Miami-Dade, Broward and Palm Beach Counties. For over 30 years, Ken has been a go-to source for his market expertise and has been quoted in major regional and national publications. He has been blogging on the South Florida commercial market since 2010 and is a contributor to numerous industry websites. Ken’s personal website and blog is at www.kenstrends.com. Ken holds a Master of Business Administration from Georgetown University.
About Levy Realty Advisors: Founded in 1977, Levy Realty Advisors has emerged as one of South Florida’s largest privately held commercial property management and brokerage companies. Levy operates a portfolio of over 4 million square feet for our private equity clients.Through proactive acquisition, leasing, and management services, Levy has delivered outstanding year over year returns to their clients and continues to manage over 1,100 tenant relationships.
00SFOBA STAFFhttps://dev.sfoba.com/wp-content/uploads/2026/08/SFOBA-logo-sharpened-transparent.pngSFOBA STAFF2023-05-29 18:23:482023-05-29 18:23:48What Makes Florida Unique? Sales Tax On Commercial Rent – But Changes Are Coming Sooner Than We Thought
Real estate and private equity firms Pebb Capital and Intalex Capital, in partnership with CDS International Holdings Inc. (CDS), announced the acquisition of a trophy ’Class A’ office building in the urban core of Fort Lauderdale.
The transaction, which closed on May 15, marks the largest ‘Class A’ office deal in downtown Fort Lauderdale this year.
Pebb Capital and Intalex Capital purchased 110 East, located at 110 East Broward Blvd., from Stockbridge for $43 million.
Christian Lee, Andrew Chilgren, Marcos Minaya and Sean Kelly of CBRE brokered the transaction on behalf of both the buyer and seller.
At the entryway to downtown Fort Lauderdale, 110 East is situated in the middle of 15,000 multifamily units developed in the last decade and is within walking distance to more than 30 restaurants and the famed Las Olas Boulevard. Conveniently located near major transportation hubs, the property is just two blocks from the Brightline Station and a 10-minute drive to Fort Lauderdale-Hollywood International Airport.
The 24-story tower consists of 343,500 square feet of space. During the pendency of the contract, Pebb Capital and Intalex Capital commenced leasing efforts and secured approximately 76,000 square feet of new tenancy.
The partnership is actively negotiating another 125,000 square feet of new leases to stabilize building occupancy years ahead of their anticipated underwriting. Travis Herring and Katherine Ridgway of Cushman & Wakefield have worked with Pebb Capital and Intalex Capital to oversee leasing velocity.
As a premier commercial offering, 110 East has the largest block of contiguous office space available in the market with panoramic views of the ocean, intra-coastal waterway and downtown. Adding to its prestige will be multi-million-dollar renovations to common areas, including bathrooms, fitness center, terraces and lobby, which follow substantial renovations completed by Stockbridge in 2021.
“This deal is a significant success for our portfolio, working nearly a year to finalize it as capital markets shifted,” said Todd Rosenberg, co-founder and managing partner of Pebb Capital. “South Florida has remained a bright spot in domestic office activity, with strong fundamentals to continue this trajectory of business and population growth. Combine this with Fort Lauderdale’s economic outlook and the value-add opportunity of 110 East, the conditions align with our office investment strategy of acquiring and developing more than 600,000 square feet in the tri-county area.”
Cushman & Wakefield’sQ1 2023 Broward County MarketBeat Office Report notes, in the coming quarters, an expected positive absorption year-to-date, with continued demand for larger leases in the Central Business District. The market also saw a historic record of overall office rates exceeding $55-per-square-foot this year. According to Intalex Capital Founder Bryson Ridgway, the deal and current market dynamics set in motion a concerted effort by the firms to aggressively acquire more South Florida office assets.
“110 East Broward is a great opportunity to take advantage of current dislocation in the office segment and capital markets,” added Bill Milmoe, President of CDS. “As soon as we completed our diligence and understood Pebb Capital and Intalex Capital’s business plan, we were enthusiastic to provide the LP capital for this very exciting project. We are bullish on South Florida and have the utmost confidence in the team to execute the business plan. The rapid pace of pre-closing leasing activity confirms that this is going to be a superlative opportunity.”
Greenwall Capital Management advised CDS in the transaction and Kapp Morrison, LLP provided legal representation to CDS.
00SFOBA STAFFhttps://dev.sfoba.com/wp-content/uploads/2026/08/SFOBA-logo-sharpened-transparent.pngSFOBA STAFF2023-05-21 19:48:332023-05-21 19:48:33110 East Broward Blvd. Sells, Marks Fort Lauderdale’s Largest Office Transaction Of The Year
CBRE has arranged a new office lease at 180 Royal Palm Way in Palm Beach Island, on behalf of The Agency, a global real estate brokerage.
The Palm Beach office is led by Principal of The Agency, Santiago Arana, and The Agency’s Founder and CEO, Mauricio Umansky, alongside Brian Fairweather Jr. as Managing Director and Howard Elfman as Managing Broker.
This office will serve as The Agency’s permanent office in Palm Beach, replacing a temporary office used at the time of launch in Q1 of this year. In addition to this new office and their current South Florida offices in Miami’s Bal Harbour neighborhood and Naples, The Agency Palm Beach currently has approximately a dozen agents and staff with plans to strategically grow their new office with like-minded agents in the region. They will occupy space on the second floor in May.
“Our expansion in Palm Beach is an exciting chapter for The Agency as we continue to grow our presence in South Florida and across the globe,” said Arana, Managing Partner of The Agency Palm Beach and Miami.
“I am honored to be leading The Agency Palm Beach alongside Mauricio, Santiago and Howard as we continue to showcase the power of The Agency brand throughout this highly sought after region,” added Fairweather Jr.
Max Pawk with CBRE represented The Agency in lease negotiations. The landlord is Frisbie Group, LLC.
“As one of the fastest-growing premier, boutique brands in the world, it was important for The Agency to find a location where they can tap into the highly affluent Palm Beach Island community as they continue growing their business across South Florida,” said Pawk.
Located steps from the ocean, this property has prime access to notable restaurants and retailers nearby, including The Breakers Hotel, Buccan Restaurant, and La Goulue Restaurant.
00SFOBA STAFFhttps://dev.sfoba.com/wp-content/uploads/2026/08/SFOBA-logo-sharpened-transparent.pngSFOBA STAFF2023-05-14 20:53:472023-05-14 20:53:47CBRE, The Agency Announce New Office Lease In Palm Beach
Cushman & Wakefield Arranges 12,000-SF Office Lease For Largest Privately-Owned Global Coworking Franchisor
/in Done Deals, News/by SFOBA STAFFCushman & Wakefield has arranged a new long-term lease totaling 12,149 square feet for Office Evolution and Venture X at the District Pointe office building in West Palm Beach.
Office Evolution and Venture X will lease the fifth floor and create a superior coworking space that offers a community of entrepreneurs, established businesses, and startups a flexible workspace and opportunities for professional collaborations.
Anthony Librizzi and Tara England of Cushman & Wakefield represented the landlord, District Pointe, LLC, in the lease negotiations. Derek Baker of Colliers represented the tenant.
Owner District Pointe, LLC is a joint venture between Verdex Construction and Index Investment Group that was formed to purchase the property in November 2021. As part of the acquisition, the building was rebranded as District Pointe and Verdex Construction announced plans to occupy a floor for their new U.S. headquarters.
District Pointe is located at 1501 Belvedere Rd. and sits directly across from Palm Beach International Airport. Recently made available for multi-tenant use, the office building allows tenants to benefit from close proximity to the airport and Interstate 95 as well as the amenities offered at the Warehouse District. The office building will soon offer additional amenities including a structured parking garage, on-site restaurant, and pickle and Padel ball courts as part of a massive interior/exterior renovation project currently underway.
Brand Atlantic, Wheelock Street Capital Complete Redevelopment Of West Palm Office Building
/in News/by SFOBA STAFFBrand Atlantic Real Estate Partners and Wheelock Street Capital have completed the redevelopment of 111 Olive, a boutique office building in downtown West Palm Beach. The building is the first phase of Banyan & Olive, a Class A mixed-use development within the city’s Clematis Waterfront District.
111 Olive features newly renovated offices with 14-foot ceilings and pine timber wood ceilings. The building offers two 9,000-square feet suites and two 5,000-square feet suites, with one of the smaller suites fully built out for immediate move-in.
Tenant amenities include a golf simulator lounge and clubroom seating; art installations throughout the main lobby, elevator lobby lounges and office corridors; shower cabana changing rooms with private lockers and towel service; dedicated parking at 300 Banyan garage with direct connection from the main lobby; concierge attendant at main lobby desk for security, guest registry, mail, package storage and tenant requests; and club-level amenities at 300 Banyan, featuring an indoor/outdoor fitness center, open-air lounge and reservable outdoor event space.
Source: RE Business
South Florida’s Office Sector May Be Cooling Off, But the Forecast Remains Sunny
/in News, Trends/by SFOBA STAFFBy Eric Messer
South Florida’s commercial real estate market for the first time demonstrated signs that it may be starting to feel the impacts of the Fed’s interest rate hikes to restrict inflation that began in March 2022.
The region’s office supply barely outpaced demand in South Florida as a whole, but results differed across asset type, location and in urban versus suburban areas, with Class A office in Miami’s central business district outperforming most of the region’s benchmarks.
Overall, the South Florida office market recorded 57,000 square feet of negative absorption in the first quarter of 2023. This was noticeably down from the nearly 383,000 square feet absorbed during the same period one year ago.
Vacancy also ticked upward 10 basis points from the previous quarter, but was down from the 15.3 percent reported at the close of the first quarter last year. New lease deals declined, totaling 1 million square feet of activity, down from the 1.6 million square feet transacted in the previous quarter and well below the 2.2 million square feet leased through the first three months of 2022. Broken out by county, Miami-Dade and Palm Beach counties both saw a similar drop with leasing activity falling just under the 50 percent mark from one year ago to 566,000 square feet and 249,000 square feet, respectively. Broward County had the sharpest drop as new deals were down 64 percent from one year ago to 204,000 square feet for the first quarter of 2023.
It’s no surprise that Miami-Dade County continued to make headlines and lead office demand throughout the tri-county area with nearly 125,000 square feet of positive absorption as vacancy fell 30 basis points year-over-year. This marked one of the strongest performances in the country — Miami recorded greater quarterly occupancy gains than any market in the South or West.
Broward County on the other hand experienced a more balanced performance, returning a minuscule 27,000 square feet of increased office space back to the market during the first quarter with vacancy only rising 10 basis points from the previous quarter. During 2022, Broward recorded a more substantial rise in vacancy when construction completed on the state’s largest project of the year, the 277,000-square-foot Optima Onyx Tower which remained almost 90 percent vacant in the first quarter of 2023.
Palm Beach was the county that took the biggest hit, with 144,000 square feet of net occupancy losses, the majority of which came from the exit of Newell, which vacated 100,000 square feet at in a Boca Raton submarket. The county’s vacancy stood at 11 percent, up 30 basis points from the previous quarter’s record-low rate, but still down 130 basis points year-over-year.
Top of the class
Two trends that have held throughout South Florida’s office sector overall included the flight-to-quality and desire for proximity to a downtown location. Class A space dominated in new leasing activity in the first quarter of 2023 with over 700,000 square feet of deals signed for high-end space, making up over 70 percent of South Florida’s office leasing transactions. Demand for these spaces continued to outpace supply within the region’s central business districts by a modest 20,000 square feet during this year’s first quarter.
Notably, Miami-Dade County’s central business district led in demand performance with nearly 79,000 square feet of absorbed space. Broward County’s central business district followed suit with 26,691 square feet of positive net absorption, while Palm Beach’s downtown submarket was, again, the only central business district to see a return of 17,735 square feet in supply. At first glance, it appears as if the downtown submarkets are seeing a slowdown in demand growth, but these modest numbers are more indicative of the lack of available space within key trophy buildings in the region’s central business districts. Downtown Miami led all submarkets in Class A leasing activity with over 168,000 square feet of deals signed during the first quarter. Downtown Fort Lauderdale also led in Broward County and followed closely behind Miami’s downtown area with 69,000 square feet.
Like leasing activity in the region’s key central business districts, office vacancy rates in the first quarter of 2023 also fluctuated by submarket and asset type. West Palm Beach’s downtown vacancy rate of 11.3 percent was the lowest throughout the region, while Class A space vacancy stood at 9.1 percent and is projected to hold until new construction is completed, which will be in 2024 at the earliest.
Miami’s overall vacancy rate of 13.3 percent in the central business district’s Class A office sector includes secondary older buildings that may not be considered “trophy.” When removing the A-minus buildings out of the inventory set, vacancy falls to around the 10 percent mark, and if isolating that figure to depict only the Brickell submarket, it falls even further to 9.1 percent. Broward County held the highest vacancy rate for any of the central business districts in the region with 18 percent at the close of the first quarter, but vacant space in the Las Olas Corridor fell to the 14 percent mark. Demand for high-end inventory pushed first-quarter asking rents past the $100-per-square-foot mark for both Miami-Dade and Palm Beach Counties while downtown Fort Lauderdale asking rents peaked over the $70-per-square-foot mark for the first time in recorded history.
Suburbia
Suburban submarkets told a slightly different story for office and continued to see a stronger return of supply with 77,000 square feet of negative absorption throughout the region at the close of the first quarter. Broward County’s suburban submarkets totaled over 54,000 square feet of negative absorption in the form of smaller tenants downsizing or moving out. Miami’s suburban sector was the only one to record positive net absorption in the first quarter, combining for more than 113,000 square feet, with the Airport West submarket making up over 60 percent of that total. This aided in allowing the 15.7 percent vacancy rate throughout the South Florida region’s suburban areas to hold level from the previous quarter and year-over-year. First-quarter leasing activity totaled over 772,000 square feet in South Florida’s suburban submarkets, a noticeable decrease from the nearly 1.6 million square feet leased during the same period one year ago.
What’s coming
The construction pipeline for office product is also beginning to dissipate across much of the country, but more than 2.3 million square feet of construction remained underway across South Florida at the close of 2023’s first quarter. Nearly two-thirds of this product was in Miami-Dade County — almost 40 percent of which came from 830 Brickell — and the remainder in Palm Beach County. The limited amount of new supply should keep vacancy well below the 20 percent threshold, signifying a more friendly tenant market during lease negotiations.
Ask and you shall receive
Finally, asking rents continued their record climbs, with all counties experiencing new peaks. South Florida’s overall average asking rate increased 3.4 percent year-over-year to $44.32 per square foot full service at the close of the first quarter in 2023. Palm Beach County led the region in growth, escalating 6.4 percent to $44.40 per square foot full service, while Broward County followed suit with a 4.8 percent year-over-year hike to $38.04 per square foot full service. Miami-Dade County’s growth noticeably slowed in comparison to the past three years, with a 3.3 percent increase year-over-year to $48.89 per square foot full service and can be attributed to the limited amount of available space in higher-tier Class A buildings. This allowed asking rents from lower-tier Class A and Class B office buildings to have more of an impact on average rates than previous quarters.
While many of the region’s office market fundamentals saw a slight shift this quarter, the numbers along with the region’s continued popularity as a spot to live, play and work all contribute to a favorable outlook for South Florida’s performance throughout the second half of 2023.
Source: Commercial Observer
What Makes Florida Unique? Sales Tax On Commercial Rent – But Changes Are Coming Sooner Than We Thought
/in News/by SFOBA STAFFIf you asked me what makes Florida unique, I would probably say our reputation for strange and unusual news stories. But today, I’d like to focus on something completely different affecting business in our State. Florida is also unique as the only state charging sales tax on commercial leases. It should also be noted that we are one of only eight states with no state income tax. But the sales tax does put Florida at a competitive disadvantage when it comes to attracting corporate relocations.
That is about to change. Two years ago, on April 19, 2021, our governor signed Senate Bill 50. The bill expanded sales tax on online purchases, but also plotted a path to reduce the state sales tax on rent from the current 5.5 percent to 2 percent (plus a 1% surtax in Miami-Dade, Broward and Palm Beach counties). That is projected to save Florida businesses approximately $1 billion per year.
Just as I was about to post this article, it changed again. On May 5, 2023, the State House and Senate unanimously passed House Bill 7063, which upon approval from the Governor, will reduce the tax from 5.5% to 4.5% effective December 2023.
But the $1 billion question remains: When will the full reduction to 2% take effect? As a commercial tenant representation specialist, I am very interested in anything that will save my clients money. But after an extensive search, I couldn’t find an answer. So, as a former market research guru, I rolled out my yoga mat and did the investigation myself.
The reduction in SB50 is tied to the Florida Unemployment Compensation Trust Fund. As of March 2020, the state had $4.07 billion in the Fund. But unemployment benefits due to COVID drained the fund to a low of $623 million in April 2021. Senate Bill 50 stipulates that the sales tax reduction will commence 2 months after the fund balance exceeds the pre-COVID level of $4,071,519,600 .
Are we there yet? Not quite, but according to my research, in addition to the 1 percent reduction this December, Florida commercial tenants will see an additional 2.5% reduction on their rent bills around August of 2024.
Upon passage of Senate Bill 50, the State began to apply funds from the online sales tax to the Fund. I spoke to the economist in charge of fund projections at the Florida Legislature, Office of Economic and Demographic Research. She referred me to the results of the State’s Consensus Estimating Conferences which are posted online. The most recent forecast was published on March 2, 2023. It showed that the fund balance had increased to $2.56 million and that the State will be allocating $90 million to the fund every month. According to the March forecast, the balance will cross the $4.07 billion mark in May 2024, which means that the reduction would take effect in August. Last week, I called my contact in Tallahassee and confirmed that my interpretation was correct.
But is that projection accurate? At the moment, there are more jobs than applicants in Florida indicating that the state should not be paying out a lot of unemployment claims. While no one could have predicted COVID and there is the potential for an economic downturn or even a natural disaster, it would take some unforeseen event to significantly alter the state’s projections. I also confirmed that the projected December tax reduction will not affect the projections from March 2nd.
When I first started researching this topic back in January, the latest forecast was from August 2022. The August forecast projected a balance in March 2023 of $2.52 billion and showed it crossing the $4.07 billion threshold in May 2024 with a balance of $4.2 billion. The state economist told me to watch for the upcoming March 2023 forecast (above) which I recently downloaded and reviewed.
As of March 2023, the balance was at $2.56 billion, 1.02% higher than the August 2022 forecast. More importantly, it showed that my friends at the State were highly accurate with their projections. I am therefore reasonably confident in the March forecast, which projects that the 2% state sales tax on commercial rents will take effect in August 2024.
So hats off to the Office of Economic and Demographic Research, and a thank you to our Governor, whether you love him or hate him. All signs point toward a sales tax reduction in 2024, providing corporations additional incentive to bring high-paying jobs to Florida. Now if we can only get our residents to stop throwing alligators into drive-thru windows or breaking into their neighbor’s house to pet their cat.
Ken Silberling is Senior Vice President of Brokerage and Tenant Representation at Levy Realty Advisors, LLC and South Florida Regional Partner for TenantBase. He specializes in tenant and buyer representation for office and industrial properties in Miami-Dade, Broward and Palm Beach Counties. For over 30 years, Ken has been a go-to source for his market expertise and has been quoted in major regional and national publications. He has been blogging on the South Florida commercial market since 2010 and is a contributor to numerous industry websites. Ken’s personal website and blog is at www.kenstrends.com. Ken holds a Master of Business Administration from Georgetown University.
About Levy Realty Advisors: Founded in 1977, Levy Realty Advisors has emerged as one of South Florida’s largest privately held commercial property management and brokerage companies. Levy operates a portfolio of over 4 million square feet for our private equity clients. Through proactive acquisition, leasing, and management services, Levy has delivered outstanding year over year returns to their clients and continues to manage over 1,100 tenant relationships.
110 East Broward Blvd. Sells, Marks Fort Lauderdale’s Largest Office Transaction Of The Year
/in Done Deals, News/by SFOBA STAFFReal estate and private equity firms Pebb Capital and Intalex Capital, in partnership with CDS International Holdings Inc. (CDS), announced the acquisition of a trophy ’Class A’ office building in the urban core of Fort Lauderdale.
The transaction, which closed on May 15, marks the largest ‘Class A’ office deal in downtown Fort Lauderdale this year.
Pebb Capital and Intalex Capital purchased 110 East, located at 110 East Broward Blvd., from Stockbridge for $43 million.
Christian Lee, Andrew Chilgren, Marcos Minaya and Sean Kelly of CBRE brokered the transaction on behalf of both the buyer and seller.
At the entryway to downtown Fort Lauderdale, 110 East is situated in the middle of 15,000 multifamily units developed in the last decade and is within walking distance to more than 30 restaurants and the famed Las Olas Boulevard. Conveniently located near major transportation hubs, the property is just two blocks from the Brightline Station and a 10-minute drive to Fort Lauderdale-Hollywood International Airport.
The 24-story tower consists of 343,500 square feet of space. During the pendency of the contract, Pebb Capital and Intalex Capital commenced leasing efforts and secured approximately 76,000 square feet of new tenancy.
The partnership is actively negotiating another 125,000 square feet of new leases to stabilize building occupancy years ahead of their anticipated underwriting. Travis Herring and Katherine Ridgway of Cushman & Wakefield have worked with Pebb Capital and Intalex Capital to oversee leasing velocity.
As a premier commercial offering, 110 East has the largest block of contiguous office space available in the market with panoramic views of the ocean, intra-coastal waterway and downtown. Adding to its prestige will be multi-million-dollar renovations to common areas, including bathrooms, fitness center, terraces and lobby, which follow substantial renovations completed by Stockbridge in 2021.
Cushman & Wakefield’s Q1 2023 Broward County MarketBeat Office Report notes, in the coming quarters, an expected positive absorption year-to-date, with continued demand for larger leases in the Central Business District. The market also saw a historic record of overall office rates exceeding $55-per-square-foot this year. According to Intalex Capital Founder Bryson Ridgway, the deal and current market dynamics set in motion a concerted effort by the firms to aggressively acquire more South Florida office assets.
Greenwall Capital Management advised CDS in the transaction and Kapp Morrison, LLP provided legal representation to CDS.
CBRE, The Agency Announce New Office Lease In Palm Beach
/in Done Deals, News/by SFOBA STAFFCBRE has arranged a new office lease at 180 Royal Palm Way in Palm Beach Island, on behalf of The Agency, a global real estate brokerage.
The Palm Beach office is led by Principal of The Agency, Santiago Arana, and The Agency’s Founder and CEO, Mauricio Umansky, alongside Brian Fairweather Jr. as Managing Director and Howard Elfman as Managing Broker.
This office will serve as The Agency’s permanent office in Palm Beach, replacing a temporary office used at the time of launch in Q1 of this year. In addition to this new office and their current South Florida offices in Miami’s Bal Harbour neighborhood and Naples, The Agency Palm Beach currently has approximately a dozen agents and staff with plans to strategically grow their new office with like-minded agents in the region. They will occupy space on the second floor in May.
Max Pawk with CBRE represented The Agency in lease negotiations. The landlord is Frisbie Group, LLC.
Located steps from the ocean, this property has prime access to notable restaurants and retailers nearby, including The Breakers Hotel, Buccan Restaurant, and La Goulue Restaurant.