Miami’s office market, once a powerhouse in the real estate sector, has seen a significant decline in leasing activity in 2023. According to research by JLL, reported by The Wall Street Journal, there was a 25% drop in leasing activity compared to the previous year, along with a 66% increase in sublease vacancies towards the end of the year.
Steven Hurwitz of JLL noted, “There is a slowdown in new market activity. We are at a new turning point.” The rise in interest rates and the hybrid work model have impacted the US office market, and cities like Miami are feeling the effects. The construction of new office buildings has also slowed down after a peak in the second quarter of 2023.
Juan Arias of CoStar pointed out that higher interest rates, increased construction costs, and a softer economic environment have contributed to the slowdown in leasing activity and new construction. Miami, known for attracting financial and technology firms from across the country, is facing challenges as it transitions from a leisure and tourism-oriented economy to a business and financial hub.
Despite the recent challenges, Miami’s office market remains solid, closing the year with the highest annual growth in office rentals among major US markets. The vacancy rate in the city is among the lowest in the country, with strong net absorption of office space.
The construction of One Brickell City Centre, a massive skyscraper scheduled for completion in 2028, has generated excitement in Miami’s real estate landscape. However, the project is facing difficulties in finding an anchor tenant, with negotiations with potential tenants, including Citadel CEO Ken Griffin, falling through. Griffin has opted to develop his own waterfront site instead.
While Miami’s office market is experiencing a slowdown, the city’s resilience and attractiveness to investors remain strong. The completion of One Brickell City Centre is eagerly anticipated, promising to be a landmark in Miami’s urban renewal and commercial development.