Continued improvement in Miami
While service job growth in Miami decelerated from 5.8% to 3.3% between 2022 and 2023, it still surpassed the pre-2020 average of 2.3%. By mid-2024, year-over-year growth further slowed to 1.9% in June. Despite this, Miami’s unemployment rate remains well below the national average. The office market has been a national bright spot, recording positive net absorption of 1.8 million SF since early 2021, with 400,000 SF of positive absorption so far in 2024. Consequently, the vacancy rate has dropped to a four-year low of 12.3%, a decrease of 210 basis points from its peak in 2021.
Record High Rents Continue To Rise in Miami
Over the past three years, asking rental rates in Miami have reached record highs. By mid-2024, the average rate across all classes has risen to $51.35 PSF, marking a remarkable 34% increase, or $12.97, since 2020. This growth has been especially pronounced in urban submarkets such as Brickell, Downtown, and the Wynwood-Design District. After several years of substantial annual increases, office rent growth slowed to 3.9% in 2023. Nonetheless, rates continue to climb, setting new records in 2024.
Investment Sales Slowing
Office investment in Miami softened in 2023 after significant activity in 2021 and 2022. With $506 million in sales volume already recorded in 2024, Miami is on track to surpass $1.0 billion in volume by the end of the year, though this remains below the four-year average of $1.4 billion.
A highlight of Q4 2023 was the sale of 801 Brickell, which traded for $250 million, marking the largest transaction in the Miami market since Q2 of 2022. The 415,150 SF property was purchased for $602/SF by Monarch Alternative Capital and Tourmaline Capital Partners. In 2024, 249 NE 6th St, a 131,129 SF office space in shell condition, sold for $67 million, or $511/SF, to Swerdlow Real Estate Group.
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