The South Florida office market is something of a nonconformist.
The real estate industry generally has been focused on urban cores offering a live-work-play lifestyle — think downtown Miami, Fort Lauderdale and West Palm Beach and Miami’s Brickell and Wynwood neighborhoods. But the office market increasingly has been checking out the suburbs.
Most new construction — 40 of 50 buildings in South Florida — is rising outside the central business districts. That’s 64 percent of the 4.09 million square feet under construction, according to an analysis of CoStar Group data.
“If you don’t have to be in the CBD and you have a high number of employees in a growing company, typically you would want to locate your business in the suburban areas,” said Elliot LaBreche, vice president at The Easton Group’s brokerage, Easton & Associates. “It’s a reduced commute to the office.”
Indeed, traffic congestion and the related perception of hours wasted on the roads are drivers in the office market.
South Florida planners decades ago didn’t factor in public transit that would connect the urban cores and suburbs, said developer Art Falcone, who has placed bets in both places. That’s left major east-west thoroughfares congested, to say nothing of Interstate 95.
“If you are living in a house, you don’t want to be sitting on the I-595 or the Sawgrass Expressway or the 826 or the 836 for an hour-and-a-half of travel time. That’s not the most productive use of time,” said Falcone, whose Encore is building the mixed-use Plantation Walk, which includes a soon-to-open office tower.
Aside from traffic, urban cores are becoming price prohibitive based on land costs and rental rates, pushing developers and tenants alike to the suburbs, according to a CoStar report and interviews with experts.
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Lidia Dinkova, Daily Business Review.