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> South Florida Business Journal, Commercial Real Estate
Journal, June 2002
By Darcie Lunsford "Broward
office market hardest hit by downsizings"
Broward County's tide of companies
bowing out od real estate commitments has surpassed that
of Miami-Dade County's, according to a new survey by Morris
Southeast Group.
The Plantation-based firm is among
the first to comprehensively track South Florida's growing
sublet market following a surge of corporate downsizing
in recent months. The research shows that Broward's office
market is being hit hardest. The county has nearly 1 million
square feet of sublets in 83 buildings, the research shows.
That eclipses what's available in the much-larger Miami-Dade
market, where there are 866,580 square feet of sublets on
the market research shows. Miami-Dade has 40 million square
feet of offices compared to Broward's 25.4 million, according
to Cushman & Wakefield market reports. The region's
smallest market, Palm Beach County, has the least amount
of sublets. But not by much.
That county's 18.8 million square
feet of offices are riddled with nearly 750,000 square feet
of sublet hotels. The wave of available sublets, often offered
at discounted rent and with other perks, is muddying the
water for owners of new buildings trying to hook tenants
for numbers close to pro forma. Those numbers were figured
when space was plentiful. The downturn and spate od sublease
opportunities is now pushing asking rents lower, real estate
watchers said.
"We are seeing a significant
lack of activity," said Ken Morris, president od the
Morris Southeast Group. "I think that everybody sort
of got caught up in the technology bubble." The burst
popped the corporate profitability that fed demand and spurred
new construction. Now companies are dumping offices at a
rapid pace to shave costs. "I wouldn't say it's over,"
said Cushman & Wakefield broker Mitchell Millowitz,
"but I think there is some leveling off."
Among the hardest hit pockets os western
Broward, where a boom of new construction happened prior
to last year's freeze. In Miramar, Lucent Technologies is
scouting for a rent-paying tenant to take over all or most
of its 230,000-square-foot hub. There are questions about
when, or if, Royal Caribbean will move into its custom-designed,
130,000-square-foot hub at Miramar Parkway and I-75 in Miramar.
In Sunrise, office-rich areas are seeing a swell of sublets.
there are 107,300 square feet up for grabs in nine properties.
"In the long run, once the economy recovers, that market
is going to recover," Morris said. In the meantime,
landlords and sublessors will have to battle for the few
tenants out there. Telecommunications outfit Airspan Networks
has dropped its rents by $3 a square foot for 9,000 square
feet of space it wants to sublease at Sawgrass Lake Center.
"It is taking a long time,"
Morris said. "I do thousands and thousands of direct
mailers, so it's not for a lack of marketing." In Boca
Raton, Nortel Networks is trying to find tenants for three
office buildings and a warehouse. The company's Caribbean
and Latin American office in Broward isn't part of the space
reduction. "There aren't enough tenants for the space
on the market right now," said Peter Reed, VP of Grubb
& Ellis. "We are 18 to 24 months to back-fill a
good portion of the vacant and sublease spaces.
Real
Estate Editor
Darcie Lunsford
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