News Details
"Broward office market hardest hit by downsizings"
June 1,2002
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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