Citing rising rents in Miami and “commuter fatigue,” Indianapolis-based Duke Realty just started construction on a new, four-story, 143,535-square-foot class A office building in Pembroke Pines. The location makes sense – it is only 20 miles from Miami and Interstate 75 runs north-south practically in the center of the city. We think they should have no problem filling the building with both Broward County companies that are growing and tenants that they manage to syphon off from Miami.
While some people have characterized the speculative project as a big bet, as companies go Duke is not exactly a riverboat gambler. To the contrary, Duke has developed more than 1 million square feet of South Florida suburban offices since it entered the market in 1999, and other than the bumps and bruises they suffered along with the rest of us in the recent recession, you would have to say that they have been quite successful in South Florida.
The project is the first of four planned office buildings on a 36-acre site that fronts Interstate 75 at Pines Boulevard known as Pembroke Pointe. The office park sits next to the Shops at Pembroke Gardens, a retail lifestyle center, and will include pedestrian and automobile connectivity to the retail development.
Duke is building its first Pembroke Pines office building to LEED Silver standards. According to the company’s press release, the lobby will feature modern, upscale finishes. Surface parking around the building will provide 4.2 spaces per 1,000 rentable square feet.
Demand for Broward County office space has been steadily rising, with professional and business services, and education and health services headcounts surpassing pre-recession levels. According to most of the big CRE houses that track the data, leasing activity in Broward County last year was its highest since 2008, with approximately 1.9 million square feet taken down in 2014. During the fourth quarter, demand for space outpaced supply for the 12th consecutive quarter. The vacancy rate for all office space, countywide, dipped below 15 percent by the close of 2014.
Normally we don’t see much “spec” product coming to market unless the vacancy rate is closer to 12 percent. Yet Duke must be looking at the combined strength of the Miami market to the south, all the new construction activity in Ft. Lauderdale to the north and solid trend lines for suburban office in Broward County overall. We wish them well.