Continued improvement in Miami
While service job growth has decelerated from 6.9% to 3.3% over the past two years, Miami still sees growth above the pre-2020 average of 2.2%. Miami’s unemployment rate is still well below the national average. Miami’s office market has been a bright spot nationally, as the market recorded positive net absorption of 1.0 million SF since Q1 2021, with 336,000 SF of positive absorption in 2023. The market’s vacancy rate continues to decline to a four-year low of 14.2%, dropping by 120 basis points from a high in 2021.
Record high rents continue to rise in Miami
Over the past three years, asking rental rates in Miami have grown to record highs. At $54.62 PSF in Q4, average rates for all classes have grown 7%, or $3.75, year-over-year. Growth has been more evident in urban submarkets such as Brickell, Downtown, and Wynwood-Design District. After experiencing two consecutive years of 12% annual growth, the office prime rent growth cooled to 4.3% in 2023, albeit still breaking a record high at $60.55.
Investment Sales Slowing
Q4 2023 brought the most investment sales activity Miami has seen since Q2 of 2022, with over $360 million in sales volume. The previous five quarters saw an average of just $116 million transacted per quarter, significantly lower than the numbers Miami posted from 2020 to 2022, when the market averaged over $420 million per quarter in sales.
The highlight sale in Q4 2023 was 801 Brickell trading for $250 million, the largest transaction in the Miami market since Q2 of 2022. The 415,150 SF 801 Brickell was purchased for $602/SF by Monarch Alternative Capital and Tourmaline Capital Partners.
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