Leasing activity for the fourth quarter in Miami's office sector has dropped 24 percent year-over-year to 3.7 million square feet, a report from Avison Young finds.
Also, absorption hit negative territory at -51,370 square feet. That comes despite strong demand earlier in the year; in the second quarter, nearly +200,000 square feet of space was absorbed.
Vacancy ticked up by 110 basis points versus levels seen 12 months ago, which Avison Young attributed to the market delivering 964,000 square feet of new office space in 2024.
Meanwhile, there were some positive trends. For example, absorption is expected to "quickly rebound" as "tenants occupy newly delivered office buildings in 2025," according to Avison Young. Also, asking rents have gone up 6.6 percent year-over-year to $61.49 square feet. The CRE advisor attributes the resiliency there to tenant demand for "quality" inventory. Additionally, office foot traffic has been strong, with occupancy at 77 percent of 2019 levels, up significantly from the national average of 60.8 percent.
"The final quarter of 2024 showed that while Miami’s office market experienced a slight downturn earlier this year compared to the record highs seen in 2021 and 2022, the market is stabilizing into its ‘new normal," Jason Steele, Avison Young's Florida market intelligence lead, said in a statement.
"People are going into the office in Miami more than the national average, according to Avison Young’s Office Busyness Index, tenant demand for quality inventory continues to drive elevated asking rents and office sales activity experiences a slight uptick compared to last year.”
While overall sales volume was up by 29 percent year-over-year at $878 million, the figure remains below the typical levels Miami saw in the pre-pandemic period. Another thing to note is construction plunged in the fourth quarter by 45 percent to over one million square feet.
Some recent major leases in the city's office sector involved Regus and UBS Financial Services. They took new leases in Miami Beach and Coral Gables, occupying 43,500 and 33,180 square feet of space, respectively.