Office rents in Miami-Dade and Palm Beach counties fell in the third quarter, according to a recent JLL report, as demand for office space leveled off compared to the previous year. The decline in asking rents has prompted some property owners and developers to sell their assets, sometimes at a loss.
One example is developer Michael Shvo, who sold his assemblage at 1656-1680 Alton Road in Miami Beach, including the former Epicure Gourmet Market & Cafe building, for $28.2 million to Infinity Collective of New York. Shvo had purchased the properties for $39.3 million in 2022 with plans to redevelop them into The Alton, a six-story project with office space and apartments. “The office project was no longer the highest and best use for this site,” Shvo told The Real Deal.
Another distressed asset was Gateway at Wynwood, a 12-story office and retail building at 2916 North Miami Avenue. R&B Realty of New York lost the property after failing to refinance its $112.9 million mortgage. Cire Equity of San Diego acquired Gateway at Wynwood by purchasing an $89.6 million credit bid from A10 Capital after a bankruptcy auction.
Despite these challenges, there were some positive developments. Playboy signed a lease in August for a 20,000-square-foot penthouse at The Rivani in Miami Beach, owned by investor Robert Rivani. Playboy intends to move its headquarters from Beverly Hills to South Beach next year but can cancel the deal if the city does not provide $800,000 in incentives.
In Miami-Dade County, the average asking rent dropped to $65.89 per square foot in the third quarter from $66.33 per square foot a year earlier, while the vacancy rate remained nearly unchanged at 15.8 percent. New construction slowed to 971,000 square feet compared to 1.1 million square feet under construction during the same period last year.
The largest lease in the third quarter was Miami-based law firm Stearns Weaver Miller Weissler Alhadeff & Sitterson renewing its agreement for 96,800 square feet at Museum Tower in downtown Miami, owned by Moishe Mana. In Wynwood, OKO Group led by Vlad Doronin leased 25,200 square feet at Wynwood Plaza, a mixed-use project nearing completion.
Broward County saw an increase in average asking rent to $48.54 per square foot in the third quarter from $42.93 per square foot last year. The vacancy rate stayed flat at 15.9 percent, and new construction was steady with 340,000 square feet underway compared to 354,000 square feet previously. While Broward did not record major lease signings, several companies chose to purchase office space; among them was Lennox Industries of Richardson, Texas, which bought a 30,000-square-foot building in Fort Lauderdale for $16 million as its Southeast U.S. headquarters.
Palm Beach County also experienced a slowdown despite recent investments by billionaire Steve Ross in West Palm Beach’s office market. The average asking rent declined to $68.81 per square foot from $70.69 per square foot last year. The vacancy rate increased to 14.4 percent from 13.2 percent. However, development activity remained strong with 1.1 million square feet under construction—the same as last year.
A significant lease signing occurred at 10 CityPlace in West Palm Beach, one of the new towers developed by Ross’ Related Ross company. ServiceNow leased 200,000 square feet at the property.
