Week of Thursday, August 3, 2017
By Katherine Lackner
Codina Partners build 8333 Downtown and has three more office buildings on the way in a tight market.
With scare supply and no new product in the pipeline, the Doral office market continues to be robust, observers say.
“Institutional capital now accepts that Doral is a mature, exciting and deep market, and one they want to be in,” said Doug Okun, Senior Vice President at CREC. “It’s become a first-class city.”
The new residential stock “is a driver,” he said, as are the ever-increasing amenities, including retail, schools, restaurants and infrastructure. Most buildings offer plentiful parking, which is not the case in urban markets or even some suburban markets, he said.
With about a 91% occupancy, pressure is being put on lease prices and concessions are becoming rarer, he said. Space in a class A building can fetch $40 per square foot, “which was hard to image five or 10 years ago,” Mr. Okun said. Class B space leases in the high $20s or low $30s per square foot, he said.
Most developers consider mixed-use projects or residential units to be the highest and best use for their land, he said. That, combined with high construction costs, suggest that the dearth of new office buildings will continue, further driving up demand for existing space.
“I remain bullish on the Doral office market,” Mr. Okun said. “I think it will continue to get better, and almost every data point supports that.”
“We are witnessing Doral become more of an urbanized environment,” said Ericka Witkowski, associate with Avison Young. “The ‘live-work-play’ play dynamic, in addition to the already acclaimed economic benefits of leasing in Doral, is really creating the ideal ambience that attracts major corporate headquarters. That will continue to grow this submarket. Doral continues to be one of the most sought-after markets in South Florida, which is attested to by a less-than-9% vacancy rate.”
“County-wide year-to-date leasing activity remains up 6% year-on-year, driven to a notable degree by non-CBD submarkets that had been unsettlingly quiet through 2016,” said JLL’s second-quarter 2017 office market report. One of the larger deals inked that quarter was the Everest Business Funding lease of 27,000 square feet in Downtown Doral, the report noted, but, on the whole, transactions were smaller.
JLL lumps Doral into the Miami Airport submarket, where rents overall are $30 per square foot and vacancy is 9%, according to the report. Class A space in that submarket can be had for $33 per square foot (and the vacancy rate is 8%), while class B space leases for $27 per square foot and the vacancy rate is 11%, the report said.