Downtown Miami’s Office Market is Booming
While the city of Miami pursuing Amazon thrust the technology sector of our region to the forefront, the Miami Downtown Development Authority has released new data stating that tech companies have been viewing Miami’s urban area as a viable home base for years.
After tracking market activity over the past five years, the DDA’s newly released office sector survey states that 72 percent of all new-to-market technology firms coming to Greater Miami are settling in Downtown.
This metric proves that downtown – our region’s largest office market – is becoming more diverse considering new industries are setting their sights here. Studies also show the companies are attracted to the favorable demographics, improved city transit, diverse housing options, and cost advantages when comparing to other major gateway metropolitan areas.
Twenty-two million square feet of rentable space in downtown Miami make it one of Florida’s most significant employment hubs and one of its primary economic engines. More than ever recorded before, 250,000 people occupy the city’s urban core area during the weekdays.
Additionally, major businesses and brands call Downton Miami home, such as Royal Caribbean, JP Morgan, Chase, HIG Capital, Fortress Investment Group, Mastercard, Facebook, and Porsche.
Law and professional services like real estate, banks and finance have historically dominated the downtown office market. Downtown has the highest concentration of financial institutions in the United States outside of New York, including 100 alternative investment firms, 60 international banks, and regional headquarters for four of the world’s largest accounting firms.
However, the recent DDA study concluded that downtown’s tenant base is becoming more varied, while those institutions remain in the area. Tech, hospitality, and media companies are increasingly locating to downtown and leasing space there. Together, these three sectors have accounted for 38 percent of all new-to-market leases signed since 2013.
Relocated tenants to Downtown from other U.S. regions include the CONCACAF soccer association, Cisneros, Google, Uber, Viacom/MTV, and I-Squared Capital. Two of the country’s largest operators of co-working space — WeWork and Regus — are also expanding in our Downtown. As employees continue to show interest in job opportunities close to their home, these factors become more important.
Additionally, improvements to the urban core ranging from new transportation and public parks to novel cultural outlets and improved pedestrian access have joined with the stability in the office market. Average occupancy levels, rental rates, and tenant renewal rates are at their highest points in years. These trends are a result of housing pricing that remains below competing for major U.S. cities such as New York, Washington, D.C., and San Francisco.
Outside of these factors, optimism continues for the downtown area due to the launch of Virgin Trains’ service into Downtown in 2018, coupled with the planned connection to Tri-Rail this year. This addition to the market will make the commute from northern counties into downtown significantly easier, which in turn will broaden the workforce.
From an accessibility standpoint, few downtowns in the country can compete when it comes to location — right off I-95, a short ride to Miami Beach and Miami International Airport, and right next to the PortMiami.
Additionally, new arts and culture venues in downtown have notably increased the quality of life. For example, the Adrienne Arsht Center, Pérez Art Museum Miami, Frost Science Museum, and ArtMiami have earned high praise among companies surveying the market.
Mixed-use developments are another important element receiving praise, such as Brickell City Centre, MiamiCentral and Miami Worldcenter. All are improving downtown’s status as a shopping, dining and entertainment destination.
Looking ahead, downtown Miami’s next chapter will focus on sustaining commercial and residential growth through investments in mobility, walkability, and education. These investments will ensure downtown continues to remain, and grow, as a desirable place to live and work. Besides, future projects in the pipeline add to the promised continued growth including The Underline, the Downtown Baywalk and the renovation of Flagler Street.
The current and future diversification of downtown Miami brings a healthier, stronger and more resilient local economy, which is excellent overall for residents, prospective residents, local companies and new companies to the market.