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(#)0 MIAMI-DADE OFFICE MARKET Diana Parker Director, Office Brokerage January 20, 2010.

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Presentation on theme: "(#)0 MIAMI-DADE OFFICE MARKET Diana Parker Director, Office Brokerage January 20, 2010."— Presentation transcript:

1 (#)0 MIAMI-DADE OFFICE MARKET Diana Parker Director, Office Brokerage January 20, 2010

2 1 Welcome to the “new normal”

3 2 MARKET INDICATORSTATUSCOMMENTS Supply Over 1.2 msf of space was delivered during 2009 and the majority was still vacant as of year-end. Vacancy Vacancy increased as a result of new construction and lack of tenant demand. Demand/ Absorption The amount of occupied space declined throughout the year resulting in negative absorption. Rental Rates Rental rates continued to fluctuate downward as a result of increasing vacancies in Review

4 3 Leasing Activity – Due to companies’ inability to forecast business demand, a vast majority elected to “stay put” and execute short term lease renewals in times of uncertainty. “Blend & Extend” – With hard hit bottom lines, many companies elected to employ the “blend & extend” strategy with existing landlords to be known as the year of – “Wait Wait – Don’t Tell Me”. A year of unprecedented of last minute changes in key decision making regarding real estate - “flip flopping” by Corporate America before like never experienced before. Troubled Assets – Miami ranked 3 rd overall in the U.S. with 235 troubled assets valued at $8.0 billion Year in Review

5 4 MARKET INDICATORSTATUSCOMMENTS Supply Supply will grow by over 2.2 msf during the next twelve months as seven projects are completed. Vacancy Vacancy will continue to increase as a result of these new buildings delivered mostly vacant. Demand/ Absorption Tenant demand expected to improve by year-end once employment starts rebounding and companies begin to hire again. Rental Rates Rental rates are predicted to move towards stabilization (as to the “new normal”) towards year’s end Looking Forward

6 5  In 2010, the Miami office market inventory will increase by over 2.2 msf due to construction completions. At year-end 2009, only 16% of this space was pre-leased which means that nearly 1.9 msf of vacant space will hit the market.  However, once these buildings are delivered during the next twelve months, there will be no construction activity thereafter. Many projects were put on hold as a result of weak market fundamentals.  After adjusting to the “new normal” of rental rates structures, asking rates are expected to hold but other additional concessions will be included in caliber tenancy packages in Office Supply

7 6 Vacancy Trends

8 7 Office Space Demand/Absorption and Construction Deliveries

9 8 Miami-Dade County Employment The unemployment rate in Miami- Dade County is forecasted to peak in 2010, and then start declining thereafter. The region will lose less jobs in 2010 compared to 2009, however net gains (positive job growth) will not be recorded until Source: Moody’s | Economy.com

10 9 Significant New ConstructionMARKET STATISTICS (% of Total Office Market) 48,085,267 SF Downtown/Brickell Size SF Delivery___________ Met 2 750, (under construct.) 1450 Brickell 585, (under construct.) Brickell Financial Centre Phase I 610,629 TBD Coral Gables / Coconut Grove 2701 S. Le Jeune 250, (built) 2020 Ponce 116, (built) Airport West / Doral 1000 Waterford 246, (built) One Park Square 231, (built) Flagler Station – , (built) 8333 Downtown Doral 150, (under construct.) Kendall/Dadeland Area Town Center One 170, (built) 8485 Bird Prof. Bldg. 19, (built) Other Submarkets Causeway Square 87, (under construct.) Miami Office Market

11 10 Under Construction Size SF Delivery Met 2 750, (under construct.) 1450 Brickell 585, (under construct.) Brickell Financial Centre 610,629 TBD 2009 Significant Transactions BIlzin Sumberg 80, Brickell Brown Mackie College 51,000 Herald Building Deloitte 50,000 Met 2 UBS Financial Services 34,500 BOA Tower BMP Paribus 28,000 Miami Center GSA 27,325 Omni Offices Quoted Direct Rental Rates (psf/yr) Overall$34.66 Class A$46.78 Class B$33.98 Class C$26.22 Average Direct Vacancies Overall16.2% Class A12.7% Class B15.8% Class C22.1% Downtown & Brickell 12,387,465 SF Total

12 11 Under Construction Size SF Delivery 2701 S. Le Jeune 250, (built) 2020 Ponce 116, (built) 5966 SOMI 38, (under construct.) 2009 Significant Transactions UBS Financial Services 36, Biltmore Berenfeld, Spritzer, Schecter 33, Ponce Kraft Foods 28, Alhambra AECOM (Spillis) 22,397 Douglas Entrance Quoted Direct Rental Rates (psf/yr) Overall$35.34 Class A$40.04 Class B$31.60 Class C$27.27 Average Direct Vacancies Overall20.6% Class A21.2% Class B20.5% Class C18.3% Coral Gables/Coconut Grove 5,907,115 SF Total

13 12 Under Construction Size SF Delivery 1000 Waterford 246, (built) One Park Square 231, (built) Flagler Station – , (built) 8333 Downtown Doral 150, (under construct.) 2009 Significant Transactions Blue Cross/Blue Shield 104,000 Westside Plaza Tracfone 101,406 Regions Bank Op Ctr Federal Express 60, Waterford State of Florida/Dept. of Health 43,000 Doral Center Oceania Cruises 27,969 Westside Quoted Direct Rental Rates (psf/yr) Overall$26.75 Class A$30.78 Class B$24.72 Class C$20.46 Average Direct Vacancies Overall16.7% Class A20.5% Class B12.6% Class C15.0% Airport West 12,059,972 SF Total

14 13 Under Construction Size SF Delivery Town Center One 170, (built) 8485 Bird Prof. Bldg. 19, (built) 2009 Significant Transactions South Florida Workforce 19, Bird Road City College 15, Dadeland Office Insource 13, Dadeland Towers Quoted Direct Rental Rates (psf/yr) Overall$27.82 Class A$38.72 Class B$25.27 Class C$24.89 Average Direct Vacancies Overall12.6% Class A11.4% Class B12.2% Class C16.4% South Dade 4,530,143 SF Total

15 14 Large Tenants Looking for Homes in 2010 Hunton & Williams75,000 SF Vitas Healthcare50,000 SF Chase50,000 SF Morrison Brown40,000 SF Wells Fargo30,000 SF Elizabeth Arden30,000 SF Barclays15,000 SF

16 15 Stagnant Office Market – While the economic recession is showing early signs of recovery, the recovery process as it relates to real estate lags the economic cycle. Employment needs to increase, specifically in the office-using sectors (such as professional and business services), before signs of improvement result from tenant demand for office space. Leasing Market Activity – Due to the tenant delay in lease commitments in 2009, 1 st half of 2010 expected to see increase in recorded leasing activity. It is likely that firms will no longer shed excess space, but it will be some time before they start expanding and absorbing additional space to grow. Rental rates to hold under pressure – Having adjusted to the “new normal” of rental rate structures, rental rates expected to hold but with other additional concessions to be included in caliber tenancy packages. New game in town: NAME THAT BUILDING. For the first time in decades, 5 signature Miami landmark office buildings will have building signage rights up for grabs Forecast

17 16 In Conclusion Miami is well-positioned for long-term growth and strong international business. The region’s next challenge will be absorbing 2.2 msf of new office product expected for delivery within the next twelve months.


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