Tenants of Florida Commercial Properties Enjoy Low Rates

Tenants of commercial properties in Florida have been renewing or signing their lease deals at lower rates as vacancy rates continue to drive down prices.

In a recent survey of professionals in Florida’s commercial real estate investment sector, most of the respondents believe that rates will fall further by 11 to 20 percent while one-fifth of them believe that rates will decline further by at least 20 percent.

Among owners of commercial buildings, 28 percent of them believe that commercial lease rates have almost bottomed out and will decline only by up to 5 percent. Almost 20 percent of real estate investors also have the same contention.

In Miami, Cushman & Wakefield, an international commercial real estate broker, have signed 9 commercial leases in the past 4 months. Although the firm did not provide details on the lease rates, it said the tenants had the upper hand in the negotiations.

Alan Kleber, senior director of Cushman & Wakefield, said tenants are taking advantage of the rise in vacancy rates and the decline in demand for commercial space.

In April, Sony Corp. signed a lease at Brickell Key while Club Med signed a lease at Waterford Corporate Center.

Warner Bros. signed a lease at 777 Brickell Ave. in May while Wampler Buchanan Walker Chabrow Banciella & Stanley signed a lease at 9200 Dadeland Towers.

In July, Cushman signed leases with Sharp Electronics at 6100 Blue Lagoon Drive, Johnson & Johnson at 6303 Blue Lagoon Drive, Marsys at 5757 Blue Lagoon Drive, Berenfeld Spritzer Schechter & Sheer PA and Penn Mutual Life Insurance at 2525 Ponce de Leon. Both the leases of Johnson & Johnson and Marsys were renewal deals.

Meanwhile, in Tampa, Greystone Healthcare, which runs assisted-living facilities and nursing homes in Florida, Indiana and Ohio, signed a lease at Highland Oaks Four, which was developed by Duke Realty Corp. as a speculative building.

In the second quarter, Highland Oaks had a vacancy rate of 20.3 percent, according to a broker of Cushman & Wakefield Research Services. In the Tampa area, the vacancy rate for Class A properties was 24.2 percent.

The overall office vacancy rate in the second quarter in Tampa was 19.8 percent, an increase from the 15-percent rate last year.

According to a Cushman & Wakefield broker, commercial lease rates have declined by several dollars per square foot in several markets, including the Westshore market where rates fell by $33 per square foot.

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