Cost of Miami office space hits record high

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The cost of Miami office space hit a new record as demand from blue-chip companies from New York, Chicago and Los Angeles for high-end offices outstrips supply.

Brazilian bank Banco Master has obtained the final 26,000 square feet in the prestigious 830 Brickell building for nearly $200 a square foot, according to two people familiar with the deal, almost double the city’s office market record just two years ago.

The sky-high cost of luxury offices has been fuelled by the migration of top financial, legal and tech groups to Florida’s tax-friendly regime. Companies that moved large swaths of their workforce to Miami after the pandemic have driven up the price per square foot for offices in the city. Pre-pandemic, the market rate for luxury offices in the Brickell neighbourhood was $60 a square foot, according to research by Miami-based broker Blanca Commercial Real Estate.

The building, completed in 2023, is considered to be the only new luxury office building in Miami’s main business district, and has also leased offices to Microsoft, the hedge fund Citadel, private equity firm Thoma Bravo, insurer Marsh and law firm Kirkland & Ellis.

“These tenants are already leasing in markets like New York or internationally where you have top quality, world-class real estate assets,” said Tere Blanca, founder and chief executive of Blanca. “Demand for these trophy office spaces [in Miami] has been very strong, but there is limited inventory available.”

The rent commanded by the 830 Brickell deal signals “a high-water mark for sure, in any market, not just here”, she said.

While many office building markets around the US have been struggling with double-digit vacancy rates since the pandemic, Miami has defied the trend as businesses have migrated south. A source familiar with tenants at 830 Brickell said that 90 per cent had moved to the building from other big markets such as New York or LA.

In January 2022, rent for Miami office space made headlines when it broke $100 per square foot, putting the city on par with markets such as New York City. The 830 Brickell deal, at roughly $190 per square foot, soared above the market rate — estimated at about $105 per square foot, according to a recent report by Cushman Wakefield. Banco Master did not reply to a request for comment.

The 57-story office tower, developed by OKO Group and Cain International, began leasing in late 2019 at close to $60 per square foot. In June, Citadel announced it was expanding its footprint in the office building where it occupies six floors. Sources close to the deal say Citadel paid $150 per square foot at the time.

While multiple high-end office towers are in development in the city to meet demand, the supply of existing space is limited. More than 1.8mn square feet of office space is under construction, according to the Blanca report.

Citadel founder Ken Griffin is among those hoping to develop his own office space. Plans for his $1bn waterfront development in Brickell were released last week. The building, which Griffin has long billed as the new headquarters for his hedge fund and market maker, would house offices, as well as shops and a luxury hotel.