South Florida’s Office Market Hits New Record Pricing in 2021
The office investment market in South Florida broke records in 2021, despite uncertainties surrounding the coronavirus pandemic and return to the office delays. South Florida’s sale volume totaled $5.1 billion in 2021, more than three times the volume in 2020 of $1.5 billion. For the most part, South Florida’s office market has proven to be resilient through the coronavirus business climate, having minimal negative impact on leasing and sales activity. As physical day-to-day occupancy in office buildings return, the resulting positive market fundamentals will continue to strengthen in South Florida and attract investors with its stabilized, top of market product commanding top dollar pricing.
South Florida’s strong demand drivers like, declining unemployment, population growth, and confidence in the economy are creating an imbalance in supply and demand. There is an ongoing supply shortage of quality product with competitive buyers driving the price up; sales price per square foot increased 19 percent year-over-year, ending 2021 at $285. High demand and potential tax changes from the White House in the second half of 2021 caused a frantic and rushed market as the year was closing out, clogging third party vendors, which impacted deal closing timelines.
As buyers and sellers contemplate these local market strengths, balanced alongside the inherent headwinds, sellers are seizing the opportunity to monetize their assets. South Florida’s strong office market fundamentals are attracting investors seeking safety that competing, slower improving markets aren’t currently offering. Additionally, South Florida is drawing institutional investors as more companies establish or move their headquarters here. With favorable trends, 2022 is expected to be another strong year for office investment in South Florida though high demand and limited supply will likely remain imbalanced.