February 6, 2024
A recent report in the Wall Street Journal highlighted how remote work is disrupting the U.S. office market. The stark headline “Offices Around America Hit a New Vacancy Record” highlights a remarkable level of uncertainty faced by downtown office buildings. The Wall Street Journal adds that “a staggering 19.6% of office space nationally remains unleased,” the highest U.S. vacancy rate since 1979.
Even 60 Minutes reported recently on the impact of empty office buildings on cities.
Is This Impacting South Florida's Downtowns?
But South Florida’s downtowns have not been impacted by this national crisis and Fort Lauderdale has not experienced this phenomenon.
"Fort Lauderdale’s office market benefits from a robust local tenant base that has continued to flourish in recent years. The quality of life, housing options, access to transit and regional centrality has also drawn attention from new-to-market tenants; and employers are taking note of the diverse and highly-educated talent pool that is growing at record speed," said Christina Jolley from Blanca Commercial Real Estate.
According to the Wall Street Journal, “Palm Beach and Fort Lauderdale had the highest vacancy rates among major U.S. markets in 1991 and today are among the lowest.” In fact, Fort Lauderdale saw the second-steepest drop of any major U.S. office market during this period.
"In order to capture continued demand for office space, Fort Lauderdale needs to address the constricted supply of high-end, modern, quality space, which will be relieved, in part, by T3 FAT Village when it is delivered in 2026 as part of the mixed-use development by Hines and Urban Street Development in Flagler Village," added Jolley.
Compared to downtowns in Austin, Charlotte, and Dallas, DowntownFTL is the only city to experience a decline in office vacancy since the peak of the pandemic.
"While post-pandemic demand for office space has waned in northeastern markets like New York and Chicago, Sun Belt markets have fared reasonably well fueled by low un-employment and strong population growth," said Ken Krasnow from Colliers International.
"Downtown Fort Lauderdale stands out as a beacon of stability marked by a post-pandemic decline in office vacancy rates that sets it apart from major Sun Belt cities such as Austin, Charlotte, and Dallas. This decline is attributed largely to factors unique to the South Florida office market, including an influx of migration from diverse regions of the country and the comparatively lower costs in the region," added Krasnow.
Based on this metric, Downtown Fort Lauderdale’s office market has been largely outperforming other top Sun Belt cities.