Investors Flocking to West Broward Office MarketJuly 15th, 2015
The suburbs of western Broward County are becoming office market hotspots.
In the past 18 months, roughly 1.7 million square feet of “Class A” office buildings have sold, with 875,000 square feet still on the market, according to the CBRE firm. Once those buildings sell, more than half of the Class A offices in west Broward will have traded hands over the past two years, CBRE said.
The improving economy and limited construction in recent years have large investment funds eager to acquire suburban properties with low vacancies and strong rental rates in Plantation, Sunrise, Miramar, Pembroke Pines and Weston. The robust activity follows a similar surge that occurred in downtown Fort Lauderdale over the past two years.
“It’s definitely a landlord’s market,” said Travis Herring, a senior vice president with CBRE in Fort Lauderdale.
West Broward offers easy access to major highways, putting employees closer to where they live, Herring said. As a result, tenants can expect increased rental rates and fewer concessions and vacancies as the new owners look to capitalize on the favorable conditions.
Herring said he’s already seeing some tenants lock in 10-year leases to avoid getting hit with rent hikes on shorter-term deals.
Among the prominent west Broward buildings that have sold recently: the 239,000-square-foot Sawgrass Lake Center in Sunrise for $45.2 million and the 128,000-square-foot Lake Shore Plaza II, also in Sunrise, for $32 million. Properties on the market include Weston Corporate Centre I in Weston and Huntington Centre I and II in Miramar.
To address the lack of available office space in west Broward, Duke Realty plans to open a 144,000-square-foot building this fall off Interstate 75 near Pines Boulevard in Pembroke Pines. It’s the largest office project countywide in seven years and the first of four buildings totaling nearly 600,000 square feet that Duke has earmarked for the site.
Duke says it’s targeting big corporate tenants that can’t find large blocks of space in existing buildings nearby.
Earlier this year, the Avison Young firm announced a lease deal with Altegra Health for 52,000 square feet at Weston Park of Commerce. Greg Martin, a broker for Avison Young, said he’s not sure the firm would be able to find a similar-size deal today because of the lack of large vacancies in west Broward.
Martin expects the Duke project to be a bellwether for future development.
“Once Duke delivers and we see new product be successful, I think we’ll start to see other new construction,” Martin said. “There’s a pent-up demand for space, and I think that environment will continue for at least the next couple of years.”
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