Lauderdale and West Palm Rank With Nation's Most Abysmal Markets for Office Real Estate
Among the many signs of desperation by employers who are struggling to survive this recession is that rate of sublease offerings: a company looking to trim costs lays off employees and then offers a deal on unused office space that it's renting. For start-up and small businesses, those rates prove tempting, and as they sublet their office space it drives down the rental rates for office space around the region. Nowhere is this cycle as vicious as in Fort Lauderdale and West Palm Beach, according to a report by a national real estate researching firm.
Jones Lang LaSalle found that those two cities posted the highest quarterly increase in sublease offerings. None of the markets studied by the firm were in such a severe free-fall as West Palm, where leasing activity dropped by an astounding 80 percent in the most recent quarter, a calamity that makes that market comparable to Detroit and Cleveland. Be afraid.
That big drop may be attributable in part, though, to Office Depot's decision to vacate over a half-million square feet of office space in West Palm, most of which was relocated to Boca Raton. The 123,000 square feet of newly available space at West Palm's Lynn Financial Center, the report notes, exacerbated the trend. The good news: analysts expect the market to collapse slightly less next quarter.
Prospects for Fort Lauderdale and Broward County after the jump.
The report finds that unemployment in Broward County is at its highest rate in 17 years.
The momentum of job losses have slowed during the second quarter of 2009, but effects from recessionary conditions are likely to linger around South Florida throughout 2009 and most likely into the first part of 2010. Continued employment losses will limit new leasing activity and thus supply will most likely continue to outpace demand over the next 12 months, placing further pressure on rents.
The greater Fort Lauderdale area rated with Detroit as one of the most stagnant in terms of new office construction.
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