More Space Means Trouble in CBD

MIAMI-The Miami Herald reports that new CBD office space anticipated to come online in 2010 will add still more inventory to a troubled submarket. The current vacancy rate downtown is 15%, the highest since 2004.

The 750,000-square-foot Met 2 Financial Center and the 586,000-square-foot 1450 Brickell are scheduled for completion in 2010. The second phase of Brickell Financial Centre, measuring more than 463,000 square feet, is anticipated to come online in early 2011. The Miami Herald article says the addition of this office space means the submarket would have to absorb as much as two million square feet. When the economy is strong, the story notes, the market is able to absorb 250,000 square feet a year.

Analysts point out that the CBD is already a tenant’s market and will continue to be for the foreseeable future, especially with lease rates in the low-to-mid $30s. On the down side, analysts estimate it could take three to seven years for the space to be rented and thoroughly absorbed.

Read more about the analysis here.