NY, DC still outpace our office rents
Written by Vanessa Zambrano on September 4, 2013
Miami office rental prices have picked up and are well above some East Coast urban centers but remain lower than those of Washington, DC, and New York City.
“Rent is at more than $30 per square foot. They’re higher than places such as Atlanta or Philadelphia, not quite as high as Capitol Hill or Georgetown in Washington or Midtown Manhattan, but those are more dense places,” said Hugh Kelly, principal at Real Estate Economics in New York and a long-time observer of Miami’s commercial market.
According to Jones Lang LaSalle’s second quarter statistics this year, the average asking rent price in Miami’s Central Business District – which includes Brickell and Downtown – is $35.46 per square foot.
In contrast, the same real estate firm found the average rent in downtown New York to be $49.60 and $56.73 in the Big Apple’s midtown area.
The Central Business District in Washington, DC, had an average office rental rate of $52.29 and Capitol Hill’s asking price surpassed any other rate at $60.07.
The Jones Lang LaSalle report found Boston’s CBD area to have an asking price of $46.50, lower than the nation’s capital and Big Apple equivalents but higher than Miami’s.
Office space rental prices in Philadelphia’s CBD and Atlanta’s urban center are well below the Magic City’s at $26.45 and $24.94, respectively.
So is Miami a bargain when it comes to office prices?
It is not an effective comparison, Mr. Kelly says. “No one will pick up from Charlotte or from New York to Miami for rent but for other reasons.”
The value that a business gets for its money is something that would make companies seek out the city, he said, as Miami has import and export services.
“Competing on the basis of low cost is a disaster for cities,” Mr. Kelly said. “When they have low rent it’s because those cities are providing less than desirable services. It’s not a sign of health, but of disease.”
New York has stayed robust, and it is much an exception to other East Coast cities, he said, and DC has been suffering more in the past two years, especially since March. “Washington has been understood to be resistant, but things are different. It did well in 2010 but the last two years have not been kind,” Mr. Kelly said, and especially since across-the-board federal spending cuts kicked in this year.
The numbers in Atlanta, the lowest asking price average out of the bigger East Coast cities, keep it still far out of balance, he said.
“Its economy is local. Until population starts growing again, it’s going to struggle,” Mr. Kelly said. Philadelphia has not had the momentum that Miami has had and Boston has been moderately successful, he said.
Investment coming from Latin America is an old story for Miami but nonetheless true, according to Mr. Kelly. “The amount coming in from Latin America is considerable.”
The downtown corridor and Brickell offer full services, but two things are needed in order to keep Miami expanding, Mr. Kelly said: broadening out of the retail base and improvement of the downtown Miami school options. “I am a believer in the renaissance of Miami.”
One of the newest trends that has helped the city has been European and Middle Eastern investments, in addition to the traditional Latin American. “That diversification is important,” Mr. Kelly said, “China will probably follow.”