Tight Coconut Grove office market keeps rents rising

Office space in Coconut Grove remains in high demand as low vacancy rates reflect the limited amount of space available.

Bert Checa, a principal at Lee and Associates South Florida, says the vacancy rate in Coconut Grove is 2.75% and the average rental rate for Class A and Class B office spaces combined is $70 per square foot.

Impacting the conversation are new developments that were previously projected to be completed in mid-2025 and now expected to be completed in 2026, Mr. Checa said.

Vizcaya Capital 2871 Oak Ave., a new development previously expected to be completed in mid-2025, is now targeting a completion in the fourth quarter of 2026, said Mr. Checa. “The reason why the market continues to increase in rate is that there’s just no new product.”

The other office project in line, also targeting completion in the fourth quarter of 2026, is at 3443 Grand Ave.

Mr. Checa said he believes the market will “continue to break records with higher rates.” Additionally, he said, people will continue to see the same path in the upcoming year of 2025 due to the two projects in line not being completed by then. “I would say, forecasted relief would be towards the end of 2025, possibly early 2026, where you may see a flattening. I don’t anticipate a reduction, but I think maybe a stopping of the increase in rates and a flattening of the cost if these two projects are completed.”

What draws people in to look at office space in Coconut Grove is the location, Mr. Checa said. “It’s the oldest neighborhood in Miami, and it’s very enchanting. The streets are all shaded with landscaping and trees.” Additionally, there are strong, diverse amenities offered throughout the market such as restaurants and high-end retail.

It’s an area with high walkability and it’s safe, said Mr. Checa. “The walking score on a lot of these buildings are all in the high 90 percentiles.” This means people don’t need cars to do many things. “The traffic flows a lot quicker for tenants; employees coming from Kendall, it’s a much shorter drive time than to go out all the way to Brickell and Downtown.”

Newer buildings in Coconut Grove have attracted interest, said Mr. Checa, as tenants have been going to markets with newer office buildings.

Coconut Grove is one of the smallest sub-markets in the county for office space, said Carlos Villanueva, a managing broker with The Keyes Company.

However, it is in great demand because of its location, access to public transportation and restaurants.

The average rental rate per square foot is about $65, said Mr. Villanueva. “They start off as low as in the $40s and they go as high as almost $80.”

Despite the amenities, location and history, long-time tenants are moving out of Coconut Grove.

“I have recently seen several legacy tenants that have been in the Grove for over 10 years,” said Mr. Checa, “and in some cases, that have even been in the Grove for 20 years, and have reluctantly had to leave the Grove and go to Coral Gables.”

Although legacy tenants love the area, said Mr. Checa, “they got priced out. They could not afford to renew their leases in the Grove and had to go to Coral Gables, where the rates are a lot more reasonable, $20 to $25 per foot below what the Grove was pricing some Class A space for and they are now taking office space in Coral Gables.”

Additionally, the desire for human interaction has also been noted from companies and their employees.

“We’re starting to see some changes where employers are not just demanding,” said Mr. Villanueva, “but even employees are actually seeking the live interaction of being with their colleagues, fellow employees and team members.”