Miami office boom is pushing deeper into posh residential areas

FINANCIAL and technology firms settling in Miami are boosting the office market in the sunny South Florida city at a time when buildings across the United States are struggling.

Leasing is surging, pushing up rents. And demand is spreading from core business districts such as Downtown and Brickell – where Apollo Global Management Inc and Blackstone Inc have taken space – to residential areas where Wall Street and Silicon Valley executives scooped up multimillion-dollar homes during the pandemic.

“You have the big firms moving here and they’re starting to attract other smaller firms that want to be around them and service them,” says Ryan Holtzman, a Miami-based managing director at brokerage Cushman & Wakefield.

“We’re seeing a tonne of new-to-market tech, law firms coming in, whereas pre-pandemic, they would’ve never thought of Miami.

Now, office projects are sprouting up close to where their employees live. Over the past year, New York-based hedge funds quickly filled Related Group’s boutique property in Miami’s trendy Coconut Grove neighbourhood.

Starwood Capital Group just completed its new headquarters in Miami Beach, not far from where chief executive officer Barry Sternlicht has a home.

Starwood and its partner are bidding on more office projects nearby, in an entertainment district famous for its Art Deco hotels and opulent houses.

Wealthy north-easterners and Californians have long flocked to Miami, drawn to its warm weather, outdoor lifestyle and lower taxes.

The pandemic accelerated that shift. After buying lavish homes as lockdown retreats, many of the 2020 migrants became permanent residents, enrolling their children in private schools and establishing social networks in the city.

That led to a wave of office leasing, with companies including Microsoft Corp and private equity firm Thoma Bravo taking space in Miami to house their growing workforces. Inc chose a WeWork location in nearby Coral Gables for roughly 100 employees.

“We’ve never been this busy, seen this much growth,” says Holtzman, who has worked in the area for 17 years. “And it’s only the beginning.”

That’s counter to what’s happening in other US business hubs including San Francisco and New York, where empty office space is piling up.

Employers are reassessing their real estate needs as many of their workers, reluctant to resume long commutes, embrace permanent hybrid schedules.

Miami-Dade County’s office market is small, with just over 46 million sq ft of space, compared with 408 million sq ft for Manhattan, according to fourth-quarter reports by Cushman & Wakefield. —Bloomberg

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