MIAMI-DADE COUNTY | OFFICE Second Quarter 2019

Research & Forecast Report MIAMI-DADE COUNTY | OFFICE Second Quarter 2019

Coworking Firms Continue Flooding the Miami-Dade County Office Landscape in the Second Quarter of 2019

Executive Summary Summary Statistics

Coworking continues to arrive in Miami-Dade County with an estimated Q2 2019 Office Market Miami-Dade, FL 120 coworking locations comprising nearly 2 million square feet. Following the 317,500 square feet leased to coworking firms last quarter, Vacancy Rate 9.4% an additional 213,00 square feet were leased to coworking firms across Change From Q1 2019 -0.2% the County in the second quarter of 2019. Additionally, coworking firm (Percent) Novel Coworking purchased a 63,000 square foot office building for Absorption (Square Feet) 253,540 $20.6 million this quarter. The vacancy rate currently stands at 9.4 New Construction percent, a decrease of 20 basis points from the previous quarter. Four (Square Feet) 141,307 buildings totaling 141,300 square feet delivered this quarter leaving 2.3 Under Construction 2,366,407 million square feet under construction. Among the buildings completed (Square Feet) this quarter, Wynwood 25 Annex was the largest at almost 65,000 square Asking Rents feet. Live Nation Entertainment is the first to sign a lease there for 8,000 Per Square Foot Per Year square feet. Overall $38.12 Miami-Dade office sales volume skyrocketed in the second quarter of 2019, reaching nearly $376 million. The largest of the deal was the sale Change From Q1 2019 -0.5% of 2 MiamiCentral and 3 MiamiCentral for $160 million in the Downtown Class A $44.96 Miami submarket. Leasing activity in the Miami-Dade office market Change From Q1 2019 -1.0% remains strong as over one million square feet were leased this quarter, Data Note: Colliers tracks office buildings 10,000+ SF. with the largest leases to coworking firms. Sixty-seven (67) percent of the leasing activity took place in the Miami Airport, Downtown Miami, Brickell and Coral Gables submarkets totaling approximately 720,000 Market Trends square feet. Gross rental rates in Miami-Dade County currently average Relative to Prior Period Q2 2019 Q3 2019* $37.95 per square foot, an increase of 6.1 percent year-over-year. Class Vacancy A office rents experienced a year-over-year increase of 5.5 percent and currently average $44.46 per square foot gross. Net Absorption Construction Market Highlights Overall Rental Rate >> Four (4) major coworking leases signed in the second quarter of 2019 Class A Rental Rate

one by WeWork in Downtown Miami, one by Quest Workspaces in Coral Gables and two by Spaces in Miami Beach and Brickell totaling 213,000 square feet. Note: Construction is the change in Under Construction. *Projected >> Adding to the coworking boom in Miami-Dade County, Chicago- Completions, Absorption and Vacancy Rates based Novel Coworking purchased a 63,000 square foot office building in Edgewater for $20.6 million that will be converted Net Absorption Completions Overall Vacancy Class A Vacancy into more coworking space. 700 16% 600 14% >> A number of major office sales transacted in the second 500 12% quarter including the sale of 2 MiamiCentral & 3 MiamiCentral 400 10% Vacancy Rate in Downtown Miami for $160 million, Regions Bank Building for 300 $60 million in Coral Gables and 550 Biltmore for $54 million also 200 8% in Coral Gables. 100 6% Square Feet (Thousands) 0 4% >> With 2.3 million square feet under construction, leasing activity (100) remains strong as 141,300 square feet delivered, and the Miami- (200) 2% (300) 0% Dade office market posted a positive net absorption of 253,540 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 square feet. Net Absorption Rebounds Net absorption for Miami-Dade County office rebounds from the first South Florida - Office Market Trends quarter of 2019, surpassing completions while Class A and overall vacancy rates stabilize. Coworking Saturates the South Florida Market As demand increases for flexible lease options and highly- Source: Colliers International, CoStar amenitized space, coworking firms flood the South Florida office market; approximately 2.7 million square feet in the tri-county area are leased by coworking firms. While Miami-Dade County is the densest coworking market, with nearly 2 million square feet of space leased to coworking firms, coworking firms are expanding to Broward and Palm Beach counties as well. Unemployment Trends Coworking offers nontraditional leases to companies of all sizes and Florida Miami-Ft Lauderdale-West Palm Beach MSA USA types, they provide turn-key desks and offices in a space loaded with 10.0% amenities such as, food and beverage services, health and fitness 9.0% centers, conference rooms, printers, outdoor patio areas, scenic 8.0% views and natural light. These firms focus on meeting the needs 7.0% of their clients by providing management services and kindling a Unemployment Rate 6.0% collaborative and creative environment. 5.0% 4.0%

Nationwide, businesses from other sectors are entering the 3.0% coworking market by partnering with coworking firms or creating Feb-19 Feb-18 Feb-17 Feb-16 Feb-15 Feb-14 Feb-13 Aug-18 Nov-18 Aug-17 Nov-17 Aug-16 Nov-16 Aug-15 Nov-15 Aug-14 Nov-14 Aug-13 Nov-13 Aug-12 Nov-12 Ma y-19 Ma y-18 Ma y-17 Ma y-16 Ma y-15 Ma y-14 Ma y-13 their own coworking companies. Office owners, commercial real Ma y-12 estate services companies and retailers are among the industries providing coworking space. For example, retailer, Office Depot, Unemployment rates decreased at the local, state, and national level. The Miami-Fort Lauderdale-West Palm Beach MSA unemployment rate recently launched its own coworking company Workonomy and will posted 3.1 percent* in May 2019, representing an 11 percent decrease provide workspaces inside of their existing stores. from May 2018. The state of Florida rate posted a 3.4 percent* unemployment for May 2019, well below the national average of 3.6 In 2019 alone, over 500,000 square feet have been leased by percent. coworking companies, resulting in almost 22 percent of all coworking inventory across South Florida. WeWork and Spaces leased the *preliminary largest amount of space; 324,120 square feet across 4 locations and

166,765 square feet also across 4 locations, respectively. Though the Source: US Bureau of Labor Statistics majority of the square-footage was leased in CBD markets in 2019, suburban markets account for almost 1 million square feet of the total coworking inventory in South Florida. The coworking trend continues to accelerate and shows no signs of letting up; their ability to please clients and provide services not offered by traditional leases will increase the demand for coworking spaces and allow them to expand further into suburban markets.

2 South Florida Research & Forecast Report | Q2 2019 | Office | Colliers International SUBMARKET BREAKDOWN

UNDER PROPERTY # OF TOTAL DIRECT TOTAL NET ABSORP. NEW COMPLETIONS AVG. DIRECT ASKING RATE CONSTRUCTION TYPE BUILDINGS INVENTORY SF VACANCY % VACANCY % CURRENT QTR. SF SF FULL SERVICE SF CENTRAL BUSINESS DISTRICT

BISCAYNE CORRIDOR A 5 527,187 23.4% 23.4% (4,398) 0 225,055 $41.38 B 20 1,105,274 9.8% 9.8% 786 0 30,000 $34.40

C 27 774,342 4.5% 4.5% 25,262 0 0 $26.99

Overall 50 2,612,049 11.3% 11.3% 26,048 0 30,000 $34.41 BRICKELL

A 19 5,674,184 11.5% 12.1% 43,156 0 552,301 $51.38 B 27 3,651,921 8.6% 9.1% 38,601 0 0 $37.20 C 6 720,459 0.4% 0.4% (2,486) 0 0 $24.03 Overall 52 10,046,564 9.7% 10.2% 79,271 0 552,301 $46.71

DOWNTOWN MIAMI A 13 5,684,002 21.2% 21.4% 83,686 0 0 $45.72 B 43 6,208,764 14.4% 14.4% (5,608) 0 0 $31.01 C 20 1,039,282 0.0% 0.0% 0 0 0 $15.00 Overall 76 12,932,048 16.2% 16.3% 78,078 0 0 $39.62

MIAMI MARKET A 13 1,381,884 12.6% 12.6% 14,260 64,900 283,693 $57.03 B 48 2,729,107 4.0% 4.0% 21,997 0 249,338 $38.46 C 84 1,711,832 2.1% 2.1% 10,575 0 0 $24.85 Overall 145 5,822,823 5.5% 5.5% 46,832 64,900 533,031 $49.39 MIAMI BEACH A 10 1,013,932 12.3% 14.1% 23,624 0 0 $52.22 B 55 2,643,787 6.4% 6.4% 11,355 0 0 $39.02 C 27 866,927 2.0% 2.0% 11,431 0 0 $30.53 Overall 92 4,524,646 6.9% 7.3% 46,410 0 0 $44.42 SUBURBAN AVENTURA A 16 1,375,893 10.0% 11.2% 16,260 0 49,133 $47.92 B 23 937,593 12.8% 12.8% 4,961 0 0 $41.64 C 3 86,726 0.0% 0.0% 14,162 0 0 $35.00 Overall 42 2,400,212 10.7% 11.4% 35,383 0 49,133 $45.44

COCONUT GROVE A 5 527,187 23.4% 23.4% (4,398) 0 225,055 $41.38 B 25 1,338,353 6.7% 7.0% 7,005 0 0 $38.07 C 8 141,533 1.0% 1.0% (383) 0 0 $38.86 Overall 38 2,007,073 10.7% 10.9% 2,224 0 225,055 $40.37

CORAL GABLES A 35 5,134,045 10.4% 11.1% (3,240) 0 291,267 $47.66 B 87 4,240,167 7.1% 7.5% (7,615) 0 0 $36.77 C 50 984,252 3.5% 3.5% (11,515) 0 0 $31.84 Overall 172 10,358,464 8.4% 8.9% (22,370) 0 291,267 $44.30

3 South Florida Research & Forecast Report | Q2 2019 | Office | Colliers International SUBMARKET BREAKDOWN

NEW UNDER PROPERTY # OF TOTAL DIRECT TOTAL NET ABSORP. AVG. DIRECT ASKING RATE COMPLETIONS CONSTRUCTION TYPE BUILDINGS INVENTORY SF VACANCY % VACANCY % CURRENT QTR. SF FULL SERVICE SF SF CORAL WAY A 2 125,365 0.0% 0.0% 0 0 0 $32.00 B 32 1,120,863 5.9% 6.0% 4,059 0 0 $32.23 C 29 593,880 1.5% 1.7% 3,222 0 0 $32.02 Overall 63 1,840,108 4.1% 4.2% 7,281 0 0 $32.19 KENDALL A 16 1,838,435 10.6% 10.7% (32,574) 0 129,317 $40.89 B 178 6,177,259 6.6% 6.7% (26,263) 0 0 $28.24 C 87 2,532,426 1.8% 1.8% 9,781 0 0 $27.90 Overall 281 10,548,120 6.1% 6.2% (49,056) 0 129,317 $32.80 MEDLEY HIALEAH A 6 793,962 3.7% 5.8% (1,363) 0 0 $30.50 B 34 1,595,663 1.7% 1.7% 5,632 0 0 $27.92 C 41 1,056,363 3.3% 3.4% (7,550) 0 0 $25.44 Overall 81 3,445,988 2.6% 3.2% (3,281) 0 0 $28.50 MIAMI AIRPORT A 42 5,847,170 15.3% 16.2% 2,115 56,407 219,081 $35.51 B 154 10,331,969 6.7% 7.0% (7,388) 0 0 $29.33 C 61 2,370,878 3.4% 3.4% 14,349 0 0 $22.03 Overall 257 18,550,017 9.0% 9.4% 9,076 56,407 219,081 $32.21

MIAMI LAKES A 9 481,094 15.5% 16.8% 4,652 0 0 $27.13 B 68 2,542,257 15.9% 16.0% (1,015) 0 0 $24.20 C 20 326,115 0.4% 0.4% 1,760 0 0 $9.82 Overall 97 3,349,466 14.3% 14.6% 5,397 0 0 $23.49

NORTHEAST DADE A 2 43,790 0.0% 11.4% (5,000) 0 235,222 $53.80 B 60 2,883,383 10.6% 10.7% (6,314) 0 102,000 $28.50 C 98 2,384,027 4.2% 4.2% (9,656) 0 0 $21.81 Overall 160 5,311,200 7.6% 7.8% (20,970) 0 337,222 $31.73

OUTLYING DADE A 1 21,668 0.0% 0.0% 0 0 0 - B 3 161,500 0.0% 0.0% 0 0 0 - C 0 0 0.0% 0.0% 0 0 0 - Overall 4 183,168 0.0% 0.0% 0 0 0 -

SOUTH DADE A 1 35,872 7.1% 7.1% 400 0 0 $22.28 B 31 1,410,976 7.1% 7.1% 16,532 0 0 $24.75 C 20 478,706 2.0% 2.0% 5,000 0 0 $19.12 Overall 52 1,925,554 5.8% 5.9% 21,932 0 0 $24.25

WEST MIAMI A 1 46,118 0.0% 0.0% 2,000 0 0 $7.50 B 24 603,453 5.6% 5.6% 12,372 20,000 0 $22.35 C 32 580,400 0.1% 0.1% 1,719 0 0 $24.38 Overall 57 1,229,971 2.8% 2.8% 16,091 20,000 0 $21.79

4 South Florida Research & Forecast Report | Q2 2019 | Office | Colliers International MIAMI-DADE COUNTY OVERALL MARKET

NEW UNDER OVERALL AVG. CLASS A AVG. QUARTER & TOTAL DIRECT TOTAL NET ABSORP. NET ABSORP. BUILDINGS COMPLETIONS CONSTRUCTION DIRECT ASKING DIRECT ASKING YEAR INVENTORY SF VACANCY % VACANCY % CURRENT QTR. SF YTD SF SF SF RATE FS RATE FS

2019 Q2 1,730 97,392,078 9.1% 9.4% 253,540 222,108 141,307 2,366,407 $38.12 $44.96 2019 Q1 1,729 97,299,204 9.2% 9.6% (31,432) (31,432) 38,885 1,869,651 $38.30 $45.42 2018 Q4 1,729 97,303,550 9.2% 9.5% (212,873) 470,367 347,028 1,779,219 $36.33 $42.90 2018 Q3 1,723 96,956,522 8.6% 9.0% 252,886 683,240 561,497 1,709,473 $35.97 $42.85 2018 Q2 1,719 96,435,025 8.4% 8.8% 393,138 430,354 372,140 2,168,970 $35.61 $42.29 2018 Q1 1,715 96,075,716 8.5% 8.8% 37,216 37,216 241,692 2,156,709 $34.98 $42.00 2017 Q4 1,713 95,849,024 8.4% 8.7% 104,728 1,130,111 25,136 1,960,953 $34.03 $41.68 2017 Q3 1,714 95,881,039 8.6% 8.8% 328,309 1,025,383 451,628 1,974,539 $33.60 $41.58 2017 Q2 1,710 95,442,625 8.5% 8.7% 243,229 697,074 109,453 2,056,974 $34.01 $41.77 2017 Q1 1,706 95,333,172 8.7% 8.9% 453,845 453,845 151,614 2,065,070 $33.83 $41.43 2016 Q4 1,709 95,415,435 9.2% 9.5% 529,459 722,799 359,914 2,156,208 $33.67 $41.68 2016 Q3 1,710 95,261,642 9.6% 9.9% 252,076 193,340 142,384 2,366,122 $32.98 $41.07 2016 Q2 1,709 95,225,426 9.9% 10.1% (31,902) (58,736) 153,840 2,264,933 $32.40 $40.35 2016 Q1 1,707 95,071,586 9.8% 10.0% (26,834) (26,834) 307,832 1,820,649 $31.70 $39.92 SALES ACTIVITY

PROPERTY ADDRESS CLASS BUYER NAME SIZE (SF) SALES PRICE ($PRICE/SF) SUBMARKET 2 MiamiCentral & 3 MiamiCentral - A Shorenstein 285,000 $159,428,000 ($489) Downtown Miami 700 NW 1 Ave Regions Bank Building - A TA Realty 146,202 $59,875,000 ($410) Coral Gables 2800 Ponce de Leon Blvd 550 Biltmore A CGI Merchant 162,000 $54,000,000 ($338) Coral Gables 2125 Biscayne Boulevard C Novel Coworking 63,240 $20,620,000 ($326) Miami Highland Park Center - B TopMed Realty 42,489 $13,875,000 ($320) Miami 1011 Sunnybrook Rd

LEASING ACTIVITY

PROPERTY ADDRESS CLASS TENANT NAME SIZE (SF) LEASE TYPE SUBMARKET

Southeast Financial Center A WeWork 88,880 New Downtown Miami

1111 Lincoln Rd A Spaces 51,000 New Miami Beach 801 Brickell Avenue A Spaces 49,000 New Brickell 6100 Blue Lagoon Drive B L'Oreal USA 43,624 Renewal Miami Airport

2000 Ponce De Leon Blvd B Quest Workspaces 23,800 New Coral Gables

701 Brickell Avenue A Saul Ewing Arnstein & Lehr LLP 22,400 New Brickell

5 South Florida Research & Forecast Report | Q1 2019 | Office | Colliers International OFFICESUBMARKET MAP

NORTHEAST MIAMI NW Broward/ DADE Coral Springs LAKES AVENTURA

OUTLYING MEDLEY / MIAMI-DADE HIALEAH

BISCAYNE CORRIDOR MIAMI MIAMI AIRPORT MIAMI BEACH

DOWNTOWN CORAL MIAMI WEST MIAMI GABLES CORAL BRICKELL WAY

COCONUT GROVE KENDALL

SOUTH DADE

6 South Florida Research & Forecast Report | Q2 2019 | Office | Colliers International JACKSONVILLE

GAINESVILLE

ORLANDO 17,000 professionals in TAMPA BAY 68 countries CLEARWATER • US $3.3 billion in annual revenue • 2 billion* square feet under management SARASOTA • 69,000 total sale/lease transactions • $127+ billion USD in total transaction value WEST PALM BEACH *Square footage includes office, industrial and retail property -un FORT MYERS der management. Residential property is excluded from this total. All statistics are for 2018. BOCA RATON

FORT LAUDERDALE

MIAMI

CORAL GABLES

SOUTH FLORIDA REGIONAL OFFICES

Miami Coral Gables Fort Lauderdale Boca Raton West Palm Beach 801 Brickell Avenue 2121 Ponce de Leon Boulevard 200 E Broward Boulevard 2385 NW Executive Center 901 Northpoint Parkway Suite 850 Suite 1250 Suite 120 Drive Suite 109 Miami, FL 33131 Coral, Gables, FL 33134 Fort Lauderdale, FL 33301 Suite 350 West Palm Beach, FL 33407 Tel: +1 305 359 3690 Tel: +1 305 854 7342 Tel: +1 954 652 4600 Boca Raton, FL 33431 Tel: +1 561 478 6400 Fax: +1 786 735 3178 Fax: +1 786 735 3178 Fax: +1 954 667 7945 Tel: +1 561 353 3650 Fax: +1 561 353 3651 Fax: +1 561 353 3651

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