SOUTH FLORIDA Savills Research

Q2 2020 MARKET IN MINUTES SOUTH FLORIDA Savills Research

South Florida's availability rates are on the KEY STATISTICS y-o-y Q2 2019 Q2 2020 rise amongst COVID-disruption, with the Change highest seen in Downtown submarkets Inventory 104.7 MSF 105.2 MSF South Florida's overall availability rate increased by 20 basis points (bps) over the Availability Rate 16.1% 18.1% quarter and 200 bps year-over-year, to 18.1% in the second quarter of 2020 as the Asking Rental Rate $34.46 $36.97 effects of ongoing economic disruption result in space returning to market. In comparison, the average Class A availability rate increased by 80 bps over the quarter Class A Asking Rental Rate $39.31 $42.30 and 380 bps year-over-year, to 20.6%. Central Business District (CBD) and suburban Quarterly Leasing Activity 2.2 MSF 0.9 MSF office availability rates in the second quarter were 19.4% and 17.6%, respectively. Q2 2020 submarket availability rates ranged from 9.5% in Boynton/Delray and 11.4% in South Dade, to 25% in Downtown Miami and 23.5% in Downtown Fort Lauderdale. ASKING RENT TRENDS Overall Asking Rent Class A Asking Rent Leasing activity fell sharply in the second quarter, registering the $50.00 lowest amount since 2017 $42.30 Total second-quarter 2020 leasing activity was just 856,500 sf, down by 60.2% $40.00 year-over-year and 45.3% versus the previous quarter. In comparison, quarterly $36.97 leasing peaked at 2.6 msf in the second quarter of 2015 and hit a five-year low of $30.00 850,000 sf in the fourth quarter of 2016. The largest leases in the quarter were signed by Banco Sabadell (33,500 sf) at 1111 Brickell Avenue in Brickell, 4Ocean $20.00$ / SF (25,538 sf) at 3600 FAU Boulevard in Boca Raton, and Discovery Communications (24,458 sf) at 6505 Blue Lagoon Drive in the West Miami/Airport submarket. $10.00

Asking rents hold firm as owners are hesitant to reprice amid $0.00 ongoing uncertainty Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020 In the second quarter of 2020, the overall average office rent stood at $36.97 per AVAILABILITY TRENDS square foot (psf) across South Florida, reflecting an annual increase of 7.3% but Overall Availability Class A Availability 30.0% a slight decline of 0.2% over the quarter. Rents ranged from a low of $26.46 psf in North Broward and $26.84 psf in Cypress Creek/Fort Lauderdale, to $48.16 psf in Brickell and $46.45 psf in NE Dade. Class A rents increased by 7.6% year-over- 20.6% year but decreased by 0.8% over the quarter, to $42.30 psf. CBD rents increased 20.0% year-over-year through the second quarter by 5.5%, to $44.33 psf, while suburban 18.1% rents rose by 7.9%, to $33.76, over the same period. Landlords have been hesitant to reprice asking rents amidst ongoing uncertainty, however tenants can expect 10.0% to see more generous concession offerings and lease term flexibility as the market continues to soften. 0.0% Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020 Outlook • Despite opening beaches, Florida’s recent spike in COVID-19 cases will LEASING ACTIVITY continue to negatively impact the region’s office markets; weakness will Quarterly Leasing Activity 5-Year Quarterly Average 3.0 continue as long as pandemic uncertainty persists

• Nearly 2.2 msf are currently under construction across South Florida, 2.5 accounting for about 2.1% of total office inventory 2.0 • Prior to the shutdown, South Florida regional employment was projected

to grow by 1.6% per year (100,000 total new jobs) in Miami, 1.7% (75,000 1.5 jobs) in Fort Lauderdale, and 1.8% (58,000 jobs) in West Palm Beach over the next five years 1.0 • Revised projections, which assume a 20% net decline in U.S. employment in 2020, imply a substantial regional job loss, by Q1 2025, South Florida Square feet (millions) 0.5 employment is expected to improve but remain significantly below pre- 0.0 COVID levels Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020 South Florida Market in Minutes - Q2 2020

MAJOR TRANSACTIONS 46.8% 32.4% 24.9% of major transactions were renewals of large transactions occurred in the Financial Services represented 24.9% of Brickell submarket major transactions

Tenant Square feet Address Transaction type Submarket Industry

Banco Sabadell 33,500 1111 Brickell Avenue Renewal Brickell Financial Services

Associations and 4Ocean 25,538 3600 FAU Boulevard Renewal Boca Raton Nonprofits

Discovery Communications 24,458 6505 Blue Lagoon Drive Renewal West Miami/Airport TAMI

Cypress Creek/Fort KCI Technologies 23,725 1425 W Cypress Creek Road New Location Construction Lauderdale

1300 Sawgrass Corporate Health Insurance Innovations 19,683 New Location Sunrise/Plantation Financial Services Parkway

International Materials 19,529 25 SE 4th Avenue Relocation Boynton/Delray Retail

Morgan Lewis 18,000 600 Brickell Avenue New Location Brickell Legal Services

Saputo Cheese USA 17,800 1450 Brickell Avenue Relocation Brickell Retail

Best Doctors 16,600 5301 Blue Lagoon Drive Renewal West Miami/Airport Healthcare For more information, please contact us: Hear.com 15,000 396 Alhambra Circle Renewal and Expansion Coral Gables/Grove Retail Savills Wells Fargo Center Source Savills Research 333 S.E. 2nd Avenue Suite 2800 Miami, FL 33131 AVAILABILITY RATE COMPARISON RENTAL RATE COMPARISON ($/SF) +1 305 423 1919 South Florida Submarkets South Florida Submarkets Sarah Dreyer Boynton/Delray 9.5% Brickell $48.16 Vice President

South Dade 11.4% NE Dade $46.45 Head of Americas

SW Broward 12.6% Coral Gables/Grove $45.74 Research +1 202 540 5510 North Palm Beach 14.4% Downtown Fort Lauderdale $45.27 [email protected] Brickell 14.9% Hollywood/Hallandale $45.04

NE Dade 14.9% Palm Beach $40.48

Coral Gables/Grove 16.0% Downtown Miami $39.68 About Savills Inc. Savills helps organizations find the Boca Raton 17.8% South Florida Overall $36.97 right solutions that ensure South Florida Overall 18.1% Boynton/Delray $34.76 employee success. Sharply skilled and fiercely dedicated, the firm’s Miami Lakes/Hialeah 18.7% Boca Raton $33.64 integrated teams of consultants and West Miami/Airport 18.7% South Dade $33.28 brokers are experts in better real estate. With services in tenant North Broward 18.7% West Miami/Airport $32.05 representation, workforce and Palm Beach 19.0% SW Broward $31.69 incentives strategy, workplace Sunrise/Plantation 20.7% North Palm Beach $29.92 strategy and occupant experience, project management, and capital Cypress Creek/Fort Lauderdale 21.3% Sunrise/Plantation $29.59 markets, Savills has elevated the Hollywood/Hallandale 23.3% Miami Lakes/Hialeah $27.09 potential of workplaces around the corner, and around the world, for Downtown Fort Lauderdale 23.5% Cypress Creek/Fort Lauderdale $26.84 160 years and counting. Downtown Miami 25.0% North Broward $26.46 For more information, please visit 0.0% 10.0% 20.0% 30.0% $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 Savills.us and follow us on LinkedIn, Twitter, Instagram and Facebook.

Unless otherwise noted, all rents quoted throughout this report are average asking gross (full service) rents per square foot (psf). Statistics are calculated using both direct and sublease information. Current and historical availability and rent data are subject to change due to changes in inventory.

The information in this report is obtained from sources deemed reliable, but no representation is made as to the accuracy thereof. Unless otherwise noted, source for data is Savills research.