Forecast for ’15: The Return of Suburban Office
Almost every South Florida asset class has recovered from the lowest valuations of the recession, except for suburban office, Avison Young principal Keith O’Donnell tells us (right, snapped with Greater Boca Raton Chamber of Commerce CEO Troy McLellan). But with positive absorption picking up in these markets, he predicts that 2015 will see the return of the office market in the ‘burbs. It’s already underway, he says: the majority of absorbed space in Palm Beach County this year took place in Boca Raton, and it’s an indication that businesses are looking beyond the urban core into the bedroom communities.
But the revival of the ‘burbs will be about more than just increasing occupancies and rents, Keith says. “As a result of investors and occupiers driving innovations in select new vertical development projects--proposed or currently underway for completion next year--prices will demand a premium due to the lack of land and rising construction costs,” he says. Further supporting this demand are increased urbanization outside of the downtown areas and professionals preferring to work closer to home not wanting to fight traffic or face a long commute.