Miami Office Market Takes Step Back As Demand Wanes
After 2025 started with the best quarter for Miami office leasing since 2023, the market didn't sustain that momentum.
New leasing in the second quarter dipped to 454K SF — down more than 100K SF from the 580K SF of deals signed in Q1, according to Cushman & Wakefield.
The slowdown is a return to the slower demand that made 2024 a sluggish leasing year. The wave of corporate migration that happened during the pandemic has continued to ebb, office brokers and analysts said.
"National relocations to South Florida have slowed down as well, meaning demand has slowed down, not a lot, but a little bit," Savills Market Research Lead Andrea Duque said. "We still have demand, but because we don't have that many relocations, developers have also realized that demand is not as strong."
According to Blanca Commercial Real Estate's quarterly report, total leasing activity, including renewals, fell to 514K SF, down from 929K SF at the start of the year. It was also below the 770K SF five-year average, which was partially inflated by the 2022 postpandemic push.
As demand has waned, so has landlords' ability to push rents. Class-A asking rents dipped by 0.3% from the first quarter, according to a Colliers report. It was the first decrease in asking rents since the first quarter of 2020, a Colliers spokesperson said.
The dip was attributed to Brazilian investment bank Banco Master leasing the remaining 27K SF in 830 Brickell, taking a $180 per SF listing off the market.
Cushman's report found that average asking rents still edged up slightly from $63 per SF to $63.39 per SF, and rents are expected to keep rising, although at a more measured pace, Cushman & Wakefield Senior Research Manager Eric Messer said.
"Landlords have the continued momentum with that around a 15% vacancy rate," Messer said. "I don't see vacancy increasing to a level where landlords lose the negotiating power."
But with just 500K SF under construction and little in the way of upcoming groundbreakings, the market could become less appealing for New York or Chicago-based companies to open satellite offices if there isn't enough trophy space.
"All of a sudden, if you've got new-to-market companies who are looking down here and they don't have anywhere to go, then it's not like they can force new inventory on us," Colliers’ South Florida Senior Vice President Kevin Gonzalez said. "It takes four to five years to deliver a new building. What happens is that demand ultimately goes away."
Many recent entrants in the market expanded their space in Q2. Amazon boosted its lease at Wynwood Plaza ahead of its move-in to 76K SF, while Uber, which entered Miami’s market in 2015, doubled its space at 3 MiamiCentral.
Other companies like J.P. Morgan, Apple, Blackstone and Goldman Sachs have also grown their footprints in Miami submarkets, Gonzalez said.
"We're seeing a lot of financial service firms here grow exponentially," Gonzalez said. "Architects, professional services, accounting firms, consulting firms. This is the stuff that happens when you become a mature market, when you evolve from a secondary to a primary market."
But there is still rising uncertainty.
President Donald Trump’s "Liberation Day" tariff policies were announced April 2, the day after Q2 started, sparking pricing fears and worries about frozen deals. Policies have since teetered back and forth, currently sitting at a 10% baseline across the board with higher levels scheduled to kick in next month.
While Gonzalez said he hasn’t witnessed a pause or adjustment because of tariffs, it is still a factor weighing on fundamentals for the market, where even South Florida’s largest developers are struggling to start projects in the fog of uncertainty.
"The thing that slows down activity in an election year is uncertainty of what is going to come in that election," Gonzalez said. "The same macro themes still exist over the last quarter or the last three, four months because of everything that's going on with tariffs. There's a lot of uncertainty."
