South Florida’s Office Cooldown Expected To Continue Through 2025

After a slower 2024, South Florida’s office market isn’t expected to pick up speed this year.

Avison Young local and national leaders said at an event at their Fort Lauderdale office that the frenzy of leasing during the pandemic has dissipated into more typical levels of activity. The historic run-up of rents that followed is also likely to keep cooling.

“I would not be stunned at all if we took a slowdown, if the value came down,” said Greg Martin, principal and managing director of Avison Young’s Fort Lauderdale and Boca Raton offices. “Because you can’t go straight up every single day.”

Asking rents in Miami offices have climbed more than 50% since 2019. Even amid a slower market last year, they rose 6.6%, according to Avison Young’s fourth-quarter office market report. 

Leasing in South Florida last year, at a total of 3.7M SF, dropped 24% from 2023, according to Avison Young. Along with that, net absorption turned negative, with 51K SF more vacant space added to market than offices taken up. It was the first time since 2020 that Miami experienced negative absorption.

“I use the word breath. I think we're taking a breath in South Florida right now,” Martin said. “It's exactly what happened in the last 12 months, particularly. The rest of the nation kind of caught up with us.”

Asking rents in Fort Lauderdale and West Palm Beach, which average $40.18 and $49.08 per SF, respectively, have begun to level off, according to Avison Young.

“I think that’s going to continue to happen, I think it's slower than what we’ve seen the last couple of years, A-Class people and companies have slowed down,” said Jason Steele, Florida regional lead of market intelligence at Avison Young. “But there’s still that demand.”

Miami is now one of the country's priciest markets, closing the year with an average rent of $61.49 per SF, and prime submarkets like Brickell are averaging more than $100 per SF, according to CBRE.

While rates aren’t expected to dip, Avison Young experts are predicting that they will flatten, which Avison Young CEO Mark Rose refers to as a “pause.”

“I think we’re going to continue to see a net positive growth, but I think [there will be] building starts and stops and pauses along the way,” Rose said. “We've seen it.” 

The market is following its natural cycle, Rose said — what goes up must come down. After years of postpandemic momentum, Rose believes it is only natural that the numbers indicated a slower office market in 2024 that may bleed into 2025.

“My biggest surprise is that people are surprised,” Rose said. “We actually follow, and the analytics behind it will tell you, that we are a cyclical business.”

But with recent return-to-office mandates and incremental traction, 2025 still has the potential for positive growth, Rose said, even if the market is experiencing a slowdown.

“Liquidity is open, deals are open and that will lead to a ‘recovery,’” Rose said.