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CBRE Global Research and Consulting

2014, CBRE, Inc.
State of Florida Office
MarketView
STEADY GROWTH SUPPORTS LONG-TERM OFFICE OUTLOOK
Hot Topics

Floridas median home sale
price of $180,000 is affordable
compared to the national
median of $213,600. The state
median sale price increased
4.3% over the past year, while
the national median sale price
increased 4.9%. Florida is
leading the nation in home
sales to international buyers.

Orlando and Miami are on
Forbes list of the 50 Most
Creative Cities.

Florida companies are
expecting growth in both
revenue and employment over
the next 12 months, according
to the National Center for
Middle-Market Companies.

Many landlords are changing
to a shared-space model, with
the expectation that small
tenants in shared space today
could grow into larger
footprints in the future.
Leasing Activity
After a slow start to the year, the Florida
office market is exhibiting strong
fundamentals. The total vacancy rate in
Q2 2014 was 17.4%, representing a 140
basis point (bps) decline year over year.
North Florida posted a Q2 2014 total
vacancy of 17.5%, a 90 bps improvement
year over year. The most significant
decrease in vacancy was in South Florida,
where vacancy declined 180 bps year
over year to 17.4% in Q2 2014. The
CBD vacancy rates for South Florida
contributed significantly to the year-over-
year decrease with Broward reporting a
480 bps decline and Miami posting a
220 bps decline. Suburban markets with
the sharpest year-over-year vacancy
decline included Jacksonville, where
vacancy declined by 210 bps, and
Tampa, where vacancy declined by 180
bps.
Statewide, office asking lease rates
increased modestly. The overall average
asking rate in Q2 2014 was $24.32, an
increase of $0.40 per sq. ft. year over
year. North Florida markets posted an
average rate of $21.06 in the CBD and
$18.86 in the suburban sectors, after
increasing $0.83 and $0.27 per sq. ft.,
respectively, year over year. South Florida
markets reported an average rate of
$34.38 in the CBD markets, an $0.85
increase, while suburban markets posted
and average rate of $27.41, which was
flat year over year. The Miami and Tampa
Bay CBD markets were bullish in Q2
2014, with annual asking rate increases
of $0.96 and $2.12 per sq. ft.,
respectively.
Absorption has tapered compared to the
same period one year ago. Year-to-date
net absorption was positive for the state,
with nearly 1.2 million sq. ft. compared to
just over 2.5 million sq. ft. reported in the
first two quarters of 2013. South Florida
markets retained a similar net absorption
pace compared to the previous year with
Miami and Broward contributing the
majority of the positive activity. North
Florida markets have fallen short to date
in 2014, primarily due to a loss of
traction in Q1 2014. In Q2 2014, North
Florida markets rebounded with over
310,000 sq. ft. of positive net absorption.
Q2 2014
$22.00
$22.50
$23.00
$23.50
$24.00
$24.50
0%
5%
10%
15%
20%
25%
2009 2010 2011 2012 2013 2014 YTD
Figure 1: Total Vacancy -vs- Average Direct Asking Lease Rate (FSG)
Source: CBRE Research, Q2 2014.
*Arrows indicate change from previous year.
TOTAL VACANCY
17.4%
ASKING RATE
$24.32
UNEMPLOYMENT
6.1%
NET ABSORPTION
818 K sq. ft.
CONSTRUCTION
381 K sq. ft.
COMPLETIONS
80 K sq. ft.
Percent
Vacancy
Asking
Lease Rate
Total Vacancy

17.4%
Average Direct Asking Lease Rate

$24.32
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2014, CBRE, Inc.
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North Florida is anticipated to sustain positive net absorption in
the second half of the year as tenants occupy space as a result
of new leases and expansions signed in the first half of the year.
Statewide there were over 1.1 million sq. ft. of leases signed in
the first half of 2014 that will have a positive impact on
absorption in the second half of the year. This activity represents
new leases and expansions of existing tenants.
Workplace strategies emphasizing efficient use of space will
continue to impact absorption. In an effort to accommodate the
preferences of the millennial workforce, employers are creating
open and collaborative work environments; advances in
technology are allowing them to do so in smaller, smarter
spaces. At the same time, telecommuting has become more
popular, further reducing office space requirements.
Sales Activity
Year to date, sales activity in 2014 has increased compared to
previous years. Quarterly sales volume in 2012 averaged $500
million and in 2013 the average was over $350 million.
Statewide sales volume was $661 million in Q1 2014 and
$537 million in Q2 2014. The state sales volume for the first
half of 2014 was approximately $1.2 billion in 70 transactions
with 7.5 million sq. ft. changing hands.
Florida is following the national trend of office market recovery.
According to the Second Quarter 2014 PwC Real Estate
Investor Survey, each of the six tracked Florida markets are in
the recovery phase of the real estate cycle. Nationally, there are
many primary markets where the return on investment has
narrowed causing investors to look to secondary and tertiary
markets to find value-add opportunity. Florida markets have
started to see increased investor sales activity and will benefit
from this trend.
Development
Office deliveries remain muted with limited space under
construction. One building of 80,000 sq. ft. was delivered in
the Miami market in Q2 2014. There were no deliveries
reported for the other Florida markets. Space under construction
in the first half of 2014 included just over 380,000 sq. ft. The
bulk of the construction activity continues to occur in the Miami
market where there is 280,000 sq. ft. under construction,
accounting for the majority of the space statewide.
A number of office projects currently underway and planned in
Florida markets are taking the form of office space located
within mixed-use projects. In recent years, high-density mixed-
use projects have become more prevalent in Floridas urban
areas. The remaining land in and around Floridas CBDs is
becoming scarce and more valuable to developers, driving the
need for higher-density projects in these areas.
Figure 2: Market Statistics
Source: CBRE Research, Q2 2014.
Submarket Building sq. ft. Direct Vacancy (%) Total Vacancy (%)
Q2 2014 Net
Absorption
2014 Net Absorption Under Construction
Avg Dir Asking Lse
Rate (FSG)
Miami CBD
14,593,894 16.9 17.2 37,227 170,410 128,580 $35.37
Miami Suburban
31,937,820 14.3 14.8 273,683 323,871 151,523 $27.72
Miami Overall
46,531,714 15.1 15.5 310,910 494,281 280,103 $30.83
Broward CBD
5,185,507 12.8 13.6 99,436 123,507 0 $30.86
Broward Suburban
22,963,755 15.4 16.1 17,318 225,135 40,000 $24.86
Broward Overall
28,149,262 15.0 15.7 116,754 348,642 40,000 $26.55
Palm Beach Suburban
23,154,131 23.0 23.3 79,639 55,489 0 $29.18
Palm Beach Overall
23,154,131 23.0 23.3 79,639 55,489 0 $29.18
Tampa Bay CBD
6,869,507 14.3 14.5 (7,499) 699 0 $23.26
Tampa Bay Suburban
38,847,242 15.3 15.4 112,049 260,254 19,474 $19.61
Tampa Bay Overall
45,716,749 15.1 15.2 104,550 260,953 19,474 $20.13
Orlando CBD
7,662,258 15.5 16.5 (54,409) 1,233 17,124 $22.55
Orlando Suburban
29,352,856 18.6 19.4 113,074 71,391 0 $19.23
Orlando Overall
37,015,114 18.0 18.8 58,665 72,624 17,124 $19.83
Jacksonville CBD
7,330,220 22.8 22.9 24,449 (216,470) 0 $18.70
Jacksonville Suburban
16,452,436 18.0 18.2 122,978 175,764 24,041 $16.47
Jacksonville Overall
23,782,656 19.5 19.7 147,427 (40,706) 24,041 $17.32
State of Florida CBD 41,641,386 16.7 17.2
99,204 79,379
145,704 $27.68
State of Florida Suburban 162,708,240 17.1 17.5
718,741 1,111,904
235,038 $23.19
State of Florida Overall 204,349,626 17.0 17.4
817,945 1,191,283
380,742 $24.32
South Florida CBD 19,779,401 15.8 16.3
136,663 293,917
128,580 $34.38
South Florida Suburban 78,055,706 17.2 17.7
370,640 604,495
191,523 $27.41
South Florida Overall 97,835,107 16.9 17.4
507,303 898,412
320,103 $29.19
North Florida CBD 21,861,985 17.6 18.0
(37,459) (214,538)
17,124 $21.06
North Florida Suburban 84,652,534 17.0 17.3
348,101 507,409
43,515 $18.86
North Florida Overall 106,514,519 17.1 17.5
310,642 292,871
60,639 $19.34
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2014, CBRE, Inc.
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City planners recognized the need to move away from single-
use zoning and have created zoning districts and future land use
plans that require or encourage higher-density mixed-use
projects that will sustain urban economic growth. Multifamily,
currently in high demand, is the driving force behind many of
these mixed-use projects occurring within and immediately
surrounding the CBD markets. Retail and office components are
now required as part of these projects in order to obtain density
approvals. The mixed-use developments foster the live, work
and play trend. However, it is yet to be determined if this type of
space presents viable opportunities for occupancy by office-
seeking national credit tenants.
Economic Influence
Floridas economy is leading the nation in job growth and
overall recovery in 2014. The state is projected to outpace the
nation for the next several years. Floridas annual job growth
rate has exceeded the nations rate since April 2012. As of May
2014, Florida added 218,800 jobs year over year, which
equates to a 2.9% increase, on a non-seasonally adjusted
basis.
Floridas unemployment rate fell to 6.1% from 7.3% year over
year. By comparison, nationally, unemployment stands at 6.1%
compared to the previous years rate of 7.3%. Floridas
unemployment rate has been equal to or below the national
rate for 13 consecutive months. As of May 2014, professional
and business services jobs increased 4% year over year while
construction jobs increased 10%.
The job growth is just one component of the economic recovery
and strength attributed to the state. The University of Floridas
Consumer Sentiment Index (CSI) rose in June by four points to
82, a post-recession high. Factors that impact the increase
include expectations of personal finances, U.S. economic
conditions, and whether it is a good time to buy big-ticket items,
such as cars or appliances.
Housing prices and sales have been holding up, with the
median price of a single-family home in Florida increasing 4.3%
year over year to $180,000. The stock market continues to
make gains and hit new highs despite consistent tapering by the
Federal Reserve in its bond-buying program known as
Quantitative Easing III.
Outlook
Office-using employment accounts for 15% of nonagricultural
employment and is growing faster than any other sector save
construction employment. The continued growth of office sector
jobs is a testament to the strength of the Florida economy and
will contribute to positive net absorption. Workplace trends of
office space efficiency are anticipated to keep positive
absorption at a moderate level. However, slow and steady
growth is better for the long term health of the market and
creates a stronger foundation for future growth.



Figure 3: Asking Rates by Class (FSG)
Figure 4: Net Absorption
(6,000)
(4,000)
(2,000)
0
2,000
4,000
2009 2010 2011 2012 2013 2014 YTD
000s of sq. ft.
Source: CBRE Research, Q2 2014.
$15
$20
$25
$30
2009 2010 2011 2012 2013 2014 YTD
Class B $21.63
$19.42
Class A $25.48
Source: CBRE Research, Q2 2014.
Class C
YTD 1.2 Million sq. ft.

Figure 5: Under Construction and Completions
Source: CBRE Research, Q2 2014.
000s of sq. ft.
0
1,000
2,000
3,000
2009 2010 2011 2012 2013 2014 YTD
Under Construction 381 K sq. ft.
YTD Completions 80 K sq. ft.
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2014, CBRE, Inc.
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Figure 8: Q2 2014 Sales
Figure 9: Sales Volume
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
2009 2010 2011 2012 2013 2014 YTD
2014 YTD # Deals Total sq. ft. Volume

$/sq. ft.
Miami 17 1,839,805 $456,518,333 $248
Broward 11 1,656,783 $356,921,651 $215
Palm Beach 5 268,553 $32,825,000 $122
Tampa Bay 21 1,545,614 $145,495,769 $94
Orlando 10 859,990 $88,108,000 $102
Jacksonville 6 1,291,052 $118,530,000 $92
State of Florida 70 7,461,797 $1,198,398,753 $161
Market Property/Address Buyer Building sq. ft. Sales Price
Jacksonville Walls Fargo Center/1 Independent Drive Allegiance Capital JV Banyan Street Capital 900,000 $79,000,000
Broward AMEX Fort Lauderdale/777 American Express Way TM Real Estate Group LLC 376,000 $33,500,000
Miami Courvoisier Centre/601 Brickell Key Dr (3 Properties) Parkway Properties, Inc. 367,652 $145,800,000
Tampa Bay Interstate Corporate Center/6302 E Dr Martin Luther King Jr Blvd B & L Investments LLC 344,467 $27,500,000
Broward Plaza 100/100 NE 3rd Ave Brookwood Financial Partners LP 165,627 $32,500,000
Miami Miami Lakes Business Center/5875 NW 163rd St Miami Lakes AM LLC 145,545 $12,000,000
Miami 200 Building/200 SE 1st St Integra Investments Llc 141,500 $21,000,000
Tampa Bay Fountain Square II/4925 Independence Pkwy Equus Capital Partners 132,300 $24,750,000
Orlando SunBank Data Center/2290 Premier Row DXRX Orlando, LLC 106,440 $8,000,000
Miami Waterford Centre/6205 Blue Lagoon Dr Ivy Realty 91,000 $21,935,000
Billions of $
Source: CBRE Research, Q2 2014. Real Capital Analytics, Q2 2014.
Source: CBRE Research, Q2 2014. Real Capital Analytics, Q2 2014.
Figure 10: Sales Volume by Market
YTD $1.2 Billion
Source: CBRE Research, Q2 2014. Real Capital Analytics, Q2 2014.
Source: Florida Department of Economic Opportunity, May 2014.
Figure 6: Labor Market Statistics
Source: Florida Department of Economic Opportunity, May 2014.
Figure 7: Florida Jobs by Sector
Trade,
Transportation,
and Utilities
20%
Professional and
Business
Services
15%
Education and
Health Services
15%
Total
Government
14%
Leisure and
Hospitality
14%
Financial
Activities
7%
Construction
5%
Manufacturing
4%
Other Services
4%
Information
2%
MSA/County Labor Force Employment Unemployment Unemploy%
Miami-Dade 1,282,788 1,185,038 97,750 7.6
Broward 1,069,429 1,013,944 55,485 5.2
Palm Beach 663,162 623,981 39,181 5.9
Tampa Bay MSA 1,361,546 1,277,469 84,077 6.2
Orlando MSA 1,197,233 1,129,305 67,928 5.7
Jacksonville MSA 726,372 683,998 42,374 5.8
Florida 9,632,000 9,043,000 589,000 6.1
United States 155,841,000 146,398,000 9,443,000 6.1
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Market Property/Address

Tenant Transaction sq. ft.
Orlando 901 Heathrow/901 International Pkwy Deloitte 130,695
Orlando Summit Park I/1950 Summit Park Dr EA Tiburon 128,240
Palm Beach Broken Sound Plaza/5900 Broken Sound Pkwy Cancer Treatment Centers of America 77,340
Tampa Bay Rivergate Tower/400 Ashley Dr Butler Pappas 61,276
Miami 9250 Doral/9250 NW 36th St Prestige Health Choice 49,230
Palm Beach Esperante' Corporate Center/222 Lakeview Ave Cole, Scott & Kissane, PA 48,821
Orlando Maitland Colonnades/2301 Lucien Way Windstream Nuvox Inc 48,522
Tampa Bay Pasco Building/805 Executive Center Dr Valpak 47,207
Tampa Bay Bank Of America Plaza/101 Kennedy Blvd Trenam Kemker 44,864
Miami Wells Fargo Center/333 Avenue of the Americas PriceWaterhouseCoopers 43,277
Miami 550 Biltmore/550 Biltmore Way UBS International Inc 43,000
Broward Sawgrass Plaza /1550 Sawgrass Corporate Pkwy Centene Corporation 42,678
Orlando TerraCotta Bus Park /5575 Semoran Blvd Agmus Ventures Inc 41,553
Tampa Bay Westshore Corporate Center/600 Westshore Blvd Undisclosed 39,560
Orlando Liberty Summit/1901 Summit Tower Blvd FedEx 37,940
Tampa Bay Bridgeport Center/5201 Kennedy Blvd Keystone Peer Review Organization 35,903
Miami Federal Reserve Bank/9100 NW 36th St Digital Latin America 35,031
Jacksonville Cypress Pt Bus Prk/8201 Cypress Plaza Blvd Selene Finance 34,200
Orlando Lake Luma Prof Ctr /1717 Orange Ave The Nemours Foundation 34,092
Miami Alhambra Plaza/2 Alhambra Plz Buena Vista Int., LLC (Walt Disney TV) 32,478
Figure 11: Q2 2014 Leases
Figure 12: Under Construction as of 06/30/2014
Source: CBRE Research, Q2 2014.
Source: CBRE Research, Q2 2014.
Under Construction Property/Address City Submarket Building sq. ft. Average Asking Rate
Miami Brickell City Centre Phase I/78 SW 7th St Miami Brickell 128,580 N/A
Miami Sunset Office Center/1515 Sunset Dr Miami Coral Gables 60,799 $35.00
Miami SoMi Building/5966 S Dixie Highway Miami Kendall 50,000 $27.00
Miami One Netanya/323 Sunny Isles Blvd Sunny Isles Beach Aventura 40,724 N/A
Broward Riviera Point/7971 Riviera Blvd Miramar SW Broward 40,000 N/A
Tampa Bay Building 5/5331 Primrose Lake Cir Tampa Northeast Tampa 19,474 $23.00
Orlando 800 N Orange/800 N Orange Ave Orlando Downtown 17,124 N/A
Figure 13: Delivered Q2 2014
Source: CBRE Research, Q2 2014.
Market Property/Address City Submarket Building sq. ft. Average Asking Rate
Miami Doral Park Centre/3895 NW 107 Ave Doral Airport/Doral 80,000 $26.00
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CONTACTS
Shanna Drwiega
Research Analyst
CBRE
101 East Kennedy
Boulevard, Suite 1500
Tampa, FL 33602
t: +1 813 273 8433
e: shanna.drwiega@cbre.com
For more information about this Local MarketView, please contact:
Quinn Eddins
Director, Research and Analysis
CBRE
777 Brickell Avenue
Suite 900
Miami, FL 33131
t: +1 305 428 6325
e: quinn.eddins@cbre.com
+ 40 million sq. ft.
30 39 million sq. ft.
25 29 million sq. ft.
Below 25 million sq. ft.
Inventory Size
Tampa Bay
Inventory Vacancy % Asking Rate
45,716,749 15.2% $20.13
Miami
Inventory Vacancy % Asking Rate
46,531,714 15.5% $30.83
Broward
Inventory Vacancy % Asking Rate
28,149,262 15.7% $26.55
Palm Beach
Inventory Vacancy % Asking Rate
23,154,131 23.3% $29.18
Orlando
Inventory Vacancy % Asking Rate
37,015,114 18.8% $19.83
Jacksonville
Inventory Vacancy % Asking Rate
23,782,656 19.7% $17.32
Abu I. Mansoor
Senior Research Analyst
CBRE
200 East Las Olas
Boulevard, Suite 1620
Fort Lauderdale, FL 33301
t: +1 954 331 1733
e: abu.mansoor@cbre.com
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