S
outh Florida's office market is facing a tougher reality than previously acknowledged. While investment sales declined from record years 2021 and 2022 due to rising interest rates and costs, they've dropped significantly since pre-pandemic levels. Over the past year, investment sales totaled $1.4 billion, down 34.5% and 46% compared to 2018 and 2019, respectively. However, average prices per square foot remain higher than before the pandemic, indicating office buildings have increased in value.

    Occupancy and rents are holding steady, but some firms that leased during the boom have already backed out. New-to-market companies are no longer signing leases for South Florida office space. Landlords are facing debt woes as securing financing becomes harder, and investors pull back. "Miami has jumped the shark," says NAI Miami's Jeremy Larkin.

    The Federal Reserve's first rate cut won't significantly impact investment sales, according to CoStar's Juan Arias. Larger rate drops would signal a bigger economic slowdown, which wouldn't be beneficial for the market. Arias predicts that distressed transactions will start to appear in the market, but a significant recovery is unlikely and will take years.

    In other news, condo developers are reportedly not paying brokers their commissions for presale projects. If you have a story to share, send it to [email protected].