Supply
Miami's office market entered the third quarter on firmer footing, with overall vacancy falling to 13.9%, a 100-basis-point (bp) improvement year-over-year (YOY) and a 70-bp decline quarter-over-quarter (QOQ), marking its lowest level in six years. Improving conditions extended across the market's major office segments, as Class A vacancy fell to 16.0%, down 180 bps YOY, while Class B vacancy slightly increased 10 bps YOY to 11.0%. Construction activity accelerated significantly, with approximately 1.8 million square feet (msf) underway, placing Miami among the top five U.S. markets by total office space under construction. The development pipeline remains concentrated among several high-profile projects, including Banco Santander, Mercedes-Benz Place, the Safra Bank Building, and One Kane Concourse. These projects are scheduled for delivery between 2026 and 2031, with approximately 395,000 square feet (sf) expected to come online sooner, while the larger developments remain further out in the pipeline. Approximately 24.0% of the office pipeline is associated with identified users or ownership commitments, reflecting a mix of leased and owner-occupied space.
Demand
Leasing activity totaled nearly 1.3 msf year-to-date (YTD), including over 674,000 sf of deals completed during Q3. This represented a 23.3% YOY decline from the same period last year. Despite the decline in leasing volume, Miami recorded over 151,000 sf of positive net absorption during Q3, bringing YTD occupancy gains to approximately 605,000 sf and demonstrating continued tenant demand. Class A continued to lead, accounting for 457,000 sf of positive net absorption YTD, compared with 147,000 sf for Class B. Q3 move-ins included several notable companies, including City National Bank's relocation of its 134,000-sf headquarters from Downtown to Coral Gables and Microsoft's relocation of its Latin America regional operations from Fort Lauderdale to 37,000 sf at 830 Brickell. With approximately 600,000 sf of additional occupancies projected before year-end, further move-ins should provide additional support for improving market fundamentals and give owners continued strength in lease negotiations.
Pricing
Rents continued to climb, with the average asking rate rising to $67.77 per square foot (psf), up 4.7% YOY. Class A asking rents reached $74.77 psf, a 6.1% gain, while Class B rents increased 1.3% to $54.76 psf, highlighting the stronger rent growth among higher-quality office space. Miami Beach led all submarkets with rent growth of 32.0% YOY, largely reflecting the delivery of The Well Bay Harbor Islands, which introduced higher-priced space to the submarket. CBD rents rose 1.0% YOY to $77.63 psf. With demand for higher-quality space holding firm, rent growth is expected to stay on an upward path with possible momentum in quarterly increases.
