RESEARCH

3Q11

Miami Office Market

The Miami office market experienced a sixth consecutive quarter of positive absorption in the third quarter of 2011 as 321,902 square feet of space was taken up, which brought the year-to-date net total for the market to 736,402 square feet. The vacancy rate finished the quarter at 19.9%, higher than the 19.8% rate in the second quarter, although remaining lower than the 20.1% rate one year ago. The vacancy increase in the quarter was partially attributed to the completion of 600 Brickell Avenue, which added 614,905 square feet of vacant space to the market. Asking rents continued to decline in Miami, finishing the third quarter with a $28.47/sf average, down from the $28.62/sf second quarter average and the $28.95/sf average one year ago.
$28.00 18.5% 3Q10 4Q10 1Q11 2Q11 3Q11
Rent (Price/SF) Vacancy (%)

Figure 1

Weighted Average Asking Rent & Vacancy

$29.00 $28.80 $28.60 $28.40 $28.20 21.0% 20.5% 20.0% 19.5% 19.0%

Net absorption in Downtown Miami was 20,128 square feet, which brought the net total for the year into positive territory at 6,568 square feet. The vacancy rate improved to 23.2% compared to the 23.4% second quarter rate and the 24.9% rate reported one year ago. The average asking rent in the submarket slipped to $34.86/sf in the third quarter, down from $35.27/sf in the second quarter and $35.84/sf one year ago.
Figure 2

Net Absorption (SF)

350,000 280,000 210,000

Table 1

Key Indicators
Total Inventory (SF) Average Asking Rent (Price/SF) Total Direct Sublet Vacancy Rate (%) Total Direct Sublet Net Absorption (SF) 3Q11 2Q11 1Q11 Under Construction (SF) 112,775,057 $28.47 $28.58 $26.21 19.9% 19.2% 0.6% 321,902 184,751 229,749 436,185

140,000 70,000 0 3Q10 Figure 3 4Q10 1Q11 2Q11 3Q11

Newmark Knight Frank ModernTrax Forecast

$29.00 $28.75 $28.50

Table 2

Year Over Year

3Q10 Vacancy Rate (%) Average Asking Rent (Price/SF) 20.1% $28.95 3Q11 19.9% $28.47 % Change -1.0% -1.7%

$28.25 $28.00 $27.75 4Q10 1Q11 2Q11 3Q11 4Q11

Actual Rent (Price/SF) Forecasted Rent (Price/SF)

3Q11

Miami Office market

The U.S. Bureau of Labor Statistics (BLS) reported that total nonfarm employment in the Miami metropolitan area increased 1.1% for the 12 months ending in August 2011, indicating a gain of 24,800 jobs, including a net gain of 32,200 jobs in the month of August alone. The unemployment rate in Miami was 11.2% in August, an improvement on 11.3% in July and 12.2% in August 2010. The Consumer Price Index (CPI) for the metropolitan area increased 4.5% in the 12 months ending in August 2011. For the U.S. overall, the BLS reported that total nonfarm employment increased 1.0%, or 1.3 million jobs, in the 12 months ending August 2011. The unemployment rate was 9.1%, compared to 9.1% in July 2011 and 9.6% in August 2010. The CPI increased 3.8% for the 12 months ending in August.
Figure 4 Figure 6 Figure 5

Consumer Price Index, 12-Month % Change

6.3% 4.2% 2.1% 0.0% -2.1% -4.2% Aug-07 Aug-08 Aug-09 Aug-10
Miami

Aug-11

United States

Total Nonfarm Employment, 12-Month % Change

2.0% 0.0% -2.0% -4.0% -6.0% -8.0% Aug-07 Aug-08 Aug-09 Aug-10
Miami

Unemployment Rate
15.0% 12.0% 9.0% 6.0% 3.0% 0.0% Aug-07 Aug-08
United States

Aug-11

Aug-09

Aug-10
Miami

Aug-11

United States

Table 3

Select Lease Transactions

Tenant Royal Caribbean Cruises GSA Genovese Joblove & Battista Maverick High School MoreDirect Address 1050 and 1080 Caribbean Way 100 SE 2nd St 100 SE 2nd St 3525-3547 S Congress Ave 1001 Yamato Rd Submarket Miami Beach Downtown Miami Downtown Miami West Palm Beach Boca Raton Square Feet 420,000 33,019 27,500 23,429 23,145

Table 4

Select Sales Transactions

Address 100 SE 3rd Ave 1 E Broward Blvd 999 Brickell Ave 6333 N Federal Hwy 4360 and 4362 Northlake Blvd Submarket Downtown Fort Lauderdale Downtown Fort Lauderdale Brickell Greater Ft. Lauderdale N Palm Beach/Jupiter Square Feet 236,000 338,201 101,073 64,500 67,657 Sale Price $44,000,000 $42,000,000 $18,943,714 $7,150,000 $10,100,000 Price/SF $186 $124 $187 $111 $149

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Table 5

Submarket Statistics
Total Inventory (SF) Urban Brickell Downtown Miami Suburban Aventura Biscayne Corridor Boca Raton Boynton Beach/ Lantana Coral Gables Cypress Creek Downtown Ft Lauderdale Greater Ft Lauderdale Greater Miami Hialeah Kendall Miami Airport Miami Beach Miramar/Weston N Palm Beach/Jupiter Palm Beach Plantation Pomano/Deerfield Sawgrass Park West Palm Beach Miami 15,353,468 6,737,922 8,615,546 97,421,589 1,694,890 1,869,978 13,952,692 1,166,908 7,157,645 6,342,129 5,784,342 5,058,263 2,393,350 2,149,664 5,919,141 11,182,658 2,678,618 5,003,924 6,594,317 489,877 4,907,825 2,759,582 2,965,687 7,350,099 112,775,057 Qtrly Net Absorption (SF) 49,627 29,499 20,128 272,275 -8,142 5,534 85,623 -2,725 74,404 -20,465 60,193 -88,201 167,998 2,411 -43,559 -14,953 12,065 8,989 -17,964 6,399 -31,187 -10,976 9,185 77,646 321,902 Direct Vacancy Rate 24.3% 27.1% 22.2% 18.4% 8.9% 35.3% 20.9% 19.7% 17.6% 17.9% 19.7% 19.7% 13.3% 17.4% 15.2% 22.1% 10.8% 10.8% 20.0% 21.5% 16.2% 18.3% 13.0% 20.1% 19.2% Sublet Vacancy Rate 0.8% 0.6% 1.0% 0.6% 0.5% 0.0% 0.2% 0.0% 0.6% 0.4% 0.7% 0.5% 1.4% 0.0% 0.1% 1.0% 0.8% 0.7% 0.8% 2.6% 1.1% 0.9% 0.7% 0.5% 0.6% Total Vacancy Rate 25.2% 27.7% 23.2% 19.0% 9.4% 35.3% 21.1% 19.7% 18.2% 18.3% 20.4% 20.2% 14.6% 17.4% 15.3% 23.1% 11.7% 11.5% 20.8% 24.0% 17.3% 19.2% 13.7% 20.6% 19.9% Direct Avg. Sublet Avg. Total Avg. Asking Rent Asking Rent Asking Rent (Price/SF) (Price/SF) (Price/SF) $36.07 $37.26 $35.10 $27.13 $35.55 $27.58 $27.32 $23.62 $32.84 $22.30 $31.35 $24.07 $33.60 $25.01 $28.38 $24.51 $32.25 $28.41 $25.04 $57.76 $25.83 $20.54 $26.42 $27.93 $28.58 $31.84 $29.88 $32.36 $24.47 $39.16 NA $23.49 NA $30.76 $23.67 $24.38 $19.42 NA NA $25.07 $20.58 NA $27.20 $21.67 $35.00 $25.57 $18.15 $14.82 $31.54 $26.21 $35.80 $37.03 $34.86 $27.02 $35.84 $27.58 $27.09 $23.62 $32.72 $22.34 $31.15 $23.93 $33.60 $25.01 $28.34 $24.32 $32.25 $28.30 $24.86 $56.99 $25.83 $20.45 $26.02 $28.01 $28.47

RESEARCH
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Miami 1001 Brickell Bay Drive Suite 2502 Miami, FL 33131 305.350.0915 Paul Frischer Executive Managing Director 212.372.2368 pfrischer@newmarkkf.com Matt Maison Director, Research 212.372.2099 mmaison@newmarkkf.com Chris Hanaway Senior Research Analyst 212.372.2096 chanaway@newmarkkf.com Peter Hur Research Analyst David Chase Research Analyst Dan Appel Research Analyst

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