By Jennifer Leclair | Globest.com
MIAMI-Office markets in most Sunbelt cities have already bottomed out and should surpass national growth rates in the next six to 12 months. So says a new report from Jones Lang LaSalle.
Fort Lauderdale, Jacksonville, Miami, Orlando, Tampa, and West Palm Beach were among the hardest hit by the recession. Now, these markets are posting substantial upticks in office occupancy and seeing declines in vacancy. JLL attributes the rebound to strengthening employment, migration and housing market shifts with absorption rates in the 1.5% to 2% range across most the Sunbelt geographies.
“A diversification of the economy is helping to fuel the resurgence in Florida,” John Sikaitis, senior vice president of Research at JLL, tells GlobeSt.com. “Healthcare opEerations, call centers in Central Florida markets like Tampa, a return of tourists primarily in Orlando and Miami, and South Florida’s growing influence as a global trade center and base of operations for Latin America are all contributing to the upturn.”
Sikaitis says people are returning to the area and considering Florida as a viable work and live alternative, something they did not consider in 2008 and 2009 due to the housing crisis limiting opportunities for jobs and income growth. But Florida markets are now surpassing the national average in private and professional and business (PBS) services job growth.
Jacksonville’s 5.9% annual increase in PBS jobs is among the largest in the nation, while Tampa’s 2.5%-plus annual growth in all measures shows signs of revival and diversification. Miami also surpasses both national expectations, increasing at around 1.9% overall annually. This growth was one of the most surprising economic trends Sikaitis witnessed in Florida.
“Employment levels have not only grown over a period of time, but in recent months have substantially outperformed the national economy and recovery,” he says. “As a result, the office market has seen demand shoot up in the majority of markets, helping to provide an overall bottom to rent prices, which are still well below 2007 peaks but are no longer falling in most segments.”
Since their pre-recession peaks, housing markets within the Sunbelt have experienced drastic reductions in price and sale volume, far greater than any other region of the United States. In most cases, these housing markets have yet to begin recovery, JLL reports. However, as a result of positive office demand growth, employment and migration indicators, there is a strong chance that most of these geographies are hitting their market low and will soon begin to recover, if this has not begun already.
“Even with these positive shifts, most of these geographies are two to three years away from returning to pre-2007 levels,” Sikaitis says. “So, while we are upbeat about the recovery for these markets, we remain realistic and guarded in the fact that we are not yet back to 2006 territory and likely will not be until the 2014-2015 timeframe.”