Podcast - The State of South Florida's Office Leasing Market in 2026

Alexa Duarte: Welcome to another episode of Real Estate Law Unlocked. My name is Alexa Duarte, and I'm a real estate and leasing lawyer here at Holland & Knight in Miami. Today we're here with Natalie Valdez. Natalie is an associate at Savills' Miami office, specializing in office leasing and tenant representation across South Florida. She is part of a highly experienced team led by Vice Chairman Donna Abood and represents office tenants and landlords to source office space and advise on lease negotiations and real estate strategy. Thank you, Natalie, for being here, and I'm so excited for our discussion today on the office leasing market in South Florida. 

Natalie Valdez: Thank you for having me. I'm excited to be here with you.

Alexa Duarte: So Natalie, we've seen some pretty major commitments recently in the South Florida market. FC Barcelona recently relocated its North American headquarters from Manhattan to downtown. Iru, a tech company, just signed a 100,000-square-foot lease in Coconut Grove, and another major tech-based company expanded to over 75,000 square feet in Wynwood. When you see this wave of companies not just arriving, but expanding in Miami, what do you think is actually driving that? And what is it about Miami that's making these tenants commit long-term?

Natalie Valdez: Great question. So as we know, COVID hit and COVID opened the door. A lot of countries and cities and municipalities across the nation closed, and Florida and Miami opened for business. And so these executives came down to Miami and they said, oh, this is nice. And then they committed here. And then obviously their companies and employees followed. I think COVID opened the door, and the lifestyle that you can achieve here in Miami sealed it. What other city do you know that you could roll into the office at 8:30 in the morning and technically be on a boat at 5:30 for networking and drinks?

Alexa Duarte: That's very true. I always say Miami has its lifestyles. You can work hard and play hard. There's a lot of professionals that are very driven. There's lot of industry, beautiful Brickell, downtown. The beach is always a stone's throw away, the ocean. Not to mention all the beautiful people here in Miami too, which is always a plus.

So we're talking about all these companies landing in Miami, but Miami really just isn't one market, is it? It's made up of all these major submarkets, all with their different environments, personalities, things they have to offer. You've got major office leasing submarkets, Brickell, downtown, Coral Gables and Doral. When a tenant comes to you and says, I want to be in Miami, how do you start narrowing that down for the tenant and matching the right submarket for their business?

Natalie Valdez: Of course, so obviously it depends on each client that you're talking to and you really get to know them, get to know their brand, get to know the type of people that come into the office because, Brickell, you are a finance guy, you want this kind of Manhattan lifestyle city life and you'll come to Brickell and cost is not an object, right? Like, you know that you're going to be coming to Brickell, Class A office product. You know you're spending $120 to $160 a foot here. If you still want this lifestyle, but you say, you know, that cost is a lot, then you just cross over the bridge. You go to downtown and you get a value play. So professional office environment, but at half the cost, right. And then there's something called the flight to quality, so you go to the flight to quality to suburbia, and so that is quote unquote "Coral Gables." And Coral Gables gives you a little bit more breathing room, not as congested as downtown and Brickell. And it's closer to the executives of where they live. So they live in Kendall, they live in Pinecrest, they live in Coral Gables, Coconut Grove, it's easier for them to get to. And then you have Doral and Waterford. So we refer to those as the submarket of Miami Airport West. And although they're growing, exponentially too in rates, you can get more bang for your buck and it's more of a value play. So more space, less money.

Alexa Duarte: And you mentioned kind of Brickell versus downtown just over the bridge and kind of how rents could vary so much. Would you say that's the number one competitor for Brickell right now, is downtown? Or would you say it's kind of Coral Gables? And in terms of kind of what they're offering, are you seeing more TI allowance being offered, kind of more wiggle room on rent or free rent? What are you kind of seeing?

Natalie Valdez: So obviously landlords are always going to want to compete for these buildings, right? I would say maybe you get more concessions in Doral because it's not as hot as Brickell and Coral Gables. And when I say not as hot, I mean not as popular, but it's still popular. So it's hard to say something's not as hot because it's hot still. Just maybe everyone says they want to be in Brickell first. They learn more about Brickell and then they say, oh, you know what? Maybe let me go to Coral Gables. I would probably tell you that what we're seeing is a mass exodus from Brickell. So local entrepreneurs or local capital that were here pre-COVID are getting priced out. And then they have to start considering other markets like Coral Gables. And then concessions, yes, we always push for concessions, and we sell our tenant, you want this credit tenant in your building, what are you going to compete to get them here? But I will say, it's highly competitive. Spaces like, for example, Coconut Grove, spaces that we were presenting to a client three weeks ago, there's two offers on them, per space. And there's three spaces. And I'm talking Class A office product because that's usually where we're going towards, is Class A office.

Alexa Duarte: Yeah, I hear you. I mean, Miami's known for the glitz and glam, so it keeps the office consistent, right?

Natalie Valdez: Yes.

Alexa Duarte: So one submarket we haven't really touched on yet is Wynwood. Wynwood has become a true hotspot for restaurants, bars, street art, shopping, and maybe seven to 10 years ago wasn't really on anyone's radar in terms of kind of where should I get an office, but it's become more of a legitimate office submarket now with some really big players opening and expanding their offices there. So what kind of office tenant do you see Wynwood attracting, and what's kind of the pitch when you bring a client over there as opposed to kind of Brickell or Coral Gables?

Natalie Valdez: Sure. So I'll tell you an anecdotal portion. It was a tour that we had. And I remember it was a finance client. He came in 2021 and he said, oh, I want to be in Wynwood, I think it's the coolest place ever. And, you know, he was really pushing Wynwood. And of course, I grew up going to Wynwood. Art walk, if anyone remembers, concerts, and of course, I was like, yeah, let's go to Wynwood. But as he got there, he saw it compared to Brickell, he was staying in Brickell. When he got there and saw it, he said, oh, wait, this is not the professional setting that I want. It's super cool, we can walk around, but is this where my clients want to come and park, or is this where my employees want to come and park? And actually, Wynwood has the highest availability in office, they're at 33 percent. And that's compared to Brickell, which is at like 17 percent, 15 percent. There's more office space available, double than what it is in Brickell, downtown, Coral Gables, right? So that because when you go into these buildings, they're beautiful, but the parking is really limited. And Miami's a driving city, like we can kid ourselves all day. We all drive, right. So where are your 40 to 50 employees going to park every day?

Alexa Duarte: Absolutely. And are you seeing, because of those low vacancy rates, are you seeing, well, is there an opportunity to get a better deal in Wynwood versus these other submarkets?

Natalie Valdez: There could be. Yeah, yeah, there's high availability. I can go to the landlord and say, you know, what are you going to do? It's a good negotiating tactic. But they're still hot, you know, $80 a square foot is what they're asking over there, which is a value play compared to Brickell and downtown. I would say if you're like a private equity, if you're a tech firm, you have a lot of young guys that are in sales, like that's a place to go because you can entertain large groups all at once, you know.

Alexa Duarte: Absolutely. And I can imagine those landlords would be motivated because many of those buildings are mixed-use. They've got restaurants at the bottom. They've got retail. So they want to bring in some foot traffic. So maybe there's a deal out there in Wynwood, just have to make sure you're negotiating your parking. If it's a parking garage, you know, is it first come, first served? Is it reserved? Is there kind of shared space? And that's where kind of your broker and your lawyer can come in and kind of negotiate those things for you if that's something you want to do just to make sure your interests are protected.

Natalie Valdez: For sure, and something to consider about parking is in a submarket like Doral, parking in Waterford as well, parking is usually free, right? And so parking is charged per space per month, so each employee gets their own parking space. And you should know that parking in Brickell, downtown, Coral Gables, that usually adds about $3 a foot to the face rate. So that's something that people don't really consider because you don't see it until the end, but that's something that we always bring up in the front end. So if you're a cost-conscious tenant, remember that parking adds to it.

Alexa Duarte: So we're getting to the end of Q2. Can you give us a breakdown of kind of what the going rates are for all the major submarkets here in Miami?

Natalie Valdez: Sure. So Class A, you're not going to get something right now under $65. We're seeing rates at Class A office buildings. So in Coral Gables, we are seeing Class A rates at $75. Minimum Class A you're going to get about $65. Downtown, we're going to increase that a little bit. You're going to $65-$85 depending on the building. There's buildings there that are asking a minimum of $110. It just depends on what building you're going to. Brickell, for sure, there is nothing under $120. It's $120 to $160 in Class A office product. Doral, you are getting to about the $50s gross. Doral is a triple net market, usually.

Alexa Duarte: And Doral with the free parking.

Natalie Valdez: Exactly.

Alexa Duarte: Right. So that's huge. So we've talked about where tenants are going. Let's talk about where the market is headed. What are some industries that you're seeing now that are making waves in South Florida?

Natalie Valdez: So actually, in December, I went to an AI conference. And obviously, everyone's talking about AI. But there was the organizer of the event – he was a former CEO of Kaseya and now the CEO of Simpro – and he was all on AI. And it was an amazing conference. And so he actually, after we attended the AI conference and talked about AI, he actually leased a space 25,000 square feet in downtown. They're an AI firm, Simpro, and what they service is HVAC industries. So utilizing AI to help HVAC individuals and companies be better, right? So I definitely think AI is on the up and up, of course. I would say aerospace, and another burgeoning industry would probably be marine and boating adjacent industries, which is funny. 'Cause we're in Miami, you think that they're already here, and they are here, but there's more coming.

Alexa Duarte: We've talked about where office tenants are headed, but let's talk about where the market is going generally. What are some industries that are making waves in South Florida right now?

Natalie Valdez: You got it. So in New York, let's go back to Manhattan, never bet against New York. So the New Yorkification is real. And what I mean by that is that in New York we're seeing, I think, 2 million square feet of space in the last six months have been gobbled up by AI. These AI companies are coming out of the ground, they're startups, they're getting immense rounds of funding and they're taking up space at an astronomical rate. I mean, it's amazing to see. And I think obviously AI will cut up the timeline, right? I think something that we used to see was every, I think in three years, like what's happening in New York will come to Miami, but obviously you know that we've become the sixth borough. So I think that they're going to start coming down here as well. I don't know if they're going to be opening these enormous offices, but maybe another satellite office, right, for the AI to complement what's happening in New York.

Alexa Duarte: And I can imagine with that major funding, they can afford some of this $120 price per square foot office rent. So hopefully we're seeing more AI and kind of more talent coming down to Miami. So we've been talking about market, the trends, where things are headed, but let's shift gears a little bit and talk about the actual process of leasing office space. Because I think there are some misconceptions that cost tenants real money. And one thing that comes up in our conversations a lot and things that you experience is that sometimes office tenants will think that they'll get a better deal if they just go direct to the landlord, cut out the broker, they say there's no commissions, but we both know that can often backfire for them. Can you walk us through what tenants are actually leaving on the table when they proceed without any representation?

Natalie Valdez: Yes. So, a landlord, an institutional landlord like in the building that we're in or any building around Miami, they are institutional and they are represented by amazing brokers out here, right? Why are you as a tenant not going to go in there represented? Because that landlord's broker has a fiduciary and it's not you, right. So as a tenant, you also don't know what you don't know. You don't know what the market terms are, you don't know what a certain landlord might accept. We're in and out of these buildings all day long. We're negotiating proposals, we're negotiating leases. Our team has a combined experience of over 40 years, so they know what has been accepted in the past and what could be accepted in future, et cetera. Of course, it's amazing that you can go by yourself and do it. I commend anyone that can get themselves a good deal, but how do you know that you need to be fighting for that 3 percent annual increase? Because some landlords will come out with a 4 percent annual increase and that's not market, or at least that's not market for what I've seen.

Alexa Duarte: And that adds up every single year, plus any renewal options and things like that. So letters of Intent (LOIs). LOIs, we all know, they're non-binding. They set out kind of the basic terms. And one thing that I always kind of advise clients from a legal perspective is get us lawyers in early at the LOI stage, because although they're just kind of the preliminary terms, they can make the negotiations that much smoother, especially when you have your biggest points already up front that you already know that landlord is going to agree to those. And your role as a broker, right, is you kind of put together those LOIs, you kind of chat with the clients on that. And one thing I kind of advise to clients – and that's part of our job too – is to kind of get that information from them. Ask them the right questions, understand their business, because like you said, they don't know what they don't know, and when they talk about their business a little bit and when we kind of find out about them, we can say, oh, you should actually negotiate this, you can actually negotiate that. You know, one thing that I've found, and I'm sure your experience is the same, is that we end up kind of heavily negotiating some maintenance and repair obligations for tenants, because tenants are also doing so many things at the same time, right? They're looking for office space, but they're also thinking about, OK, I have to move my employees over, I have to relocate, I have to think about IT. But our jobs as your broker and your lawyer, all we're focused on is this lease, this lease for you, and kind of looking out for your interest to kind of take that off for you. HVAC, for example, is a big one. If HVAC is exclusively serving the space, oftentimes landlords will try to push that on the tenant, and the tenant may not pick that up right away or whatever, and I'm sure that you in your experience been like, OK, we may cap that. We're going to cover up to $2,000, or we're not going to cover replacements at all. Do you have other examples of things maybe that the tenants have overlooked that you've been able to come in and say, hey, you haven't thought about this, you haven't thought about that, and it could have been a disaster for them.

Natalie Valdez: For sure. So what you're saying is I've heard instances that a landlord has been pushing a tenant into their building, they're about to go to lease and then they somehow find out that the whole HVAC system on the floor was going to be covered by one tenant. So that's like a great example that you just brought up. So making sure that you're only taking your pro rata share. So if you're 4,000 square feet on a 12,000-square-foot floor plate, right, you want to make sure that the HVAC that you are being charged is towards you alone and you're not taking care of the whole floor. So good example. Another thing that I would say is you probably want to look at your base years. That saves money in the long run.

Alexa Duarte: And tell us a little bit more about base year.

Natalie Valdez: Yeah. So for example, if we're in 2026 and we're negotiating a renewal in 2026, you would probably try to push your base year out to 2027 because in a full-service office lease, you are of course, you know if it's a $50 per square foot rate, and let's say $20 of that is to operating expenses (OpEx). But let's say in 2027, 2028, you see that there's an increase. So now your $50 rate, you're now going to be responsible in 2028 for $52. So you're responsible for every increase above that base year. So you want to push it out as far as possible so you can capture the rate then and then not really be open to other increases.

Alexa Duarte: And even having the base year period, right, because without the base year, then you're just responsible for your pro rata share. Exactly. You know, 15 [percent], 12 [percent], whatever, increase year over year, which we can also cap that, right, something that we can put in the LOI, that we can cap it to, you know, no more than 5 percent, only, you know, non-controllable expenses, things like that. Things that the tenants may not know about, which is kind of where we come in.

So sticking with a theme of things that office tenants can often get wrong, if you could sit every client down before they even start their search, what's one thing that you'd advise them of before going in?

Natalie Valdez: Got it. So time kills deals, right? If you have a renewal, even if you're going to renew, you know you're going to renew, you know you're not leaving and you know that it's up in 2028, we should be talking today in 2026, because you need time to decide what is out there. What can I go get? What rates can I go see out there that I can take back to the landlord to gain leverage? I can leave right now and go get $40 versus the $50 that you're asking me for here. Another thing, though, is in those conversations, sometimes tenants are like, wow, I actually really like this space, let's move. But we're quoting 8 to 10 months of construction from lease execution. And you know very well, Alexa, that lease proposals, leases, they take six months. More, sometimes. I'm going to say six months to be conservative, but right there, so 8 to 10 months, I just told you for construction, six months of negotiation. So we're now at 18 months, let's call it. And that's before we've even started meeting and talking and deciding. And you know, that takes another month or two to tour and get proposals and get space plans. Like it takes 24 months, give or take. And you want to give yourself time. You don't want to just be like, I'm moving at this day. You want to say, OK, if I need to move August 1, 2028, then you need to be getting your ducks in a row by May to move your stuff. Moving's stressful. Make sure you have as much time as possible. It's not as short as you think it is. And there are some deals that get done really fast. I'm not saying that there's not, but most of the time they take a while, and you want to give yourself enough leeway for negotiations.

Alexa Duarte: And to get yourself the best deal.

Natalie Valdez: Exactly.

Alexa Duarte: So we talked about who's coming to Miami, where they're going, how they navigate the process, but is there anything that you're seeing the market is still missing, any gap that still needs to be filled?

Natalie Valdez: Yes. So in Miami, it's the health and wellness capital, right? Everyone is like super fit, super healthy and on their fitness grind. And you also want to make sure that you're healthy. And we have the top physicians, top hospitals down here, right. But the medical office space across Miami-Dade County, we're seeing a 6 percent vacancy rate, 6.9 percent vacancy rate. That's virtually zero, OK. And then when you get closer to the hospitals, so like Kendall Baptist or South Miami Baptist, or even the health district, that goes down. Like for example, Kendall, 3.7 percent vacancy rate. There's not a lot of space. So if I was a developer, if I was an investor right now, I would probably be looking at medical office buildings to invest in.

Alexa Duarte: I mean, I can imagine the infrastructure may be a little more expensive, with the different plumbing and the electricity needs, but those tenants are often there to stay, right? Because once they have their patient base, they don't want to go anywhere. So although there's an investment up front, I think there's kind of a long-term return as well. So you've heard it here first. OK, to finish us off, tell me one of your hot takes on the South Florida market.

Natalie Valdez: So my hot takes are we had a wonderful boom in 2021 and 2022. Then from 2023 to 2025, we saw a little bit of a slowdown, but I was kind of grateful for that slowdown because it gave Miami a chance to catch its breath, because Miami, it's here, right? We're a growth capital of the world. Like, you can come grow your business here. That's not news to anyone. But if we want to sustain that growth, then we need to start investing in our infrastructure. So transportation, education, housing, because we want to sustain it. We don't want to be the boom and then in 10 years be the bust.

Alexa Duarte: Definitely.

Natalie Valdez: So that's my hot take.

Alexa Duarte: All right, Natalie, thank you so much for speaking with us today. This has been super informative and helpful and hopefully very helpful to office tenants who want to renew, kind of come down here, expand. And thank you so much.

Natalie Valdez: Thank you. Thank you for having me.