By Rob Beckner, Principal
This year there have been several important factors that have come to light when dealing with the Brevard County Office Market.
These factors are not unusual for any county with significant growth in both jobs and industry. This engineering boom has seen some interesting aspects:
1) Office vacancy is 6.8%
2) Zero speculative buildings under construction
3) Large space office buildings have been leased; no vacancy
An office vacancy of 6.8% is a historic low for Brevard County. Our area has experienced a staggering rate of growth that can only be supported with “new” locations for business. As our vacancy number continues to shrink, we need to understand that the lack of office space may deter new business.
Speculative building is a major factor for emerging markets. However, as of March 2017, we are not aware of any speculative office building. This is not due to a lack of optimism in the marketplace but, instead, basic economics. Brevard County’s average rental rate for Class “B” office is $10-$12/SF. Class “A” rates are $20-$22/SF. Based on new construction costs, these rental rates will need to be increased by 30%+. The speculative developer must ask himself or herself, “Will this market support this increased rental rate?”
Finally, a majority of the large buildings over 50,000 SF have been leased. As our county continues to be awarded department of defense, engineering, and other contracts where will these companies go? Most awarded contracts require quick turnaround, so there is no time for a two-year build to suit.
Creativity is the key to many of the above challenges. These are fantastic growing pains that we are experiencing. We firmly believe that Brevard County’s “business as usual,” is not “usual” anymore but instead, a new normal.
We at Team LBR are always available to discuss strategy.