Team LBR is often asked about the health of the office market. “I see signs on every corner so there must be an abundance of office space” is a comment we have been hearing recently. To understand the health of today’s office market, we need to quickly review the past.
In December 2008 just prior to the pop of the commercial real estate balloon, Brevard County experienced vacancy levels of 9%. This 9% crossed all classes of office space A, B and C. Class A had the lowest vacancy rate of this time at around 5%.
Brevard was experiencing the bottom of the recession in December 2013. Cross class vacancy reached 23% with Class A approaching 15%. The banks were slow to lend, tenants were cautious to make decisions, and they only focused on the bottom line.
Over the last two years, the market has stabilized and vacancy rates are just below 10% with Class A hovering at 7%. Should we be concerned that these numbers are similar to the last bubble? NO. Several things are occurring that are different from the crash. New business is coming to the market. Brevard is already experiencing the effect of the recent Northrup Grumman announcement, Embraer, and others.
Brevard County is seeing real, sustainable growth not based on speculative development, but on the expansion of our employment base. This growth is being seen throughout the market to include Blue Origins, a private space company newly based in Titusville, to the anticipated Heritage Parkway connector at I-95 just north of the Indian River County line.
The above is not a foolish prediction that the market will continue to skyrocket for the next 10 years. It is a strong statement of stability in the marketplace. This is an exciting time for Brevard County.
Rob Beckner, Principal