After Pandemic Rush, South Florida Office Market Sees Steady Demand

Angelo Bianco was a Florida developer who drove by the massive, wooded IBM Corporate Campus off Interstate 95, Boca Raton in Florida, for years without giving it much attention. His interest was piqued after a broker told him the property was up for sale.

IBM built the 550-acre site because they 'didn’t want people to be in their secret lab space', Mr. Bianco explained. The site was where IBM engineers created the first personal computers and the prototype of the first smartphone.

In its heyday the complex employed nearly 10,000 people. However, after IBM relocated its operations to Raleigh (N.C.) and sold the property in 1997, it became a bit of a "white elephant". The complex was renamed the Boca Raton Innovation Campus after a series of owners failed to recast it. They sold off large tracts, and eventually renamed it.

Bianco is a managing partner at the CP Group. A group of buyers acquired the site five years ago, for a reported amount of $179 million. After studying corporate campuses owned by Apple, Google, and Nike, Mr. Bianco explained, the company decided not to keep it hidden from the public but to make it available to the community.

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IBM created the campus because they 'didn’t want people to be in their secret lab space', said Angelo Bianco.

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James Jackman, The New York Times

IBM engineers created the first personal computer in the facility.

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James Jackman, The New York Times

As well as the prototype of the first smartphone.

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James Jackman, The New York Times

Owners of commercial real estate are rethinking the corporate office as hybrid work models continue evolving and transforming the workplace. This is true even in markets like South Florida which have been better insulated against the decline in office space in other metro areas such as

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According to Moody's Analytics, office vacancy rates nationwide topped 19% in the third quarter this year. This is close to their 1991 record. Dallas and Austin in Texas had higher vacancy rate. Miami, however, is one of the markets that has seen a decline in vacancies.

Jonathan Kingsley is a vice-chairman of Colliers International. A real estate advisory company. After a rush to the suburbs at the height of pandemic, tenants are now looking for space in the downtown area and central business districts. They are also looking to attract workers back into the office by offering a better experience.

Mr. Kingsley stated that 'They should have access to fitness centers, wellness rooms, restaurants, and perhaps some retail'.

Developers face a costly prospect in integrating new amenities to appeal to today's workforce, as they are limited by public transportation, and have to compete for space. This is especially true for the South Florida market.

Real estate has been snapped up by hedge funds and technology firms that moved to the area or expanded in the region during the pandemic. Kenneth C. Griffin, a billionaire, made headlines when he bought office buildings in Miami's Brickell district and Palm Beach. He plans to build a skyscraper for Citadel, his hedge-fund.

The CP Group updated the one-story building with skylights and coffee shops.

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James Jackman, The New York Times

Since the start of 2023, newcomer tenants account for 21 percent of the 3.8 million square feet in active deals in Miami-Dade. Tere Blanca is the chief executive officer of Blanca CRE. She said that since the beginning of 2023, the number of new tenants has accounted for 21 percent out of the 3.8 millions square feet of deals currently active in Miami-Dade. Rents are holding steady and have even increased in some of Miami-Dade's hottest neighborhoods like Brickell.

Ms. Blanca said that a key reason why the region has been able to maintain its strength is because it attracts many different industries and does not rely on just one or two. Businesses often open regional offices or smaller ones, hoping to take advantage of the new talent that has moved to the region.

The 'tenant-experience' is another attraction. This involves the creation of events and amenities that are often food trucks or 5 kilometer races.

Marcel Breuer designed the Y-shaped one-story building in the center of the Boca Raton Innovation Campus. It is the biggest office building in the state. CP Group updated it by adding skylights, courtyards and entrances. It also added amenities like a convenience shop, a coffee shop, a beauty parlor, and art displays.

Bianco stated, "We want people to feel that they are getting more than just a desk when they come here." People don't want a work environment that is separated from the rest of the world. They want excitement, energy, and other things near them.

The concrete panels can be used to block the sun from entering the window.

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James Jackman, The New York Times

In 2021, Hubert Phipps' 30-foot-high stainless steel rocket sculpture was added.

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James Jackman, The New York Times

Scott Sherman, the founder and principal at Torose Equities in Miami, believes that office space can flourish if it's relevant and located in a good area. Torose bought a 1972 office building in Coral Gables for $54.4 million in August. His company plans to upgrade the building to attract tenants with new amenities.

Mr. Sherman stated that more and more employers are requiring employees to work three, four or five days per week. The more enjoyable the work environment, the easier it is to bring people back.

AMC Entertainment had the top floor of River Landing in Coral Gables when Andrew B. Hellinger (co-founder and principal at Urban-X Group), a developer from Coral Gables began construction on the shopping center in 2018. The project included rental apartments, a dock and a shopping mall along the Miami River. When the pandemic hit, the theater chain was in financial trouble and gladly gave up the space.

Hellinger and partners converted the three floors on the top of the complex to 150,000 square foot of office space. He said that the offices were now 75 percent leased.

Mr. Hellinger stated that the marketplace has begun to realize that work is more than just going to an office and leaving. Even those who commute might not want to fight traffic and instead hang out.

According to Mr. Kingsley, Colliers, the main reason why more companies place a high priority on proximity of public transportation is because it makes commuting easier. He said that prospective tenants are looking to make it easier for their employees to get to work. A British design firm that was looking to open a South Florida office detailed to him their clear requirements: a "cool, funky" space near public transportation.

Brightline is the newly expanded high-speed train line in Florida. It's a game-changer. Andrea J. Heuson is a professor of Finance and academic director for real estate programs at Miami Herbert Business School. The new train service will make it easier to access the northern part South Florida where rents are cheaper, she said. This could ultimately harm Miami-Dade and favor Broward and Palm Beach.

According to reports, the building has the longest hallway in the world -- 907 feet.

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James Jackman, The New York Times

In fact, the top rent in the South is about half the price of Mr. Bianco’s Boca Raton property. The proximity of the property to Tri-Rail’s Boca Raton Station, the busiest station in the 70-mile-long commuter train line, is an attraction -- and one that Mr. Bianco hopes will make the campus more attractive.

The Boca Raton City Council voted recently to rezone property to allow his firm to move forward with its plans to add 1,250 apartment, a grocery, restaurants, hotels, and a performance space.

Mr. Bianco, as he guides prospective tenants around the building and displays what he claims to be the longest hallway in the world -- measuring 907 feet long -- points out a collection photographs dating back to the dawn of computer revolution.

Mr. Bianco stated, "I tell them that when IBM was here it was like having Google and Apple together in one company." Maybe the lineage is a part of what makes people want to work there. The building has now been leased to 90 percent, up from 70% when his group acquired it.