Broker Gian Rodriguez can’t get a breather from out-of-state businesses calling to inquire about potentially opening South Florida outposts and scheduling tours of prospective offices.
“I’m speaking to someone every week looking to come here: individuals, venture capitalists, groups looking to invest here,” said Rodriguez, CBRE head for Miami and Fort Lauderdale. “My guys are busy.”
South Florida has been experiencing a surge in interest from firms based elsewhere since the start of this year. This is not a complete surprise. Long favorable to businesses and the ultra-wealthy, with no state income tax, a recent ban on a 2 percent commercial lease tax and some of the nation’s strictest non-compete protection, its appeal is resonating, especially in blue states.
In places like New York and California, local Democratic officials, at odds with Trump’s embrace of the billionaires and big tech, have taken aim at both.
New York City Mayor Zohran Mamdani is floating a 9.5 percent property tax increase, and California is considering a one-time 5 percent billionaire tax. Other municipalities are adding regulations on AI and data-mining firms. Meanwhile, Florida is now pursuing an outright elimination of property taxes on primary homes and has zero sweeping AI mandates. South Florida’s reputation as a tolerant refuge, a be-and-let-be place, also plays a role.
“It’s OK to be rich here. It’s OK to be poor here. It’s OK to be anything here,” is the mentality, Cyril Bijaoui of Corcoran said. “It’s not OK to be rich in California or New York as it was before.”
Case in point: Billionaire Palantir Technologies CEO Alex Karp bought a Miami Beach home and moved the controversial AI firm’s headquarters to Miami from Denver, where it faced data-mining regulation and persistent protesters angered by its work with immigration authorities. It announced its headquarters move in a terse eight-word statement on X last month, feeding into the current industry chatter.
The momentum is everywhere, brokers insist.
“I am in New York right now,” JLL’s Dan McGowan said late last month, “and we have seen a lot of companies expanding their presence in Miami or looking to expand here.”
If the pandemic era — when the likes of hedge fund Citadel, law firm Kirkland & Ellis and asset manager Corient took large offices in Brickell — was the first inning for this decade’s office market boom, then the industry is describing the current environment as 2.0.
But while excitement has gripped office developers, landlords and brokers, who energetically tell of the renewed calls and tours they’re holding, it’s yet to be seen whether the resurgence of out-of-state tenant demand will lead to material, needle-moving leasing.
And while the giddiness feels like deja vu, data show that even in the pandemic boom years, new-to-market firms as a whole played a supporting role in total regional leasing.
“These companies, these announcements, they get headlines, but they are not a significant change to the market,” Juan Arias, a longtime South Florida commercial real estate analyst with CoStar Group, said. “It’s Miami. It’s a lot of hype.”
Leasing small, not seismic
South Florida office leasing is buoyed by in-market company moves, not new-to-market relocations, data show.
Newcomers represented just under 12 percent of the biggest leases from 2020 through last year, while companies already in the region accounted for the 88 percent balance, according to an analysis by CompStak. Of the in-market moves, 65 percent were expansions.
Newly arrived firms also weren’t a big driver for the total space leased in the past six years. As a whole, they took 3.9 million square feet — 11 percent of all South Florida office leasing, according to a CBRE report. Activity peaked in 2021 at 1.3 million square feet, or 20 percent of the total market, but once interest rates and other expenses increased, leasing petered out, settling at 500,000 square feet last year, or 8 percent of the market.
Annual averages for that six-year period ranged from 10,000 square feet to 29,000 square feet leased, the report shows. (CBRE’s dataset only covered leases larger than 5,000 square feet.)
Indeed, newcomers start out small and, if they decide to stay long term, expand, brokers said. These moves are harder to track, but one example is Dwight Capital. The formerly Manhattan-based lender leased 3,600 square feet in 2023 before expanding to 23,000 square feet the following year.
“The little fish follow the big fish.”
“A lot of them have put their toe in the water first, take out small leases and then their intention is to grow,” broker Jaime Sturgis said. “They’re creating a beachhead, moving here one step at a time.”
This pattern so far this year is holding. Private equity real estate firm Trinity Investments took about 5,000 square feet for its Coconut Grove headquarters, moving from Honolulu. New York brokerage Modern Spaces took less than 1,000 square feet, law firm Cullen and Dykman opted for 2,800 square feet and Concorde Investment Services for 9,000 square feet. On the larger end, quantum computing firm D-Wave Quantum will move its Silicon Valley headquarters to a 25,000-square-foot space by year’s end in Boca Raton.
Palantir’s move signals small is still the story. The firm, which hasn’t responded to inquiries about its plans, is now in a co-working space in Aventura, though it’s expected to find permanent space.
It’s hunting for roughly 3,000 square feet, a person familiar with the matter said.
Yet, it’s kept its big offices elsewhere. In New York and Washington, D.C., it has 307,000 square feet, combined, and five offices in California and Colorado at an average of 26,000 square feet, according to CoStar.
Palantir’s ripple effects shouldn’t be discounted, said Declan Hood of Avison Young.
“The little fish follow the big fish,” Hood said.
The little-fish leases might not move the needle on absorption, but newcomers still play a role in growing the business ecosystem in Miami.
“It’s a better indicator of growth if 20 new AI firms come and sign up for 1,000 square feet each versus three companies signing for 10,000 square feet apiece,” Hood said. “Obviously landlords will want more people to sign off for more space. [But] the more people come, regardless of the size they sign on for, holds much more weight than the amount they leased.”
Developers take note
Much of the fanfare about the office market is rooted in the thriving ultra-luxury residential market. Just this year, Meta CEO Mark Zuckerberg and Google co-founders Larry Page and Sergey Brin bought homes.
But billionaires travel light. They’re less likely to move their entire companies here and more inclined to seek small, top-tier offices near their mansions, Arias, the CoStar analyst, said.
The office development pipeline reflects this. Much of what’s on tap is bespoke jewel boxes — not towers for large corporate tenants.
Terra’s 113,000-square-foot The Well in Bay Harbor Islands targets the health and wellness-focused founder and comes with an adjacent condo building, while Taubco and Landau’s nearby One Kane, with just 75,000 square feet of offices, will have boat slips for executives who commute by water.
In the coveted South of Fifth neighborhood, The Fifth Miami Beach is pitching its aesthetic. It’s a glass and marble building with 60,000 square feet of office space, crowned by a rooftop where bougainvilleas and Asian snow jasmine vine on trellises. Meanwhile, Square Hallandale office condo will offer pickleball and padel courts, a cold plunge pool and a sauna, while offering small office suites from 250 to 1,800 square feet.
Tom Brady’s family office TEB Capital Management pre-leased 8,400 square feet, and Dwight Capital signed up for 23,000 square feet at The Well, both for their headquarters. New York-based J. Goldman signed up for 13,500 square feet at The Fifth Miami Beach, with the project scoring additional deals, though developers declined to provide details.
At Square Hallandale, about 20 percent of the building is pre-sold. Developer Arie Abadi said his team is in discussions with AI and financial firms for full floors.
Coral Gables is attracting a crowd at lower price points than offices on the coast: Constellation Group and The Boschetti Group’s recently finished 84,000-square-foot 4225 Ponce is over half leased. Most tenants are moving from elsewhere in the region, but “there’s a good amount of them that are new to market” among tenants on the cusp of signing, Constellation’s Eduardo Otaola said.
These are all boutique projects, broker Robert Orban noted. The market already delivered its verdict on what happens when someone tries to build a corporate tower: After 830 Brickell’s success, Swire’s proposed Brickell supertall was scrapped, due to lack of pre-leasing.
A true sign of a boom, Arias said, would be if Swire’s project, or one like it, came back to life.
Ross in the mix
Billionaire Steve Ross has made downtown West Palm Beach an exception to the rule that new arrivals test the waters with small leases, tapping his New York network to fill his buildings, at first with financial service firms and now tech companies too. He owns 10 office properties, including purchased, developed, under construction and planned.
Cloud computing firm ServiceNow, which automates and organizes tasks for businesses using AI, last year pre-leased nearly 212,000 square feet at one of Ross’ buildings under construction. It marked the largest new-to-market office lease in South Florida for the past six years.
Ross also has spearheaded fundraising for the planned Vanderbilt University campus in West Palm, which will include graduate programs in business, as well as AI and quantum computing, and an innovation hub that will connect startups and entrepreneurs with capital. The goal is to re-create what Arias called an “agglomeration economy,” like Silicon Valley’s, where companies, innovators and universities develop together. But: “It’s very hard to replicate unless it grows organically,” Arias said, which is “a long way from happening.”
In the meantime, though Miami offices still seek leases from California tech types, partly prompted by Palantir’s relocation, the city’s staple tenants remain law firms, as well as financial, insurance and real estate companies, Avison’s Hood said.
“Miami is not AI land,” he said.
