Miami's Emerging Tech Scene Driving Commercial Leasing Transactions

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Miami's technology companies and startups alike are now driving strong growth and increased leasing activity in South Florida's commercial markets.

According to CBRE, growth of office space leased, the tech sector in South Florida is outperforming the market as a whole; it accounted for about 369,000 square feet of new leases and expansions in 2014, more than twice what it recorded in 2013.

Key South Florida Tech Sector Commercial Market Highlights Include:

• A growing millennial population (a younger workforce is considered a robust contributor to the growth of tech talent pools)

• Its gateway to Latin America status and international business community

• Business-friendly tax climate

• Lifestyle to rival most other U.S. markets

Over the same period, expansions and new leases for all other sectors, taken together, declined slightly. Put another way: while the total amount of leased space in the South Florida office market increased at a more or less steady rate, growth in space leased by tech firms accelerated considerably. CBRE also recorded a 225% increase in new leases and expansions by co-working spaces, which cater to early stage tech companies, during the same period.

These include two leases signed late last year: CBRE arranged a 40,000-SF lease for WeWork, which provides entrepreneurs, freelancers and small businesses with business space, at 350 Lincoln Road in Miami Beach; and Pipeline Workspaces, a national high-design shared office space concept, signed a lease for 14,000 square feet at 95 Merrick Way, part of The Alhambra property in Coral Gables.

"There's a lot of energy around the tech sector in Miami right now and while it's still in its infancy, we are seeing some early indicators of a tech cluster forming," said CBRE Florida Director of Research and Analysis Quinn Eddins. "We've tracked a couple foreign digital media companies that signed office leases in Miami last year, for example. And Miami's millennial population is growing, which we know is a robust contributor to the growth of tech talent pools. The eMerge conference has really put Miami on the map for tech and it's exciting to see where all this will go."

The eMerge Americas tech conference now being held this week in South Beach Florida, has a number of nationally recognized business executives, tech investors, government leaders, celebrities and entrepreneurs that include former U.S. Senator Mel Martinez, Miami Heat NBA star Chris Bosh, music icon Pitbull and event founder Manny Medina, who both celebrated the closing of the NASDAQ stock market on national TV with CNBC broadcasting live coverage of the event all day with TV anchors Michelle Caruso-Cabrera and Melissa Lee.

Also in attendance as a panelist at eMerge Americas was Seattle-based online real estate brokerage firm Redfin CEO Glenn Kelman, who says technology is having a significant impact on the real estate industry nationwide. Kelman said, "Technology really enables real estate agents to leverage it to be far more productive, informative and efficient."

Kelman further told World Property Journal, "Technology is also helping online property listing sites to migrate from a basic property 'search function' into handling parts of the actual transaction itself such as online lending." When asked if technology will ever replace the role of the agent in the transaction, Kelman says: "No, technology and people are both needed in the transaction to help provide the best consumer experience when buying or selling a home - it's a true balance of people and technology needed in the equation."  

On the commercial market side, Diana Parker, CBRE Senior Vice President, Office Brokerage tells World Property Journal, "There has been a significant increase in inquiries from new-to-market tech companies exploring office locations throughout Miami-Dade. Tech firms, in general, tend to have different needs than office tenants in more traditional industries. Their employees tend to be on the younger side, millennials, and their workplace routines are less orthodox - they don't always keep predictable hours and they like to blur the lines between work and play. Amenities like a fitness center, communal spaces, public transportation, restaurants, and of course high-speed WiFi all factor heavily in location decisions. To lure these tenants, landlords need to create a special kind of environment. For example, the new owners of The Landing at MIA, one of the Class A office properties CBRE represents, are investing heavily in providing all the above mentioned amenities and creating an entirely unique workplace experience - imagine a "Google-style" campus in the heart of Miami. There's a lot that goes into creating a tech hub, but having the right kind of office environment is one piece of the equation."

Largest tech sector leases in South Florida in the last 12 months:

1. Ultimate Software Group, a software publisher, signed a 97,178 SF new lease in Weston Park of Commerce in Broward County's SW Broward submarket.

2. Digital Latin America, an internet publishing and broadcasting firm, signed a 35, 031 SF new lease in Miami-Dade County's Airport/Doral submarket

3. Unified Physician Management, a software publisher, signed a 21,000 SF new lease in Palm Beach County's Boca Raton submarket

4. Quantum, a computer systems design firm, signed a 7,567 SF new lease in Miami-Dade County's Airport/Doral submarket