Kendall Office Market Spells Opportunity
The Kendall market is the second largest office submarket in Miami-Dade County, close behind the Miami Airport submarket and slightly ahead of the Downtown Miami market. According to CoStar’s 2Q16 office report, Kendall is one of the top best performing submarkets in Miami-Dade. If you compare Kendall to Downtown Miami – both with about 12 million square feet of office space, it becomes clear where the upside potential is.
With a vacancy rate of about 8 percent, Kendall has a YTD net absorption of 9,401 square feet and about 46,000 square feet of office space under construction. In contrast, downtown Miami has a 17.4 percent vacancy rate, a negative YTD net absorption of about 131,000 and nearly 312,000 square feet of office under construction.
Kendall is a well-performing market that continues to present value-added opportunities. Case in point: I recently listed a two-story office building totaling 13,136 square feet of rentable space that is half vacant, giving the property an upside in occupancy and offering an attractive projected cash-on-cash return.
Listed for $3.4 million, the office building is at 11755 SW 90th Street. It is near bustling Kendall Drive and adjacent to The Palms at Town & Country, which recently was sold to Weingarten Realty, a Houston-based REIT. The 664,000-square-foot premier shopping destination in Miami sold for $285 million, according to Weingarten. Tenants include Publix, Kohl’s, Nordstrom Rack, Dick’s Sporting Goods and Marshalls. The demand for CRE in Kendall is not a mystery. The affluent communities of Kendall and West Kendall include 171,000 people and 59,000 households in a three-mile trade area, according to Weingarten.
A second office building that I listed in the Kendall market was on the market for a short time before going under contract. I anticipate this market will continue to thrive and that cap rates will compress until more office space appears in the pipeline.