Southwest Florida Office Space Market Sees Improvement
The Colliers International Group Inc., the fourth largest commercial real estate firm, focusing on professional services and investment management, including consulting, corporate facilities, investment services, landlord and tenant representation, project management, urban planning, property and asset management, valuation and advisory services recently completed a study of the Southwest Florida office market.
One key takeaway is that the Southwest Florida office market experienced a rebound in the third quarter (Q3) of 2023, with positive absorption (rented space), reducing overall vacancy to 6.5%. The Fort Meyers area led in performance. Although sublease vacancy rates remain a bit weak, the market stabilized as new leasing activity improved. This improvement spurred demand in submarkets like Naples and Fort Meyers, according to Colliers.
The logic for the growth is simple: In Q3 2024 The Cape Coral-Fort Meyers areas continue to be an emerging market, with the current unemployment rate at 3.4%, well below the national average of 4.1%.
Q3 2024 had an increase of 500 office-use jobs in the region, driving demand for more office space.
Also, Southwest Florida has shown strong economic health. The metro area’s nonagricultural employment has reached 534,200, reflecting an increase of 11,000 jobs, or a 2.2% increase, year over year.
The report states, “The Southwest Florida market remains stable buoyed by ongoing population growth and a tight labor market.”
Class A and B properties (higher end office space) in Q3 2024 had a “positive net absorption rate” of 148,000 square feet, “reflecting a rebound from negative absorption earlier in the year.” Fort Meyers had the highest absorption, gaining over 139,000 square feet. Bonita Springs and Cape Coral also saw robust leasing.
Class A properties (the highest end) saw the greatest spike.
Since 2019 there has been a steady decline in vacancies, with class A properties leading the way. But class B and C vacancies have also declined during this time frame.