Miami’s Pull As A Corporate Relocation Magnet Is Only Getting Stronger
Most of the corporate headlines in 2023 so far have focused on layoffs and cost-cutting, but just like in 2022, the news in Miami is playing a different tune.
This month alone, global banking giant Rothschild & Co. signed a lease for its first Miami office, Silicon Valley tech firm LeverX moved its global headquarters to the Magic City, and local IT company Kaseya announced a 3,400-job expansion.
The moves build on a year in which Miami emerged as the hottest office market in the country, with a record 4.3M SF of leasing activity, according to Blanca Commercial Real Estate data. Much of the city’s momentum in recent years came from tech companies, but even as that sector of the economy saw the most contraction, Miami continued to expand.
“Our fear was that it was going to be sort of one of a handful of companies that are moving or opening offices this year. And it really gained incredible momentum,” said Andrew Trench, executive director of Cushman & Wakefield’s Miami office agency leasing team. “It went from we were afraid it was going to be a flash in the pan to more of a snowball effect, where, as more and more influential groups are moving here, others were intrigued by that, and it really gained steam.”
Fifty-seven companies either relocated or expanded to Miami-Dade last year, and the county’s economic development arm, the Miami-Dade Beacon Council said in its 2022 annual report. Already in 2023, 16 more firms have committed to relocate or expand in the county, planning to create 4,000 new jobs, Beacon Council Executive Vice President James Kohnstamm told Bisnow.
“It’s not so much looking at the number of companies, but the size of the job impact, and that’s truly what matters,” Beacon Council Vice President of Research and Strategic Planning Christos Costantinides said in an interview. “What we have a challenge with in Miami, and what we hope to get better at, is attracting higher-paid jobs. And we definitely see that happening in the first quarter of the year.”
On Monday, Kaseya was revealed as the recipient of the largest incentive package in the Beacon Council’s history, potentially receiving $4.6M for its expansion, which includes renovating 102K SF of offices, much of which will be at its headquarters in the Wells Fargo Center in Downtown Miami.
LeverX, a 20-year-old tech systems implementation firm, officially switched its headquarters to Miami last week, where it has space in the Regus in the Wells Fargo Center. Company executives said in a press release they wanted to tap into Miami’s talent base and global connections.
Those connections were on display the day before LeverX’s announcement, when London-based proptech firm LandTech announced it was expanding to the U.S. and choosing Miami as its launch pad.
“While we’ve chosen Florida as our starting point, it’s just the beginning. Over time, our vision is to create a suite of data-driven tools that enable real estate stakeholders across the US to build the communities we all desperately need,” LandTech co-founder Jonny Britton said in a statement.
Miami saw 740K SF of leases 5K SF and larger signed by new-to-market tenants in 2022, according to CBRE data. Much of that activity was concentrated at 830 Brickell, which has exemplified better than any other building Miami’s new gravity.
The 640K SF tower being developed by OKO Group and Cain International signed Microsoft, Citadel, Thoma Bravo and Kirkland & Ellis to big leases last year, and it is where Rothschild — the international banking firm famous for financing the Duke of Wellington’s victory over Napoleon at the battle of Waterloo — leased 5K SF last week.
Trench is on the leasing team at the building and said now that it is more than 90% leased, there are far fewer options at the top of the market, which is where many of the new entrants want to be.
“The question is how do we accommodate the interest in being in Miami over these next few years while we wait for new product to be delivered to Miami,” Trench said. “Interest is still here. It’s still robust. The only concern is trying to accommodate these companies.”
Of the 1.6M SF expected to be delivered this year, only 600K SF is available, said Donna Abood, a principal and managing director of office leasing at Avison Young. She added that she doesn’t think that will be a detriment to the market — many of the firms she is working with are looking for smaller spaces and taking their time.
“There’s a bit of a slow pause going on,” she said. “These people are really, really bright people, and that’s why we’re seeing a little bit of a slowdown. I think they’re just watching what the Fed is going to do, they want to see what happens to the U.S. economy, and they’re very careful about what’s happening in Europe right now.”
Some companies are watching their South Florida-based workforce expand, even without dedicated office space to accommodate them. Others have opened up temporary offices while they wait on their permanent space to get built out.
Yelp allowed its staff to work entirely remote, which led to an exodus of its employees from New York and California and a surge of Yelp workers moving to Florida and Texas, Bloomberg reported. A Yelp spokesperson told Bisnow the company has never had a Miami office.
One company Abood represents, Canadian fintech firm CI Financial, has leased nearly 40K SF at 830 Brickell and expected to be able to move in by earlier this year. But construction delays have pushed its projected opening date to summer or fall 2023, throwing a wrinkle into its plans.
“CI Financial came into the market and said, ‘Donna, damn, we need some temporary space,'” Abood said. “Now they’ve got like 50 people employed, but they don’t have space to put them in yet because the project has been delayed. So we are currently in a flex space environment right now with them. So a company that wants to be in Miami can make it work.”
Longer-term, an impediment to Miami’s momentum could be its inability to handle the growth. Dustin Ballard, the president of leasing at Tricera Capital, moved to the area as a pandemic migrant two years ago from California with two children who are entering school. He represents a critical demographic if job creation goals are going to be met.
“It’s imperative that the local government keep up with infrastructure improvements to kind [of] be able to absorb and handle that amount of growth,” said Ballard, who was on the team that secured hedge fund Schonfeld Strategic Advisors’ 18K SF expansion at The Dorsey in Wynwood last week.
“If people can’t get their kids into school, they’re not going to move [to Miami],” he said. “So I think being out in front of that and being able to to address that, I think it’s gonna be really important for all of South Florida.”