Q2 2025 South Florida Office Market Report

Executive Summary

The South Florida office and medical office markets are navigating a dynamic environment in 2025, with varied trends across submarkets. Palm Beach County’s office sector is showing stability, underpinned by sustained demand for Class A properties and limited new supply, helping to moderate vacancy and support rent growth. In contrast, Broward County’s office market faces short-term absorption challenges due to recent tenant departures but maintains strong rent growth and robust investor interest in premier assets. Both counties’ medical office sectors demonstrate resilience, characterized by high occupancy rates, increasing rents, and cautious but ongoing development reflecting growing healthcare demand. Collectively, these factors highlight a cautiously optimistic outlook for South Florida’s commercial real estate markets.

Market Overview

This report analyzes current market conditions and trends in the office and medical office sectors within Palm Beach and Broward Counties. These regions represent South Florida’s largest commercial hubs, with diverse tenant bases ranging from corporate headquarters to healthcare providers. Data herein covers activity through the first half of 2025, incorporating vacancy, rental rates, absorption, sales, and development insights.

Vacancy Rates

Palm Beach County

The vacancy rate has stabilized at roughly 9%, with Class A buildings particularly benefiting from increased leasing activity. Newer, well-located properties in CBD submarkets have experienced leasing momentum, reducing available inventory and improving overall market balance.

Broward County

Vacancy remains elevated near 9.5%, a slight improvement from earlier in the year but still above historic averages. This is driven in part by recent tenant relocations and consolidations, particularly in older or less competitive properties. However, leasing activity is picking up in key corridors such as Las Olas Boulevard and Sawgrass International Corporate Park.

Medical Office

Occupancy rates remain strong, exceeding 90% in both counties. The medical office market continues to benefit from an aging population and expanded healthcare service demand, leading to limited vacancy and steady tenant demand for modern, well-equipped medical facilities.

Rental Rates

Office

Palm Beach County Class A office rents are averaging between $40 and $43 per square foot on a gross basis. Rent growth has been moderate but steady, supported by tenant preferences for modern, amenity-rich spaces.
Broward County office rents have seen stronger upward momentum, averaging around $44-$47 per square foot gross. This is driven by competition for limited high-quality office inventory and increased investor activity in trophy assets.

Medical Office

Palm Beach County medical office rents average $26-$27 per square foot on a triple net basis, reflecting incremental annual increases as demand outpaces new supply.
Broward County medical office rents are higher, typically in the $34-$36 per square foot range gross, with some submarkets reporting even stronger rent growth due to specialized medical uses and limited new inventory.

Absorption/Occupancy

Office

Positive net absorption in Palm Beach County is primarily concentrated in newly delivered Class A buildings such as One West Palm, where pre-leasing and post-delivery leasing have absorbed significant space. Conversely, Broward County recorded a slight negative absorption figure in early 2025 due to some large tenants vacating or downsizing; however, new lease signings and tenant expansions in strategic locations suggest a potential rebound in the second half of the year.

Medical Office

Both counties maintain robust occupancy above 90%, supported by ongoing healthcare sector growth, including outpatient services, specialty clinics, and wellness centers. Leasing activity remains consistent, and developers are selectively pursuing new projects to meet demand while remaining cautious due to inflation and construction cost concerns.

New Development/Construction Pipeline

Palm Beach County

Office development activity remains moderate, with projects such as One West Palm nearing completion. Medical office construction is more subdued but includes strategic expansions by major healthcare providers, reflecting demand for specialized clinical space and outpatient facilities.

Broward County

Office projects are progressing, particularly in high-demand submarkets like downtown Fort Lauderdale and Sunrise. Medical office construction is ongoing but cautious, with developers balancing demand with economic uncertainties and construction cost inflation.

Sales Activity

Palm Beach County

Peninsula Corporate Center, Boca Raton: This 48,829-square-foot office building sold for $15.3 million. It is fully leased to 54 tenants, offering value-add potential through lease renewals and rent escalations. The transaction reflects investor interest in stable, multi-tenant assets in strong submarkets.
One Clearlake, West Palm Beach: An 18-story Class A office tower sold for $45 million, representing a 26% discount from its 2021 price. The buyer plans to invest $10 million in renovations aimed at repositioning the property to attract premium tenants.
Northlake Corporate Park, Palm Beach Gardens: A four-building office park totaling 75,606 square feet sold for $13.8 million. The office park was fully occupied with an 8% CAP rate at the time of sale.

Broward County

401 E Las Olas, Fort Lauderdale: This premier office tower sold for $221 million, underscoring strong investor confidence in Broward’s core submarkets. The asset’s location on Las Olas Boulevard and high-quality tenant roster contributed to its record sale price.
350/450 E Las Olas, Fort Lauderdale: These two adjacent office buildings sold for a combined $208 million. This transaction highlights the demand for trophy office assets in Broward County, particularly those offering modern amenities and proximity to downtown.
400-700 N Hiatus Rd, Pembroke Pines: A four-building medical office complex totaling nearly 92,000 square feet was acquired for $38.3 million. The acquisition by a prominent institutional investor reflects growing confidence in the medical office sector’s resilience.

Market Drivers & Challenges

Key drivers include robust economic and population growth, a strong healthcare sector expanding outpatient services, and increasing corporate demand for flexible, amenity-rich office environments.
Challenges involve managing vacancy and absorption in Broward’s office market, navigating inflationary pressures on construction and operating costs, and potential shifts in remote work patterns that may affect office space utilization.

Outlook & Forecast

Broward County

While some near-term headwinds persist in the office sector, increased leasing activity and high-profile sales signal improving market fundamentals. The medical office market is poised for continued growth, with rising rents and occupancy levels driving investor interest.

Palm Beach County

The office and medical office markets are expected to strengthen, supported by limited new supply and ongoing demand for quality space. Rent growth is likely to continue at a moderate pace, with positive absorption forecasted, especially in well-located Class A properties.