Supply
Overall vacancy stood at 11.6% at quarter-end, down 100 basis points (bps) year-over-year (YOY) and the lowest level in two years. Both Class A and Class B vacancy declined YOY, with the Class A improvement concentrated in the Central Business District (CBD), while all of Class B's decline came from the suburban submarkets. Overall CBD vacancy followed the broader trend, falling 110 bps YOY to 12.2%, its lowest level since One Flagler and 300 Banyan delivered at year-end 2024. With both buildings now fully leased, true submarket vacancy is closer to 8.5%. Palm Beach County's development pipeline rose to almost 1.7 million square feet (msf), with the start of The Modern, a 200,000-sf building slated for late 2027 delivery. Upcoming deliveries, led by the long-awaited One West Palm, are expected to bring much-needed relief to Florida's tightest office market.
Demand
Overall leasing activity totaled nearly 1.2 msf through the third quarter, down slightly YOY. Q3 accounted for almost 508,000 sf of that total, the second-highest quarterly volume in the last three years, behind only the record set in Q3 2025. Northwest Boca Raton has captured roughly 36.0% of 2026 deal activity, led by Fiserv Solutions' 254,000-sf lease at BRIC, the largest in the county since 2023. Downtown has also been a key contributor, generating nearly 290,000 sf of YTD deal volume, supported by almost 75,000 sf of preleasing at 15 CityPlace in Q3 alone. Absorption remained positive for the third consecutive quarter, bringing YTD net absorption to nearly 279,000 sf. The CBD continued to benefit from the steady lease-up and occupancy of its trophy product, with Wells Fargo's 20,290-sf move-in the latest at One Flagler.
Pricing
Palm Beach County's overall average asking rental rate stood at $58.05 per square foot (psf) at the end of Q3, up 12.3% YOY. CBD rents fell 3.0% quarter-over-quarter, as the continued lease-up of the submarket's premium-priced space pulled down the average. Despite the dip, the CBD's rate reached $98.13 psf, up 15.4% YOY, with Class A at $117.77 psf, up 15.3%. Suburban submarkets also posted double-digit rent growth, with rents averaging $51.63 psf, an 11.2% increase. Landlords are expected to retain their pricing power, though asking rates may fluctuate quarter to quarter with the availability of trophy space. New supply beginning next quarter should further support overall market rents.
