Miami, FL – August 18, 2014 – Federal regulations proposed to strengthen student outcomes at for-profit schools could have an impact on space absorption and vacancy rates in certain Florida commercial real estate markets, according to research conducted by CBRE. This month’s CBRE Florida Viewpoint finds at least three major institutions have reduced their office footprint since the new school performance mandates were proposed in 2011.
“Under the proposed regulations, for-profit colleges that do not adequately prepare graduates for employment could lose access to federal student aid. This aid accounts for the majority of revenue for for-profit colleges. For-profit schools occupy more than 4 million square feet of space in Florida, mostly concentrated in a handful of cities, and any downsizing by these organizations could have an impact on the state’s real estate markets,” said Quinn Eddins, CBRE Florida’s Director of Research and Analysis.
Since the regulations were proposed by the U.S. Department of Education in 2011, one for-profit college vacated about 46,000 square feet in Boca Raton, consolidated operations at locations in Fort Lauderdale, Cypress Creek, and Plantation, and stopped enrolling new students in Jacksonville. In 2013, another for-profit college consolidated its space in Fort Lauderdale. And another large for-profit institution vacated 15,000 square feet in Daytona and ended a lease early in Palm Beach Gardens.
For-profit colleges currently occupy more than 100,000 square feet in each of the Fort Lauderdale, Miramar, Miami, Orlando, Tampa, and Jacksonville office markets.
The CBRE Florida Viewpoint suggests that, once the regulations take effect, the coinciding financial impact on multiple colleges has the potential to cause declines in the relevant markets’ positive net absorption levels.
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