Malcolm Butters, president of Butters Construction & Development, was one of the first to see that opportunity. As prices started falling during the recession, Butters tied up three pieces of land in Miami-Dade for new industrial development, then started looking for capital partners. For Butters, which typically has done most of its work in Broward and Palm Beach County, this was a chance to expand into Miami-Dade.
We have always wanted to be in Dade, but the economics never seemed to work in our favor, said Butters, who initially secured the land now being used by Liberty Property Trust, KTR Capital Partners and Industrial Income Trust. Dade is by far the biggest industrial market in the Southeast and one of the top three or four markets in the whole country.
With top assets selling between $80 and $110 per square foot, Butters was able to show investors that they could build new developments for $80 a square foot or below. That made the numbers workable. Butters currently is working on three new industrial projects in Miami-Dade, representing 2.5 million square feet of space.
The biggest of those projects is the building of Miami International Tradeport with Liberty Property Trust, which invested about $20 million last year to acquire 126 acres that had been owned by cement and concrete firm Tarmac America. The project will include more than 1.6 million square feet of warehouse and distribution space, with the first 150,000 to be delivered next year and the entire project built out over as long as a decade.
This project will mark the Miami-Dade arrival for Liberty Property Trust, a Pennsylvania-based, publicly traded real estate investment trust. The company has been in South Florida for about 15 years and owns about two million square feet of office and industrial property in Broward and Palm Beach counties. But to move into Miami-Dade, the company didnt want to just purchase one small building.
Pricing has gotten to the point where development makes sense, said Andy Petry, Libertys vice president. At the current pricing levels, what people are paying for older product we can build better, newer product. The right time for us to go in was when we knew we could get a larger presence in the market.
Developers and brokers say they dont see any problem finding tenants to fill the space because the growth still only amounts to about a 1 percent increase in total supply.
This product is going to be absorbed pretty quickly based on the current business, said Eric Swanson, executive vice president of Flagler, which plans to break ground on the South Florida Logistics center later this year and has land in Hialeah for a future business park. There are a lot of tenants trying to grow and relocate to Florida. There are not many choices right now where they can locate. If somebody needs a large block of space in West Miami Dade and needs it now, thats hard to find.
George Pino, president of State Street Realty, estimates there are more than 10 tenants in the market each shopping for more than 100,000 square feet of space. Pino, who handles the leasing for Prologis Beacon Lakes among other projects, already has signed an 80,000-square-foot tenant that will take up more than 40 percent of the new space under construction.
When was the last time you heard of a building that was halfway built and it was half pre-leased. Normally, tenants like to see it, touch it and feel it, Pino said. This is the most active Ive seen the market in five years.