Miami’s industrial real estate once flourished as a place to briefly hold flowers when they arrived from Latin America and to store goods to be shipped to that region. Today, market movers include companies such as Amazon that didn’t exist in 1990 and a Miami-Dade/Broward population that has grown 58% to nearly 4.7 million in the intervening years.
During this 30-year period, we have seen the rise and fall of big-box stores, the decline of big-name retailers such as Sears, and a sea change in the way people buy and receive goods.
Since its founding in 1974, The Easton Group has owned more than 14 million square feet of industrial space. In 1995, we broke ground on International Corporate Park, a 300-acre, Class A, master-planned industrial park west of Miami International Airport. Having experienced about a half dozen real estate cycles, our brokerage and sales teams have a deep understanding of market forces.
The market dynamics of yesteryear are gone. At one time, retailers kept goods in their stockrooms. When you bought an appliance at a department store, you picked it up there and took it home.
Today, mall, big-box and strip-center retailers put all their inventory on the sales floor or in a warehouse. If you want a refrigerator or a mattress-and-box-spring set, you schedule a warehouse delivery.
Why? Because store rents are four or five times higher than those of industrial properties that may be only a mile away from the store. Big-box retailers can save money by shifting a significant portion of their footprint to less expensive warehouses. That downsizing, which is also occurring at malls and shopping centers, is creating closer ties between retail and the industrial market.
The consumer shift to buying online is only strengthening that relationship. Amazon alone has over 1 million square feet of warehouse space near Miami International Airport and Opa-Locka Executive Airport. As it shifts from two-day delivery to Prime now same day delivery, their footprint will continue to grow. The company will be putting delivery vehicles in Sawgrass International Corporate Park, according to one report.
Amazon and companies like it make industrial properties much more valuable. The distribution facility that Amazon leases in Miami Gardens sold earlier this year for $24 million, over four times the price in 2002.
Consumer shopping habits are driving demand. Many people, especially younger buyers, would much rather tap their phones at home than fight Miami traffic to the mall.
Each new resident in Miami-Dade and Broward counties also pushes up demand for warehouse space at a rate of 70 square feet per person. During the recession, our population growth never slowed but construction did. That created a lot of pent-up demand which we estimate will take another five years to be met. That market force plus shifts in business demand for space, consumer behavior in buying, and population growth, should sustain the industrial market for years to come.
Jose Hernandez-Solaun is president of The Easton Group, which is headquartered in Doral.