Demand for industrial warehouse space in South Florida is on the rise, according to a new study by Colliers International, thanks to e-commerce, new cruise ships and improvement in some Latin American economies.
The vacancy rate for the industrial market in Miami-Dade increased by 4.2% and rose by 4.9% in Broward, according to the third quarter industrial Colliers International South Florida Market Report. But don’t let that fool you, said Colliers International Vice President Steven Wasserman; the additional space probably won’t last long. Demand is on an uptick.
“A lot is planned for 2020, 2021. Vacancy will fluctuate depending on inventory as well as supply and demand,” said Wasserman regarding the Miami-Dade market.
The report noted several major sales during the third period, including:
▪ A record-breaking, $178 million sale of Hialeah’s warehouse center Centergate at Gratigny to an affiliate of New-York based, real estate investment company RREEF America. The price equates to about $110 per square foot.
▪ An $116.5 million sale of five warehouse buildings about $192 per square foot — at Miramar Centre Business Park by Albany, N.Y.-based Stockbridge Capital.
Net absorption fluctuated in Miami-Dade, but is expected to increase come the fourth quarter 2019, according to the report The net absorption decreased year-over-year with 214,672,423 square feet of total inventory and 869,081 square feet of net absorption in the third quarter 2018 compared to 218,533,802 square feet of total inventory and 619,026 square feet of net absorption in the third quarter 2019.
Net absorption increased from the second to third quarters in Miami-Dade, from 217,779,390 square feet of total inventory and 357,428 square feet of net absorption in second quarter 2019 to 218,533,802 square feet of total inventory and 619,026 of square feet of net absorption in the third quarter 2019.
Vacancy and net absorption are rising simultaneously thanks to supply expanding, said Wasserman.
Doral is no longer the primary hub of industrial activity. Supply is coming to more different markets than it was five years ago, said Wasserman, with Hialeah, Hialeah Gardens, and Medley leading the race. “In the last 24 months,” he said, “Miami Gardens and Opa-locka in particular have seen a lot of activity.”
In Broward, net absorption decreased year-to-year and quarter-to-quarter. But as in Miami-Dade, an increase is expected in the fourth quarter of 2019. Total inventory measured 111,113,981 square feet with a net absorption of 1,044,060 square feet in the third quarter of 2018, which decreased to 192,497 square feet in the third quarter of 2019 with 113,365,716 square feet of total inventory.
Broward’s net absorption also took a hit when comparing the net absorption of the second quarter to the third quarter of 2019. There was 113,003,485 square feet of total inventory space with 296,069 square feet of net absorption in the second quarter, and 113,365,715 square feet of total inventory with 192,497 square feet of net absorption. Most the leases that did occur happened in South Broward.
The amount of industrial square footage under construction dipped between the second and third quarters in Miami-Dade but increased in Broward. In Miami-Dade, 4,429,356 square feet were under development in the second quarter, with 3,836,401 square feet under development in the third quarter. In Broward, the square footage under development grew from 2,196,864 square feet in the second quarter to 2,383,480 square feet in the third quarter.
But, said Wassermand, “You can’t look at it as a snapshot. It takes about a year and a half to build, and supply of inventory will dramatically increase for vertical [development].”
Net absorption decreased in Broward, Wasserman said, because of the increase in suppy. He said, “The market is good, rates are going up, but in the second half of 2020 there will be more supply coming up.”