2015 was a record breaking year for Miami’s industrial real estate market. Lease rates now average $9.01 per sq. ft. and sales prices average $95.94 per sq. ft. Neither stat has ever been higher. Positive absorption was a very impressive 3.9M sq. ft. bringing our overall occupancy up to over 95% (the vacancy rate is now only 4.7%). About 2M sq. ft. of newly constructed warehouses were delivered in 2015. Miami International Tradeport, Flagler Station, South Florida Logistics Center and Beacon Lakes continue to lease up expeditiously while other newly-constructed warehouses linger on the market due to inferior locations, over-sized spaces and other various reasons.
Although there are very few industrial properties for sale, all-time high rental rates and sales prices will encourage some investors to buy and some to sell. We will continue to witness existing buildings modernized and/or re-purposed entirely. Dis-functional buildings, those needing lots of improvements and/or properties in a poor location will have their values discounted.
The largest deals of the year were Prudential Real Estate’s purchase acquisition of the 978,000 sq. ft. Centergate Building in Gratigny for $95M and the largest lease deal may have been Telemundo’s new build-to-suit 567,000 sq. ft. facility on 37 acres in Beacon Lakes on the Florida Turnpike and NW 25th Street owned by Prologis. It is interesting to note that Miami recorded eight new lease transactions over 100,000 sq. ft.
The Miami industrial real estate market has a variety of industries that are doing well such as aviation, logistics, distribution, and more. These are the drivers of our market. In addition, PortMiami has recently invested in capital improvements, 50’+ deep channel, Post-Panamax cranes, the Miami Tunnel and the FEC Railroad. This has all been accomplished in preparation for the opening of the $5.25B Panama Canal expansion in April 2016.
The State of Florida, Miami-Dade County and municipal building codes continue to hinder commercial development and job creation. The bureaucracy, uncertainty and costs negatively effect business growth and development. On the bright side, Florida’s governor is promoting another year of business tax reductions of $1B including a reduction of the business rent tax from 6% to 5% which we hope will occur in 2017 then a complete phase-out in the years afterward.
Nationwide the vacancy rate has decreased to 6.4%. The average rental rate increased to $5.76 per sq. ft. and $70.88 per sq. ft. for sales prices. Logistics, e-commerce and retail distributors such as Amazon.com, Office Depot, Best Buy and FedEx, made up a significant amount of the bulk warehouse transactions.
Looking forward into 2016, we are encouraging customers to act expeditiously when acquiring available properties since this market is very much in favor of the sellers/landlords; not the buyers/tenants. Rental concessions and tenant improvements will continue to diminish. You can expect the best brokers to get some deals done off-the-market with clients that are ready, willing and able to transact. However, given our past experience, we notice that every four years some major decisions will only be made after the results of the presidential elections. Will capitalism make America great again or will socialism keep progressing? As Ronald Reagan so succinctly stated in “The Speech” in 1964: “… there is no such thing as a left or right. There’s only an up or down…”
In case you missed our prior report, click this link for ComReal’s Miami Industrial Real Estate 3rd Quarter of 2015 Report. >>>
Featured Property: Homestead Park of Commerce
14.7 acres for sale in the Homestead Park of Commerce and Foreign Trade Zone (FTZ). At an asking price of only $6.00 per sq. ft. it is the most economically priced land in Miami-Dade County. The property is zoned industrial and the ownership has entitlements to construct up to 200,000 sq. ft. of warehouse space.
Miami Warehouses Leased in 4th Quarter 2015 (partial list):
|10000 NW 25 Street
|10000 NW 25 Street
|8060 NW 14 Street
|CPS Transportation & Logistics
|2200 NW 129 Avenue
|9905 NW 17 Street
Miami Warehouses Sold in 4th Quarter 2015 (partial list):
|745 W 18 Street
|Doral 87 Group
|8650 NW 58 Street
|8125 NW 54 Street
Sunshine State Industrial Park Miami Warehouse Leased!
The ComReal Miami Industrial Team completed the lease of 35,000 sq. ft. to Ferrara Group at 1120 NW 165th Street in Miami Gardens. “Sunshine State Industrial Park offers a unique location for companies serving Miami-Dade, Broward and Palm Beach Counties; it has easy access to main highway, including I-95, Florida’s Turnpike and Palmetto Expressway (S.R. 826). This Miami warehouse provides Ferrara Group the ideal location to showcase their furniture to customers and distribute to nearby stores.” according the Edison Vasquez. Read more about this story at Sunshine State Industrial Park Warehouse Leased. >>>
Patricia Quintana, CCIM is welcomed onto the ComReal Miami Industrial Team:
Patricia possesses over thirty years of real estate experience. Licensed since 1983, she has concluded over 537 commercial real estate lease and sale transactions totaling over $43 million. Her past experience includes positions such as Director of Leasing, overseeing 3.2 million square feet, 350 tenants comprising of industrial, office and flex properties.
Experienced in Landlord and Tenant Representation, and was designated a (CCIM) Certified Commercial Investment Member in 2003. ComReal has the only four-person team that are all designated CCIM’s. Patricia is fluent in Spanish, originally from Colombia and speaks some Portuguese. You may reach Patricia at (305) 815-3376.
Ed Redlich Appointed as 2016 Chairman of the Commercial Alliance of Florida Realtors:
Ed Redlich has been appointed as the 2016 Chairman of the Commercial Alliance for Florida Realtors. Redlich has been a commercial Realtor for over twenty years. Florida Realtors is the largest trade association in the state with over 140,000 members.
Redlich’s primary focus for 2016 will be to work with Florida Realtors, Governor Rick Scott and Florida legislators to eliminate the sales tax on commercial lease agreements (aka “the business rent tax”). The Governor has a plan to reduce taxes by $1B which includes an initial 1% reduction on the sales tax on commercial rent commencing in 2017.
Florida is the only state in the union that has such a tax. It’s elimination would result in more businesses expanding in Florida and hiring more employees. Redlich states that “This is more than just a tax. It is a regulation as well that creates additional legal, bookkeeping and administrative work on Florida businesses. These are just extra problems that only Floridians have to bother with. It is just not fair.” Read Redlich’s letter to state legislators on the Florida sales tax on commercial lease agreements. >>>