The Miami industrial market’s Q1 vacancy rate was 4.6% at the close of the quarter with a $13.16 per sq. ft. average (gross) lease rate. Industrial The Miami industrial market’s Q2 vacancy rate was 3.9% at the close of the quarter with a $13.78 per sq. ft. average (gross) lease rate. Industrial vacancies have compressed after reaching higher levels in 2020. The annual rent growth is 9.2%. After trending in line with the country for most of 2020, growth in Miami is now three percentage points stronger in recent quarters.

There is over 4.4 million sq. ft. of new construction in the works, and about 4 million sq. ft. was delivered over the past year. This is including the one million SF Home Depot distribution center in Hialeah, which completed construction in early 2021. Most of what is being built is speculative. The largest speculative projects are in the 200,000 SF-300,00 SF range like the two buildings at Gratigny Logistics Center in the North Miami Beach Submarket, which totals 447,000 SF and is due to complete in coming quarters.

Vacancy rates in Miami are around 3.9% and are back below the National Index rate. Though international trade has been impacted by the Government-19 pandemic and shutdown, the e-commerce sector, including Amazon, has been responsible for many of South Florida’s largest lease deals in the past seven months. In April, Amazon leased about 220,000 SF at the newly built Prologis Beacon Lakes Industrial Distribution Center in the Miami Airport West Submarket. The company also leased a 210,000 SF property in the Hialeah Submarket, which it will occupy following extensive renovations. Vacancies could stabilize once the 4.5 million SF under construction delivers and leases. Construction starts have slowed, which along with a rebound in leasing in recent months could keep vacancies stable.

Annual rent has been rebounding after two years of slowing significantly stronger here, and annual gains are now about three percentage points stronger than the National Index. The average rent in Miami has grown 68% since 2011, while the National Index grew 56%.  Still, at over $13.50/SF, the average rent in Miami is one of the highest in the country and is more than 50% higher than the national average. Within the market, average rents reach $21.50/SF in the South Central Miami Submarket, which is more than 130% higher than the national average. Despite high rents, the submarket has maintained growth near 8% in the past year.

Annual industrial sales volume has bounced back and is now about 25% higher than the metro’s 10-year average. Deals over $20 million have become less frequent during the past year, with only nine deals in that range versus 17 deals in 2019. However, there have been a handful of smaller portfolios like the sale of buildings six and seven at County Line Corporate Park in Hialeah. In June, Chicago-based CenterPoint Properties acquired the two buildings totaling 412,000 SF from Miami-based Flagler Real Estate Services for $61 million. The 12-month sales volume growth is down 20.2%. Market prices are around $175/SF.

Though the region has regained some of its jobs toward the end of the year, as of the Bureau of Labor Statistics’ (BLS) release of April jobs figures, the metro was still down about 100,000 jobs since February 2020. Tourism has been greatly interrupted and the cruise industry with which Miami is intertwined will likely feel the lingering effects for some time. While the shape of the economic recovery from the past year is yet to be seen, in Miami it is likely to be prolonged. The high cost of living is likely to continue driving net negative domestic migration from the city. The good news is that no one industry accounts for more than 15% of Miami’s jobs, helping to insulate the city from higher losses as a proportion of the workforce during downturns.

There is over 3 million sq. ft. of new construction of warehouses in Miami in the works, and about 4.5 million sq. ft. was delivered over the past year. This is including the one million SF Home Depot distribution center in Hialeah, which completed construction in early 2021. Most of what is being built is speculative. The largest speculative projects are in the 200,000 SF – 300,000 SF range.

Vacancy rates for Miami warehouses are around 4.6% and are back below the National Index rate. Though international trade has been impacted by the pandemic, the e-commerce sector, including Amazon, has been responsible for many of South Florida’s largest lease deals in the past seven months. Amazon signed two large deals in 2020. In April, the company leased about 220,000 SF at the newly built Prologis Beacon Lakes Industrial Distribution Center in the Miami Airport West Submarket. The company also leased a 210,000 SF property in the Hialeah Submarket, which it will occupy following extensive renovations. Vacancies could stabilize once the three million SF under construction delivers and leases.

Annual rent has been rebounding after two years of slowing. Still, at nearly $13/SF, the average rent in Miami is one of the highest in the country and is more than 40% higher than the national average. Within the market, average rents reach as high as nearly $20/SF in the South Central and East Miami Submarkets which are nearest to downtown. These submarkets have had the most trouble maintaining growth and have had some of the lowest rent growth in the market in the past year. Still, at 4.5% or higher, annual growth in these submarkets has been considerable.

Industrial investment volume is down in Miami year-over-year but remains at more than $1 billion in the past year. Volume is slightly higher than the market’s 10-year annual average, but turnover has dropped below 5% for the first time in nine years. Deals over $20 million have become less frequent during the past year, with only nine deals in that range versus 17 deals in 2019.

Though the region has regained some of its jobs toward the end of the year, as of the Bureau of Labor Statistics’ (BLS) release of January jobs figures, the metro was still down about 115,000 jobs since February 2020. Tourism has been greatly interrupted and the cruise industry with which Miami is intertwined will likely feel the lingering effects for some time. While the shape of the economic recovery from the past year is yet to be seen, in Miami it is likely to be prolonged. Still, the market should benefit from its diversity. No one industry accounts for more than 15% of Miami’s jobs, helping to insulate the city from higher losses as a proportion of the workforce during downturns.

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South Miami-Dade Focus

Many industrial investors and developers are turning their focus to southern Miami-Dade County for the first time. This is largely driven by the lack of available industrial land in the northern parts of the County. Two large developers filed an application in March for the South Dade Logistics and Technology District, which is an 800-acre parcel of land located on the south side of Florida’s Turnpike and north of Southwest 268th Street, between Southwest 122nd Avenue and Southwest 107th Avenue. It would be just north of Homestead Air Reserve Base. The project would feature 5.9 million square feet of warehouses, 100,000 square feet of commercial space and a 150-room hotel.

In 2021, Amazon plans to open four new delivery stations in South Florida. Two of the facilities are in the South Dade market – one will be located at the corner of Southwest 136th Street and Southwest 132nd Avenue in Kendall (65,536 SF) and the other will be located at 3750 Palm Drive, in Homestead (145,125 SF). This is in addition to the 1,000,000+ SF distribution center Amazon got approved in 2020 just north of the Homestead Air Reserve Base.

ComReal recently sold 117 acres to Copart USA in the Homestead Park of Commerce for $35mm. With land prices at 30 – 50% of the value of industrial land in Northern Miami-Dade, investors and users should consider the growing South Dade market as an option for their investments and/or business operations.

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For more info on Miami commercial real estate, please visit www.comreal.com. Thank you very much.

The Miami industrial market starts Q1 2020 with a 4.7% vacancy rate and $12.53 per SF average (gross) lease rate. There was 1.4 million SF of positive absorption over the past 12 months, with deliveries totaling 3.7 million SF in the same time. Two significant deals include leases signed by Home Depot with a move-in date of September 2020 with 1.1 million SF in the Hialeah Submarket, and Swiss-based CEVA Logistics renewed a 365,000 SF lease in the Miami Airport East Submarket in March.

There are 3.8 million SF of new construction in the works, which is 1.7% relative to inventory and slightly below the national average. The most notable area of supply is the emergence of North Miami Beach, the metro’s second largest submarket. There is currently 1.8 million SF under development in this submarket, which is more than half of the metro’s total development. North Miami Beach is seeing a higher rate of development due to its strategic location relative to infrastructure, and because of the fact that it is much cheaper in terms of land costs and rent prices.

Vacancy rates in Miami are around 4.7%, but rental growth rate is about a percent below last year. Miami industrial has the highest rental growth of any other commercial real estate sector. The metro’s three largest submarkets, Miami Airport West, North Miami Beach, and Medley are seeing rent growth that is very close to the metro headline rate of 5%. The forecast is calling for rent growth to continue normalizing and to drop by an additional percent over the next year.

From a construction standpoint, the Miami-metro area remains active with 3.8 million SF in the works across 30 properties, 1.7% relative to inventory, which is slightly below the national average. North Miami Beach Submarket has emerged as a construction hotspot. The North Miami Beach Submarket offers an excellent strategic location relative to infrastructure and is much cheaper in terms of both land cost as well as rents. The largest under-construction project is Bridge Point Commerce Center at 21201 NW 43rd Ave, located in the North Miami Beach Submarket. The project is comprised of three buildings and will deliver a combined 1.1 million SF of new product when it is fully completed. The second-largest project underway is the 246,000-SF Pepsi distribution center at 8701 NW 93rd St, located in the Medley Submarket.

The project will deliver in August 2020, and the sole tenant will be Pepsi. The third-largest project underway is the 220,000-SF SeaVee building at 111000 NW South River Dr, located in the Medley Submarket.The industrial products’ shorter construction cycle compared to other commercial real estate means that supply can adjust quickly to meet demand in the market.

As of April 9, 2020, due to the recent Coronavirus pandemic, the City of Miami and Miami Beach are both under a “shelter in place” order, meaning residents cannot leave their homes unless they are visiting a grocery store, purchasing essential goods, or require medical assistance. Most businesses have closed their doors or have switched to a telecommuting model. The pandemic is expected to place a large burden on the county’s healthcare system. The impact on the local economy will depend on how widespread the pandemic is, but it is likely to greatly impact the commercial real estate market in Miami-Dade County. The hospitality industry in the region will take the brunt of the economic hit as people are required to stay home and not travel.

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The Miami industrial market ends Q3 2019 with a 4.2% vacancy rate and average lease rate over $12.32 per sq. ft. (gross). The strong activity continues as more companies expand and new companies move to the area. There was 3.1 million sq. ft. of positive absorption over the past 12 months; averaging about 1M sq. ft. per quarter ; a sign that our market is relatively healthy. New construction keeps pushing along at record levels; there was over 4 million sq. ft. of new construction completed over the past 12 months, which is the highest level in a decade. In addition, at the end of the quarter, there were 4,105,432 sq. ft. now under construction. The most notable area of supply is the emergence of North Miami Area (Hialeah Gardens, Opa Locka / Gratigny), the metro’s second largest sub-market. There is currently more than 1.5 million sq. ft. under development in this sub-market, triple that of Miami Airport West, which is the metro’s largest sub-market. North Miami Area is home to projects such as Amazon’s recent endeavor, which just finished an 836,000-SF fulfillment center next to the Opa Locka Executive Airport.

Fueling all this growth is the growing trend in population. Miami-Dade county’s labor market has grown by 12% over the last five years, and the current unemployment rate is 3%, which is over a percent less than a year ago. The labor market is forecast to grow by 3% over the next five years. However, Miami’s labor force is heavily dependent on international arrivals and could be greatly affected by a change in immigration policy and or changes in economic conditions in Latin America.

Vacancy rates for Industrial Space in Miami have fallen and stayed around 4%, and they are expected to stay below the national average. Supply has remained strong. There has been an absorption of 2,804,575 sq. ft over the past year, with most transactions occurring near the airport, along State Road 826, Hialeah, just south of the Opa Locka Executive Airport. Miami and Fort Lauderdale have the second highest asking rents on the U.S. east coast, just behind New York City. Miami’s rent prices stay high due to the consistent demand and natural land restraints. The average rent for warehouse and distribution space in the Miami area is over $12/sq. ft.

Sales of industrial building continue to be strong during the quarter. Not surprising, Blackstone has been one of the most active buyers of industrial space in this market. Buying portfolios from TA Realty and Global Logistics Properties (GLP). Excluding portfolio sales, there were 3,579,448 Sq. Ft. sold in Q3 2019 with a sales volume of $454,791,600. Putting the average sale price at $127/Sq.Ft. Definitely one of the stronger quarters in record.As the leader in terms of economy in the state of Florida, Miami has experienced favorable economic and demo-graphic conditions over the last five years, and the forecast calls for continued growth, which could be accelerated if the region attracts more high-paying jobs in more diverse and larger employers to improve Miami’s income base and support commercial real estate growth.

ComReal closes three deals totaling 144,000 sq. ft. of warehouse space! 

The ComReal Miami-Doral Industrial Team led by Edward Redlich, SIOR, CCIM, and Patrick McBride, Esq. has successfully assisted Omni Transloading and Logistics (Omni) open warehouse spaces totaling 144,000 sq. ft. at Flagler Station in Medley and International Corporate Park in Doral. These three multimillion-dollar deals are all located in Class-A warehouse space convenient to transportation and logistics access points such as the Florida East Coast Railroad (FECR) and Miami International Airport. ComReal team members Edward Redlich and Patrick McBride overcame significant obstacles in finding the warehouse space for the client, Omni. ComReal and Omni have a close working relationship that spans over 10 years!

Read the full story at www.MiamiIndustrialTeam.com.

What are “last mile” warehouses?

The explosive growth of e-commerce has resulted in a race to reach consumers. Some retailers are offering one-day, same-day, even one-hour delivery in a bid to stay ahead of the pack. How retailers fulfill this promise is through what’s known as “last mile” warehouse facilities. The term “last mile” is used in supply chain management and transportation planning to describe the movement of people and goods from a transportation hub to a final destination, such as a person’s home. Therefore, when we talk about “last mile” warehouses, we’re referring to the warehouse located closest a final destination – even though most are not technically within one mile of a destination.

Read full details at www.MiamiIndustrialTeam.com.