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.

Featured Listing! Miami Warehouse at 16215 NW 15th Avenue in Miami

Miami Warehouse at 16215 NW 15th Avenue in Miami

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.

ComReal Sponsors the 2021 Florida Cargo Brokers & Forwarders 2021 Golf Tournament!

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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Overall, Miami remains a seller/landlord’s market. This is a challenge for businesses seeking to expand. Especially for manufacturing and production companies who prefer to own their real estate as well as invest in the property’s infrastructure. The high sale prices per square foot and low cap rates are still turning owners into sellers. Some prospective buyers continue to pay a premium for the right property. Smaller spaces and buildings are in low supply. Economically-priced, class C spaces and short term leases are also hard to find.

In 2019, we have some tips on acquiring industrial properties in this market. 1. Go view available properties expeditiously. You do not have to buy it, but at least go look at it. 2. Have your team ready. Select your real estate attorney, lender and broker (ComReal) so that you are ready to take action. 3. Although presenting offers swiftly is important, a well-thought-out proposal and impressive presentation can help ensure a successful acquisition. Present offers in-person if possible along with a pre-qualification letter and/or strong financial statements. “Get ready to get ready.” as Ron Redlich with ComReal often says.

Missed Our Last Industrial Market Report? If you would like to read last quarter’s report, please view online at: Miami Industrial Real Estate Report for the 3rd Quarter 2018. >>>

News Release: Refrigerated Warehouse Sold for $18.7M!!!

ComReal sells The 18770 Building located at 18770 NE 6th Avenue in Miami for $18,770,000 to 18770 Miami, LLC. The 234,739 sq. ft. building was one of the largest transactions involving a refrigerated warehouse in 2018. Read the full story at Refrigerated Distribution Warehouse in Miami Sold! >>>

Congrats to Coaster Company of America for their 250k SF warehouse space lease renewal within Miramar Park of Commerce!

Featured Property: The Deerwood Office Building for Lease or Sale

The Deerwood Office Building is now available for lease or for sale. The property is located at 14000 SW 119 Avenue in the Deerwood Business Park in Miami. Enterprise Rent-A-Car occupies the 2nd floor and the 11,700 sq. ft. 1st floor is available for lease. This 25,000 sq. ft. office building would be excellent for a tenant or an owner/user investment opportunity! It is within a corporate park setting in South Miami-Dade just off of the Florida Turnpike. For more information, please contact Patricia Quintana, CCIM at 305-815-3376

Miami Warehouses Sold in 4th Quarter 2018 (partial list):

* Deals closed by the ComReal Miami Industrial Team

Miami Warehouses Leased in 4th Quarter 2018 (partial list):

* Deals closed by the ComReal Miami Industrial Team

Our friends with Lennox Industries have expanded their presence at the Kendall Summit building!

Opportunity Zones in Miami by Pat McBride:

You might like to learn more about Opportunity Zones in Miami. Please check out Pat McBride’s report on Opportunity Zones in Miami. >>>

Welcome! Seair Cargo Logistics relocates in Doral thanks to Patricia Quintana, CCIM!

Florida State Sales Tax on Commercial Rent Reduced in 2019!

After heavy lobbying efforts over many years by Florida Realtors and other pro-business groups, the State of Florida has generously reduced the state sales tax on rent by a whopping one-tenth of one percent (.10%). Starting in 2019, the rent tax will be reduced from 5.8% to 5.7% in Florida; from 6.8% to 6.7% in Miami-Dade County.

Upon visiting Tallahassee several times, the State of Florida legislators would tell me that this sales tax on rent does not effect all of the businesses who own and operate within their property (i.e. owner-users). In reality, this is mostly NOT true! Because very often the real estate property is owned under a different entity than the business operation. This scenario necessitates a lease agreement among the two entities and rent to be paid. In steps the State as this is a taxable transaction. So yes, owner-users do indeed pay sales tax on commercial rent (unless the ownership and business is exactly the same entity). 

Florida is the only state in the nation that has such a sales tax on commercial rent. What’s worse is that the state charges the sales tax on top of property taxes. This is double taxation. Not fair! And not legal. The government thinks that we are stupid. Maybe we are. – written by Ed Redlich

Two large sales worth noting were Winn-Dixie’s sale-leaseback of their 968,487 sq. ft. facility in Gratigny for $59,000,000 and Seagis Property Group’s acquisition of two warehouses totaling 207,420 sq. ft. in Miami for $23,440,000. There were only two lease transactions over 100,000 sq. ft. which is not uncommon in our market.

Summertime and the Hurricane Irma recovery are now behind us and the market is now very active. Most of Miami’s industrial real estate market only experienced tropical storm conditions. Miami International Airport did record wind gusts of about 90 mph, but most buildings had very little to no damage. There was no effect on the overall market other than some delays for a week or two during the recovery time. In addition to some nominal landscaping damage, some of our customers did report some more serious electrical and roof issues with their buildings. Our friends in the agriculture industry in South Miami-Dade were much less fortunate. There was widespread destruction of nursery farms and groves. It may take a couple of years for some operations to fully recover.

If you would like to read last quarter’s report, please view: ComReal’s Miami Industrial Real Estate Report for Midyear 2017. >>>

Featured Property: The Deerwood Office Building for Lease and/or Sale

Our featured listing this quarter is The Deerwood Office Building and is represented by Patricia Quintana, CCIM. The property is located in the Deerwood Business Park in South Miami-Dade County, Miami, Florida. The building is about 25,000 sq. ft. with 11,700 sq. ft. that is available for lease on the ground floor. For more info, please visit The Deerwood Office Building. >>>

Coming soon! Dunham Bush recently broke ground on their new 100,000+ sq. ft. warehouse in the Homestead Park of Commerce!

Miami Warehouses Sold in 3rd Quarter 2017 (partial list):

* Deals closed by the ComReal Miami Industrial Team

Miami Warehouses Leased in 3rd Quarter 2017 (partial list):

* Deals closed by the ComReal Miami Industrial Team

Thanks again! Coastal International Logistics extends their lease for 25,000 sq. ft. at the Miami Free Zone and foreign trade zone (FTZ).

News Release: Warehouse in Redland, Florida SOLD!

August 2017 – ComReal sold The Redland Warehouse for $3,445,000. To learn more about this packing/refrigerated warehouse in South Miami-Dade and the transaction, please visit Warehouse Sold in Redland, Florida. >>>

Congratulations to our friends at Solutions 2 GO Logistics! They have renewed their lease for 51,771 sq. ft. at South Florida Logistics Center.

Society of Industrial & Office Realtors (SIOR) Independent Brokers Group of Florida:

“Let our network of local experts serve your industrial and office space needs anywhere in Florida.” – Ed Redlich, SIOR, Florida Chapter Past-President