Despite a struggling office market, South Florida’s industrial vacancies are among the lowest in the United States.
Miami-Dade County had the strongest market, with an industrial vacancy rate of 8.3 percent, the lowest in South Florida, according to a new report from Cushman & Wakefield. That number was the sixth-lowest in the nation, just after Denver’s 8.1 percent rate.
“It’s indicative of the level of activity,” said Sky Groden, senior director at Cushman & Wakefield. “There’s been a good amount of deal flow, and there’s a lot underway right now in the market. There’s just very limited construction, so absorption will most likely remain positive through the end of the year.”
The market was led last month by one of its largest deals in some time, when the Bel company signed a contract for 342,750 square feet in Medley’s Lincoln Logistics Park.
While the Bel deal made waves, the market has been boosted by demand in the Airport West submarket in Doral, where proximity to Miami International Airport has helped shield the submarket from challenges faced by other areas.
“I think the Airport West submarket is really outperforming the others at this point,” said George Pino, senior vice president at Flagler Real Estate Services.
Pino has been working on Flagler’s Beacon Lakes Business Park project, which announced a large deal of its own last month, with a lease for 125,000 square feet in the complex’s Building 12.
That pushed the project’s 1 million square feet to 100 percent occupancy.
Pino said Airport West is broken up into two size ranges — of approximately 30,000 square feet, and of 50,000 and above. Sixty percent of the leases in Airport West are in the 30,000-square-feet-and-below range, where there is just 2 percent vacancy.
Firms are now looking to lease in the higher end, and Pino said he has seen an increase in rates.
“I think in the next 12 months, you’re going to see a lot of space being absorbed. You’ll start to see vacancy go down and that is going to push rates up.”
In the Airport West’s 50,000 to 100,000-square-foot range, vacancy is a little under 10 percent, which is closer to the countywide rate.
While Miami led the way, Broward and Palm Beach counties showed vacancies better than the national average. Industrial vacancy in Broward was 9.1 percent in the third quarter, according to the report, with the Palm Beach County market at 9.9 percent.
Each fell below the national average vacancy rate of 10.6 percent.