The Panama Canal
The expansion of the Panama Canal, a move that will mean the arrival of so-called super-ships to the Port of Miami, is helping to drive investment in Miami’s industrial market.
While the project won’t be finished until 2014, the canal is casting a large shadow on the sector — and could ultimately bring new industrial space to the area.
“I think it’s very much on the minds of investors,” said Greg Zeifman, senior associate at Marcus & Millichap. “I’m seeing investors, especially the institutional crowd, being very bullish on the Miami industrial sector, and I think that’s one of many reasons.”
The optimism is contingent, however, on the re-dredging of the Port of Miami, which will allow these super-ships, larger ships that are too wide and long for the canal as it was currently sized, to head to Biscayne Bay.
Governor Rick Scott’s office announced it would fully fund the approximately $180 million project, which it began studying at the end of 2010.
If the project goes ahead as planned, it would make Miami the first port of call after Panama, and could be a boon to the industrial market, with more ships and a higher volume of goods. That would mean a need, not just for existing space, but for new industrial developments to house the new volume of goods.
“I think that it could be very important,” said George Pino, senior vice president at commercial brokerage Flagler Real Estate Services. “Consequently, you’ll need more warehouse space. So the expectation is that it could represent a significant amount of new warehouse development beginning in 2014 to meet the demand. [But] the question remains, how much of an impact will it have? But I think investors certainly have that on their minds.”
Commercial brokerage ComReal Miami’s Ed Redlich visited Panama on a trade mission in June, and saw first-hand the construction of the Panama Canal expansion, and a number of other signs that could prove valuable for the Miami market.
“One thing everybody talks about is the canal, and obviously that’s a major part of it, but it’s everything that goes with the canal,” he said. “It’s the other infrastructure that’s being developed by the country, the big airports and the significant amount of direct flights out of Panama City.”
Ed Mitchell, senior vice president at commercial investment firm Duke Realty, agreed that the canal could have a large impact.
“It’s a huge talk of the town right now,” he said. “Certainly, it’s going to have a large impact.”
Those developments, along with several free trade zones and what he described as a business-friendly government, could mean an even larger flow of goods coming into Miami.
“When you talk about some of the institutional landlords and investors that own warehouse product down here, they’re really looking hard at how the Panama Canal is going to affect it, as well as end users — manufacturers, import/export firms, logistical companies,” he said.
Further down the road, however, could be another impact in Miami: new office space.
“A lot of people focus on the warehouse market,” he said. “But with more warehouse space, it necessitates more office space. So all of the service providers may need more office space in Miami-Dade — they need attorneys, translators, accountants. They need an office space to figure it all out.”