Miami-Dade County’s industrial market continued to gain momentum in the third quarter, with leasing activity increasing and vacancy rates continuing to fall.
Leasing activity in the county totaled 4 million square feet in the third quarter, a 3.8 percent increase from the same period in 2010, according to a third-quarter industrial market report from Cushman & Wakefield released this week.
The sector’s growth — both on the leasing and the sales sides — has progressed to the point that developers are already eyeing new projects.
“The biggest news is that the Class A and B inventory has diminished to the point where there are four projects that are in various stages of construction as we speak,” said Wayne Ramoski, executive director of industrial brokerage services at Cushman & Wakefield. “And it’s a sign of activity that we’re going to see an appreciation in rental rates.”
Those four projects are as follows: DCT is developing a 334,000-square-foot warehouse in the Doral area; KTR/Butters is developing 356,000 square feet in the same area; Prologis is building a 207,000-square-foot spec warehouse in Beacon Lakes and in Medley, Flagler is building a 172,000-square-foot spec warehouse in its Flagler Station park.
These new sites are largely coming from two places: a diminishing quantity of space for development, and a series of infrastructure projects giving confidence to investors, according to Greg Zeifman, a senior associate at Marcus & Millichap in Fort Lauderdale.
“I think if you can get your hands on a piece of dirt and make the numbers work in Miami, there’s not many good sites left,” he said. “So if you can get a site that makes sense, folks like Prologis are seeing the future, which I think looks really bright for Miami.”
Zeifman pointed to a series of projects at the Port of Miami, along with the much-anticipated expansion of the Panama Canal, which has been on the minds of potential investors in Miami for some time.
For the year, the Medley/Airport North submarket has seen a total of 1.3 million square feet of leasing, the highest of any area in the county. The Airport West region has seen 1.2 million in the same period, according to the Cushman & Wakefield report.
“From an occupier standpoint, [Miami-Dade County] is seeing a lot of activity in the Class A and B product types, and those product types mostly exist in Doral and Medley,” he said. “And activity levels have dictated that more space be brought onto the market.”
For larger occupiers, though, Doral and the Airport West markets remain strong, according to ComReal associate Chris Spear.
“I know they’ve been doing deals in Medley, but Doral is still such a tight market,” he said. “There’s a lot of 100,000-square-foot-plus sort of users that are in the market right now looking, and they’re preferring to be in the Airport West submarket.”
Much of that comes down to the size of space, Spear said, and the amount of goods those tenants ship. Because of rising fuel costs, a company that makes a lot of trips back and forth from the port and the airport may find that Medley’s rates, which can average about $1 per square foot less than in Airport West, can be offset by fuel prices.
Through the third quarter, the industrial property vacancy rate in Miami-Dade County stood at 8.1 percent. A new report from ComReal Miami shows that number to be slightly higher, at 8.4 percent.