Industrial pipeline exceeds 1M sf in West Palm Beach

Indianapolis-based Duke Realty is building 822,850 sf at Belvedere and Jog roads

Miami /
Nov.November 06, 2015 12:45 PM
 

Pent up demand for industrial space in West Palm Beach is driving plans for more than 1 million square feet of new development, experts say.

“Nothing has been built in quite some time. On the demand side, the economy is good, companies are growing, and banks have eased up on lending. People see more opportunity and less risk,” Bill Reichel, president of Reichel Realty & Investments, told The Real Deal.

Robert Smith, senior vice president at CBRE, said vacancy rates are less than 4 percent and quality product is nearly nonexistent. “Palm Beach County is the only market in the South Florida area that has large tracts of land still available for single family residential developments,” he said.

The housing expansion and the population growth that is causing it create a need for building materials, food service, medical products, aerospace and more, Smith said, sparking a need for more industrial space.

Among the projects planned:

  • Indianapolis-based Duke Realty‘s 822,850 square feet at Belvedere and Jog roads
  • West Palm Beach-based McCraney Property Co.’s 388,000 square feet east of the Florida Turnpike on Belvedere Road
  • FedEx’s 225,000 square feet on Pike Road along the Turnpike
  • Malvern, Penn.-based Liberty Property Trust’s 218,160 square feet on Southern Boulevard about two miles east of the Turnpike

Industrial construction in 2015 is equal to that between 2000 and 2008, Smith said. “The fact that almost no industrial buildings were built between 2009 and 2014 has created a very large amount of pent up demand for space,” he said. “Newer generation buildings with higher clear heights, wider column spacing, better fire safety features and impact glass are much more desirable than most of the older, low-ceiling buildings, many of which are now functionally obsolete.”

But Reichel injects a note of caution. “It will be interesting to see how all the space is absorbed,” he said. Reichel notes that industrial real estate has gone through cycles that start with moderate growth, turn into go-go growth, then overbuilding, then the market slides, then distressed investors jump in, and the cycle begins all over again.

Meanwhile, Smith expect the go-go growth phase to continue. “Rental rates are only now hitting levels that were achieved in 2004 and are still substantially lower than they were at the peak in 2007,” he said. West Palm Beach industrial rents averaged $8.68 per square foot in the third quarter, according to CBRE.

“I believe that this run in new construction will last longer and reach higher rental rates than 2007,” as the same factors supporting the market now remain in play, Smith said.


Related Articles

arrow_forward_ios
1930 Northwest 23rd Street with (from left) Shane Neman, Richard Kilstock and David Aaron (Getty, Arkadia, Neman Ventures)

Arkadia buys cold storage warehouse in Allapattah for $5M

Arkadia buys cold storage warehouse in Allapattah for $5M
Tony Robbins and 2951 Electronics Way, West Palm Beach (Getty, Google Maps)

Tony Robbins buys West Palm Beach warehouse for production studio

Tony Robbins buys West Palm Beach warehouse for production studio
Pebb’s Ian Weiner and 5544 Okeechobee Boulevard, West Palm Beach (Pebb Enterprises)

Pebb sells West Palm Tesla dealership for $13M

Pebb sells West Palm Tesla dealership for $13M
From left: Steve Bisciotti, Jim Davis with  Jim and John Arrigo, with 5901 Madison Avenue, Tamarac and 2250 North State Road 7, Margate (Getty, Arrigo Auto Group, Google Maps)

Investment firm tied to Baltimore Ravens owner buys South Florida car dealerships for $91M

Investment firm tied to Baltimore Ravens owner buys South Florida car dealerships for $91M
Kasperi Kapanen and 2603 Embassy Drive (Credit: Jeff Zelevansky/Getty Images)

Pittsburgh Penguins’ Kasperi Kapanen scores West Palm Beach home

Pittsburgh Penguins’ Kasperi Kapanen scores West Palm Beach home
827 South SR 7, Fort Lauderdale & 1200 South Congress Ave, West Palm Beach (Credit: Google Maps)

Off Lease Only sells two South Florida locations for $50M

Off Lease Only sells two South Florida locations for $50M
The Bristol (iStock)

Insurance exec sells Bristol condo in West Palm for $8M

Insurance exec sells Bristol condo in West Palm for $8M
750 Malibu Bay Drive, West Palm Beach, Jeremy Bronfman, and Matthew Rieger of HTG

Seagram scion pays $38M for West Palm affordable housing

Seagram scion pays $38M for West Palm affordable housing
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...