Vacancies rise amid surge in self-storage construction in SoFla: report

Vacancy rates are expected to increase for the third consecutive year to 7.8%

TRD MIAMI /
Sep.September 27, 2018 11:30 AM

U.S. Storage Centers in South Florida

Demand for self-storage units in South Florida has not yet kept pace with the surge of construction, a newly released report shows.

According to a semi-annual report from Marcus & Millichap, vacancy rates in Miami, Fort Lauderdale and West Palm Beach are expected to increase for a third consecutive year to 7.8 percent, up from 7.3 percent year-over-year.

Michael Mele of Marcus & Millichap says market is “teetering [on] the edge” of the cycle.

“Now may be a good time to sell, or wait for the next cycle to develop,” Mele said. “Rental rates are going to go down, which could mean a decrease in property values.”

Miami

In Miami, developers are expected to complete 1.65 million square feet of self-storage space in 2018, with nearly 1 million square feet delivered in the second half of this year. At that pace, completions are expected to surpass the 1.7 million of inventory delivered during the past two years combined, according to the report.

Amid rising vacancies, Miami’s average asking rent dipped by 8 percent over the past 24 months to $1.39 per square foot, according to the report.

Last week, a partnership led by Carlyle Group sold three recently completed self-storage facilities throughout Miami-Dade County for $100 million.

“That price per square foot was incredible for properties that weren’t even leased-up,” Mele said.

Fort Lauderdale

Construction deliveries are even higher in Fort Lauderdale. The city is expected to see more than 2.4 million square feet of new storage space delivered by the end of the year, according to the report. The uptick follows a sluggish year in 2017, in which less than 750,000 square feet of self-storage was completed.

As of the end of June, developers completed 994,000 square feet, and an additional 1.7 million square feet is slated for completion this year, according to the report.

Average asking rent in Fort Lauderdale dipped 7.4 percent over the past two years. Still, the area remains the most expensive self-storage market in South Florida. By year end, the average asking rent is expected to be $1.47 per square foot.

Among recent sales, Extra Space Storage paid nearly $25 million, or about $210 per square foot, for a five-story self-storage facility at 1850 Miami Road in August.

West Palm Beach

In West Palm Beach, developers completed 330,000 square feet of self-storage space during the first half of this year. An additional 520,000 square feet is slated to be completed during the second half of the year, according to the report.

Rents in the area are more stable. West Palm Beach’s average asking rent has hovered at $1.28 per square foot for two years.


Related Articles

arrow_forward_ios
AHS Residential’s Ernesto Lopes (Credit: D Ramey Logan/Wikipedia)

AHS Residential scores $34M loan for apartment project near West Palm

Atria Willow Wood

SoFla senior housing developers brace for coronavirus impact

Mayor Dean Trantalis (Credit: Larry Marano/Getty Images)

Restaurants, bars and gyms to shut down immediately in Fort Lauderdale

Gov’t Meetings Canceled or Moved Online Due To Coronavirus (Credit: iStock)

Miami, Miami Beach and Fort Lauderdale cancel city meetings

Coronavirus closures hit South Florida restaurants and stores

Coronavirus closures hit South Florida restaurants and stores

Howard Wurzak’s development firm is suing over delays and defects at the double branded Dalmar and Element hotel

Fort Lauderdale hotel developer sues Tutor Perini, seeking nearly $12M for alleged delays, defects

Joseph P. Thomas, Adam Duncan and Tyler Carbonelli with the Fort Lauderdale properties

California investors buy multifamily portfolio in Fort Lauderdale

360 Rosemary, Stephen Ross

Spaces is moving into West Palm’s 360 Rosemary

arrow_forward_ios
Loading...