The Real Deal Miami

Institutional investors flock to South Florida’s industrial market: Q3 reports

Vacancy rates in Miami-Dade County fell to 3.8%
By Keith Larsen | October 23, 2018 05:30PM

Medley Palmetto Industrial Park (Credit: iStock)

South Florida’s industrial market continued to remain one of the area’s best performing asset classes in the third quarter of 2018, thanks in part to growing demand from institutional investors.

In Miami-Dade County, vacancy rates fell to 3.8 percent from 4 percent on a year-over-year basis. Amid an influx of new industrial space, asking rental rates declined to $9.95 per square foot, a 3.8 percent decrease from the same period of last year, according to a Colliers International South Florida third quarter report.

In Broward, vacancy rates rose to 3.9 percent from 3.7 percent from the third quarter of 2017, Colliers’ report showed. Warehouse and distribution rental rates decreased slightly and currently average $8.04 per square foot.

In Palm Beach, vacancy rates held steady at 3.1 percent and have remained stable year-over-year, while rental rates have increased by 7 percent to $8.82 from $8.51.

Developers and investors are increasingly seeing South Florida’s industrial market as a strong investment opportunity due to e-commerce, the area’s lack of available land and growing population, according to the report.

Over the past five years, average prices per square foot for warehouse buildings in South Florida have increased by 65 percent, according to Colliers.

Institutional investors are driving demand, having acquired nearly $340 million of industrial assets in South Florida so far this year, representing 23 percent of total buyers, according to Colliers.

Highlighting this trend, TA Realty recently purchased a nine-property portfolio from Cofe Properties for $92.3 million or $99 per square foot. The portfolio totaled 932,516 square feet and included properties in Hialeah Gardens and Medley.

Blackstone Group also acquired an industrial portfolio of 82 properties, including seven properties in Miami Gardens totaling 657,011 square feet and equating to $82.9 million or $126 per square foot.