Industrial rents continued to climb in the third quarter, as leasing soared in Miami-Dade and Broward counties, according to a recently released report.
In Miami-Dade and Broward, net absorption nearly tripled, while Palm Beach County’s net absorption crossed into negative territory, Colliers’ third quarter report shows. Yet, average asking rents continued to rise in nearly every industrial submarket across South Florida.
Steve Wasserman of Colliers told The Real Deal that the industrial market’s high performance is driving up sale prices, as institutional investors look to outmaneuver competitors for land and buildings.
“Every Wall Street firm wants to buy in South Florida,” Wasserman said. “Pricing has escalated dramatically the past couple of years.”
Oxford Properties Group, Highbrook Investors, Longpoint Realty and CenterPoint Properties are among the institutional investors wheeling and dealing for South Florida industrial sites during the latest quarter.
Oxford bought two warehouses in Boynton Beach for a combined $15.5 million, as part of the Toronto-based firm’s $1.1 billion acquisition of KKR’s industrial portfolio in the U.S. Highbrook paid $33 million for a trio of buildings near Doral, and also teamed up with Orlando-based Foundry Commercial to purchase a Doral industrial park for $18 million.
“There is unlimited capital [in the market],” Wasserman said. “I think we have a good three-year run ahead of us.”
In the latest quarter, the vacancy rate dropped to 2.9 percent from 3.4 percent in the second quarter. In the third quarter of last year, vacancies reached 4.5 percent.
Miami-Dade County’s net absorption catapulted to 1.4 million square feet this quarter, from 527,878 square feet in the third quarter of 2020.
The average asking rent for warehouse space hit $10.72 a square foot, compared to $9.74 a square foot for the same period last year. Manufacturing spaces leased at an average of $9.43 a square foot, compared to $8.25 a square foot in the third quarter last year. And flex space now costs $25.36 a square foot, compared to $19.10 a square foot during the same period last year, the report shows.
“In the Doral submarket, you are certainly paying a premium price,” Wasserman said. “The closer to Miami International Airport, the higher the price goes.”
The vacancy rate also fell significantly in Broward County, to 5.6 percent in the third quarter, compared to 6.8 percent last quarter and 6.6 percent in the third quarter of 2020.
Net absorption matched the rocket pace in Miami-Dade. In the third quarter, Broward absorbed 1.5 million square feet, compared to a net absorption of 579,945 square feet during the same period last year.
The average asking rent for warehouses hit $9.68 a square foot, a bump from $9.19 during the same period last year. Manufacturing space cost $11.18 a square foot, compared to $8.58 during the third quarter of 2020. Flexible space climbed 39 cents to $13.53 a square foot from the second to the third quarter. But the rate was still less than $13.58 a square foot during the third quarter of last year.
Palm Beach County
The vacancy rate in Palm Beach County hasn’t dipped below 3.4 percent for more than a year. In the latest quarter, vacancies inched up 0.3 percentage points to 3.7 percent, compared to 3.4 percent in the second quarter. The vacancy rate was 3.6 percent in the third quarter of 2020.
The amount of space absorbed took a hit. Palm Beach County had a negative absorption of 215,006 square feet in the third quarter, compared to an absorption of 252,701 square feet in the third quarter of 2020.
Average asking rent for warehouse space dropped to $9.76 per square foot, 8 cents below the second quarter’s asking rent, but still higher than the $9.35 cents per square foot in the third quarter of last year.
On the manufacturing side, the average rent was $11.51 a square foot, up 92 cents from the previous quarter and a $2.41 increase per square foot compared to the third quarter of 2020.
For flex space, tenants paid an average of $16.28 a square foot in the third quarter, $1.27 per square foot more than in the second quarter. During the same period last year, the rate was $15.04.