Inflation? Recession? Pfft. South Florida’s industrial market hasn’t slowed down, as super low vacancy rates continue driving rents to new heights.
In the second quarter, industrial landlords in Miami-Dade County increased asking rents by more than $1, compared to the same period last year, while Broward and Palm Beach industrial property owners jacked up the rate by $3, according to a recent Cushman & Wakefield report. In all three counties, the vacancy rate dropped below 4 percent in the second quarter, the report shows.
“In Miami-Dade, we cannot keep up with the demand, so rents continue to push up,” said Sebastian Juncadella with Miami-based Fairchild Partners. “We have seen the highest level of pre-leasing in the market in the last year, and that continues. For the most part, Broward and Palm Beach are seeing the same trends.”
The vacancy rate hit a record low 2.3 percent in the second quarter, compared to 3.4 percent during the same period of last year, according to Cushman. The average asking rent shot up 14 percent, year-over-year, to $10.87 a square foot from $9.28 a square foot.
Some industrial investors are looking to carve out a niche catering to tenants in need of small and mid-size warehouse space. Last month, Basis Industrial, formerly known as Miami City Self-Storage, acquired Megacenter Palmetto, an 180,000-square-foot mixed-use site in Medley, for $37.5 million. The company plans to offer small bays between 700 square feet to more than 4,000 square feet.
Industrial space is at a premium in Broward, as landlords bumped up the average asking rent to $13.02 a square foot in the second quarter, according to Cushman. During the same period last year, they charged an average of $10.05 a square foot. The county also saw a dramatic drop in the vacancy rate, year-over-year, to 3.7 percent from 6.6 percent, the report shows.
Similar to Miami-Dade, Broward is seeing increased interest from industrial buyers for small bay warehouses. In July, Dallas-based MSP Capital Investments paid $50 million for Pelican Bays, a collection of eight warehouses in Davie totaling 197,000 square feet.
Palm Beach County
Landlords are so confident that demand is outpacing supply of existing and newly built industrial buildings that the average asking rent jumped 20 percent in the second quarter to $13.19 a square foot. Last year during the same period, Palm Beach County landlords were asking an average of $10.55 a square foot. In the second quarter, the vacancy rate dipped to 3.6 percent, compared to 4.1 percent during the same period of last year.
In one of the second quarter’s largest deals, Salt Lake City-based Extra Space Storage acquired two self-storage facilities in West Palm Beach that the company already operated for $29.2 million.