Industrial rents keep climbing as vacancies fall in South Florida

It’s a familiar refrain for South Florida industrial landlords.

During the third quarter, asking rents continued on an upward trajectory, as premium warehouse space in the tri-county region remains hard to find, according to a JLL report. New developments in Miami-Dade, Broward and Palm Beach counties are experiencing strong pre-leasing activity, resulting in landlords setting the market for asking rents.

Furthermore, tenant demand and rising rents in South Florida’s industrial market show no signs of slowing as the year winds down, JLL found. “As the vacancy rate continues to remain low, and demand outweighs supply, asking rates are anticipated to increase,” the report states.

Miami-Dade County

In the third quarter, the average asking rent in Miami-Dade jumped to $14.35 a square foot, compared to $8.84 per square foot during the same period last year. Sustained demand, limited supply, and record low vacancies have enabled landlords to push rents, JLL found.

The vacancy rate hit an all-time low of 1.8 percent in the third quarter, compared to 4.5 percent during the same period last year. Landlords can’t keep up with demand, as Miami-Dade absorbed more than 600,000 square feet of new industrial space in the third quarter, the report states. Developers have pre-leased 40 percent of new warehouses and industrial buildings currently under construction, which are commanding rents above $15 a square foot, JLL found.

Due to its strong performance, Miami-Dade’s industrial market continues to attract interest from institutional investors. For instance, Atlanta-based Truist Securities paid $59.4 million in September for a national food distributor’s cold storage facility in Medley. Truist is leasing the property back to the seller, Coral Gables-based Quirch Foods.

Broward County

Asking rents in Broward rose to $12.89 per square foot during the third quarter, compared to $9.70 per square foot during the same period of last year. Similar to Miami-Dade, tenant demand in Broward is outpacing a tightening supply, motivating landlords to continue raising asking rents.

During the third quarter, Broward’s vacancy rate dropped to 3.3 percent, compared to 6.5 percent during the same period of last year. Through the first nine months of the year, Broward absorbed more than 2 million square feet of new industrial space.

Blackstone subsidiary Link Logistics is among Broward industrial landlords capitalizing on demand. Third-party logistics provider Challenge Warehousing signed a lease for 82,000 square feet at Link Logistics’ recently completed Port Everglades Distribution Center in Dania Beach.

Palm Beach County

In the third quarter, Palm Beach County’s average asking rent climbed to $11.84 a square foot, compared to $9.34 per square foot during the same period of last year. In submarkets such as Boca Raton and North Palm Beach, landlords commanded asking rents above $13 a square foot, the report shows.

Palm Beach County’s vacancy rate hit 3.1 percent during the third quarter, compared to 3.6 percent during the same period of last year.

With a total inventory of 47.5 million square feet, the Palm Beach County industrial market is relatively small compared to Miami-Dade and Broward, the report states. Yet, the county is also experiencing tenant demand that is quickly filling up new industrial buildings. Year-to-date, the Palm Beach market has absorbed more than 500 million square feet, slightly outpacing deliveries, JLL found.

Boca Raton-based real estate investor James Batmasian is among real estate speculators betting on Palm Beach County’s industrial market. In August, Batmasian paid $15.5 million for a portfolio of three industrial sites in Mangonia Park, Lake Park and Riviera Beach.