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South Florida industrial vacancies rise in the first quarter
Miami-Dade and Broward landlords still hiked up average asking rents, but Palm Beach experienced a drop in rates, year-over-year
South Florida industrial landlords may see a slowdown on the horizon, as vacancies crept up across the tri-county region in the first quarter, according to a CBRE report.
Demand in Miami-Dade County is growing at a slower pace, dropping to 2.1 million square feet in the last 12 months, well below a five-year average annual absorption rate of 4.5 million square feet, the report shows. In Broward, landlords are “adjusting to occupancy losses, lackluster leasing activity and rising availability, and are no longer pushing rents higher.” And the Palm Beach County market has softened in the past four quarters, the report states.
Miami-Dade County
The vacancy rate in Miami-Dade inched up to 3.6 percent in the first quarter, compared to 3.2 percent during the same period of last year. Vacancies are forecast to rise for the next 12 months, due to 7 million square feet under construction, of which 74 percent remains available, CBRE found.
Miami-Dade’s average asking rent hit $15.55 a square foot in the first quarter, an all-time high for the county’s industrial submarket, the report states. During the same period of last year, Miami-Dade industrial landlords were asking an average of $14.25 a square foot. Yet, rent growth has started to decelerate and could potentially experience a reduction as the year progresses, the report shows.
Among major deals that kicked off the first quarter, Boston-based Longpoint Partners dropped $30 million for six industrial buildings in Medley and Doral. Last year, Longpoint had the biggest industrial purchase in South Florida, paying $262 million for a massive industrial portfolio in Miami-Dade and Broward counties.
Broward County
Vacancies in Broward County jumped to 3.8 percent in the first quarter, compared to 2.7 percent during the same period of last year. But as the year progresses, the vacancy rate will likely remain flat due to “a combination of only a few new deliveries and an onslaught of sizable move-ins,” the report states. In Broward, new construction starts have declined over the past few quarters to the lowest level since early 2012.
Meanwhile, landlords are easing up on pricing, with the average asking rent hitting $15.70 a square foot in the first quarter, a slight increase compared with $15.25 a square foot during the same period of last year, CBRE found. “After record-high rent growth over the past two years, Broward’s industrial rent increases have slowed,” the report states. “Market rents nearly flatlined at the beginning of 2024.”
In the first quarter, Bahrain-based Investcorp paid $72.3 million for Powerline Business Park, a 14-building industrial complex in Deerfield Beach.
Palm Beach County
The vacancy rate in Palm Beach County took a big leap, rising to 3.9 percent in the first quarter, compared with 2.5 percent during the same period of last year. The county’s industrial submarket has roughly 1.5 million square feet under construction.
Growing supply led to a softening in the average asking rent, which dipped to $15.88 a square foot in the first quarter, the report shows. During the same period of last year, the average asking rent in Palm Beach County was $16.50 a square foot.
The county did not have any significant trades during the first quarter.