South Florida’s industrial market took a hit in the fourth quarter of last year, as vacancies rose across the tri-county region, and rents dropped in Broward and Palm Beach counties, according to a recently released report.
Since the pandemic, industrial landlords have reaped the benefits of Florida’s population boom and the need for e-commerce distribution facilities. Asking rents skyrocketed to record levels in recent years, as warehouse owners in all three counties enjoyed occupancy levels above 95 percent.
Yet the last three months of 2024 should give industrial landlords some unease, as rent growth plummeted in Broward and Palm Beach counties, CBRE found. The slowdown is giving tenants some leverage in lease deals with landlords, some experts said.
“We are not seeing the crazy increases that we saw in 2021, 2022 and even in 2023 when landlords were increasing the rent by 20, 50 and 100 percent,” said Edison Vasquez with Com Real Miami. “[In 2024] we saw a normalization [in rent growth]. This has created some balanced negotiations between landlords and tenants.”
Miami-Dade County
In the fourth quarter of last year, industrial landlords increased the average asking rent to $16.03 a square foot, compared to $15.05 a square foot in the same period of 2023, the report shows. Miami-Dade’s vacancy rate climbed to 5.7 percent in 2024’s last quarter, compared to 3.2 percent during the same period of the previous year.
The higher vacancy rate was a result of supply outpacing demand for the first time since before the pandemic. Industrial developers delivered a record 5.6 million square feet of new warehouses in 2024, CBRE found. Vacancies should come down in the next 12 months as new construction is expected to dip, the report states.
But industrial landlords won’t be able to capitalize on that by increasing rents.
“The increasing vacancy rate has placed downward pressure on rent growth, a trend likely to persist,” the report states. “Miami’s industrial rent growth has slowed significantly.”
Still, the fourth quarter generated some significant industrial trades, including Boston-based TA Realty’s $160 million acquisition of a four-warehouse complex in Hialeah from Link Logistics, the New York-based subsidiary of investment giant Blackstone. In another deal, San Francisco-based Prologis paid an affiliate of Coral Gables-based Codina Partners $57 million for a Doral warehouse.
Broward County
Industrial landlords in Broward fared better than their counterparts to the south, as the average asking rent in the fourth quarter of last year dipped slightly to $15.29 a square foot, compared to $15.65 a square foot during the same period of the previous year. Broward’s industrial vacancy rate rose to 4.5 percent, year-over-year, from 3.5 percent, the report shows.
The vacancy rate rose as a result of new supply coming online, CBRE found. Broward industrial developers added more than 1 million square feet, with another 1 million square feet scheduled to be delivered this year.
Despite the slight dip in the average asking rent, Broward should see rent growth of 3 percent in the next 12 months, the report states.
Broward’s major sales in the fourth quarter were led by Miami-based Elion Partners’ $205.5 million purchase of a five-warehouse portfolio in Sunrise from Link Logistics. It was the second largest industrial deal of 2024 in South Florida.
The Blackstone subsidiary also sold a portfolio of 26 properties in Miami-Dade, Broward and Palm Beach counties to Boston-based Longpoint Realty Partners for $331.3 million, representing the priciest industrial deal of last year.
Palm Beach County
Industrial landlords in Palm Beach County are pulling back on pricing too. The average asking rent in the fourth quarter of last year nosedived to $14.49 a square foot, compared to $15.75 a square foot during the same period of 2023, the report shows. The vacancy rate shot up to 6.8 percent, year-over-year, from 4.2 percent.
Large blocks of available space in Jupiter hampered rent growth in Palm Beach County, CBRE found. “Currently, large vacant spaces remain the market’s biggest challenge, and the
combination of normalizing demand and record levels of big-box construction have lifted
the vacancy rate,” the report states.
Developers added 3.4 million square feet of new space in 2024, but construction is slowing down with only 727,179 square feet scheduled for delivery this year, the report shows.
Cabot Properties headlined Palm Beach County’s most significant deal in the fourth quarter of last year. The Boston-based firm paid $91.3 million for a Silver Beach Industrial Park, a recently completed complex in Lake Park.