Miami’s Industrial Market is in a Position of Strength Heading into Summer 2022

Bridge Level Commerce Middle options frontage on the Florida Turnpike and is equidistant between Miami Worldwide Airport and Fort Lauderdale Worldwide Airport. The image is a development shot of the venture from April 2022.

Amid a record-breaking yr for Miami-Dade County in 2021, industrial market fundamentals grew even stronger within the first quarter of 2022. Final yr, the nationwide industrial market noticed unprecedented exercise ensuing from limitless funding capital from Wall Road, personal fairness companies and REITs deploying vital capital into shopping for present income-producing property and improvement websites.

Erin Byers, Colliers

Within the first quarter of 2022, market fundamentals continued to warmth up in Miami-Dade County and are anticipated to proceed to draw buyers and builders that need to capitalize on a rising inhabitants and hovering demand for warehousing house.

The continuing international provide chain challenges are forcing present tenants’ necessities to incorporate extra warehouse house for storage. Concurrently, new-to-market tenants are persevering with to flock to the realm, regardless of a shrinking provide of obtainable house.

Steve Wasserman, Colliers

Collectively, this confluence of exercise triggered a file low emptiness fee of two.7 % in Miami-Dade County within the first quarter, a 150-basis-point lower year-over-year. Rental charges additionally reached a file excessive of $11.80 per sq. foot triple-net, which is a rise of 8.3 % year-over-year.

We count on continued development in port markets, in addition to elevated leasing exercise from third-party logistics and e-commerce tenants. In 2021, Amazon leased a number of areas all through Miami-Dade County totaling a number of million sq. ft with websites starting from 200,000 to over 1 million sq. ft. The Residence Depot additionally just lately bought a 1 million-square-foot warehouse in Hialeah for residence supply and FedEx simply leased 500,000 sq. ft from Duke Realty in its Miami 27 warehouse in Medley.

Hialeah, Medley and Hialeah Gardens stay sizzling spots since entry to the Florida Turnpike and Palmetto Expressway stay vital transportation drivers. Logistics, constructing provide and warehousing companies have been leasing these buildings rapidly and at premium costs. Hialeah is residence to what would be the second-largest enterprise park in South Florida upon completion, Countyline Company Park.

The Russia- Ukraine battle has induced disruption to the imports from Russia and Ukraine leaving South Florida corporations weak to extra value will increase, delays and competitors for scarce substitute supplies. Nonetheless, whereas South Florida exports totaled $10.1 billion in 2021, simply 1 % was exported to Russia and Ukraine (roughly $84 million to Russia and $17 million to Ukraine). Imports to South Florida totaled $27 billion in 2021, of that solely $160.5 million got here from Russia and $7.7 million from Ukraine.

Within the face of rising prices on supplies and labor and development, rental charges in 2022 are rising at a tempo by no means seen earlier than within the South Florida area. Inflation has surged the price of doing enterprise throughout the board.

To offset the rise in prices, landlords within the South Florida area have responded by trickling down prices to the tenant. As landlords battle to maintain up with the quick tempo of change, shorter-term offers have gotten the norm and concessions like TI allowances and free lease are diminishing.

Regardless of challenges surrounding development timelines and prices, South Florida delivered 9 million sq. ft in 2021, leaving 6 million sq. ft at the moment beneath development and 10 million sq. ft slated for improvement within the subsequent 18 months. Land gross sales reached $2 million per acre in Miami-Dade in 2021, possible creeping as much as $3 million per acre in 2022 resulting from land constraints.

Miami’s industrial market is able of power getting into 2022, and landlords are anticipated to navigate the continued challenges surrounding supplies and inflation via proactive efforts. Rents are anticipated to extend farther from their present double-digit vary and will likely be sustained by the extreme demand for brand spanking new high quality distribution house.

— By Erin Byers, Managing Director of Industrial Companies, and Steve Wasserman, Government Managing Director of Industrial Companies, Colliers. This text was initially revealed within the Could 2022 challenge of Southeast Actual Property Enterprise.