Edward Easton, chairman of the Miami, FL-based Easton Group, is not surprised. "The reason is that lenders don't want to do any speculative development," Easton tells GlobeSt.com. For this to change, he says, "Net absorption will have to get up again, where it was three or four years ago." The Easton Group owns and brokers industrial properties, primarily in South Florida.
Spec development is going to go down as long as the economy is weak, says Easton. "As the economy picks up and net absorption picks up, we will see rates increase and speculative development increase," he says. Year-to-date net absorption was 586,896 sf.
The weighted average asking rental rate for industrial space dropped from $7.65 per sf gross in the second quarter to $7.44 per sf gross in Q3. Furthermore, the report states, activity under construction in Miami-Dade County fell 19% from last year's 1.2 million sf.
This trend is expected to continue, with speculative development expected to be minimal throughout the year. Only 245,404 sf is proposed for projects through the end of the year.
The report shows significant growth in leasing activity in the third quarter; however, it is 12% lower than the same quarter a year earlier. Notable leases in the quarter include 101,000 sf of warehouse space by Vital Care, 98,226 feet of warehouse space by Jettran International and 87,000 sf of warehouse space by Bax Global. All three deals are in Airport West, the area's biggest submarket.
The overall vacancy rate for Airport West was 12.6% at the close of the quarter, relatively unchanged from the 12.5% of the previous quarter. Year-to-date, 2.4 million feet was leased in that submarket. Despite 60% growth in leasing activity from the second to the third quarter in this specific area, leasing activity was down 24%, compared with the third quarter of last year.
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