Palm Beach Industrial Market Shows Positive Signs

PALM BEACH COUNTY-The county industrial market was the site of many positive signs in the first quarter, according to a first-quarter industrial report by Cushman & Wakefield.Absorption for the quarter was positive 103,280 sf, a major improvement compared with the negative 87,080 sf of absorption the same time last year. In addition, the development of the Scripps Research Institute is having a positive impact on the county, illustrated by 425,085 sf of solid leasing activity and a slightly smaller overall vacancy rate, 7.5%, down from 7.7% at the end of the year, the report states.The overall vacancy rate was not so pleasant, though, in Jupiter, where the rate doubled since the end of the year from 13.2% to 26.4% first quarter, C&W adds. Currently, the submarket has more than a quarter million sf available. The excess space is due in part to GE Medical’s vacating 188,567 sf early this year. The weighted average direct net rental rate is expected to continue to decline here to encourage leasing. This rental rate dropped from $8.85 at year end to $8.29 in the first quarter.Although Riviera Beach had the strongest leasing activity, with 93,255 sf in transactions first quarter, the submarket saw its overall vacancy rate more than double from 4.8% to 10.6% in the last 12 months. Two of the larger leases this quarter were Century Forest Products’ lease of 29,765 sf at 1160 W. 13th St. and Hilda Flack’s deal for 18,810 sf at 3900 Fiscal Court, according to the report.Rental rates, which fell here from $5.92 at the end of the year to $5.68 first quarter, are expected to drop more to secure additional leases. Future development is expected later this year with Premier tilt-wall projects. The lower rental rates and new construction should bring even stronger leasing activity by the end of this year.In Boynton Beach, the Motorola Building demolition at year end has impacted the submarket’s absorption to become positive 60,217 sf, the county’s second-highest figure first quarter. Boynton Beach’s absorption was negative 25,000 sf a year ago. South of there, Delray Beach experienced its lowest overall vacancy rate in the last year. The rate was 3%, and just 71,327 sf are available in this submarket, according to C&W .Countywide, construction activity was a strong 425,085 sf, 3.6 times more than the activity in last year’s first quarter, when 117, 425 sf was under construction. The construction increase confirms that the state is one of the few with an expanding economy. In addition, many of the hundreds of thousands of jobs that are expected to be created nationwide this year should be concentrated in engineering, warehousing and trucking, which would further strengthen the Palm Beach County industrial market, the report adds.