Medwin: The South Florida industrial market—and Miami in particular—is viewed by institutions as one of the top three industrial markets in the United States, along with Southern California and Northern New Jersey.

Much of the interest stems from Miami’s position as the gateway to and from Latin America and the Caribbean. In addition, our real estate sector is supply-constrained by the ocean to the east and the Everglades to the west, which gives investors comfort that the market cannot easily be overbuilt. International trade is also driving this market, with the air and seaports both seeing import and export growth since 2009.

GlobeSt.com: To what extent has the wave of international investment in Florida made its way into the industrial sector?

Medwin: While most of the industrial investment has been from the domestic institutions, international capital flowing into Miami has certainly helped businesses grow. Other factors coming into play are growing middle classes in major Latin American markets such as Brazil and Peru, new free trade agreements with Colombia and Panama, and massive construction projects in Brazil as preparations continue for the World Cup and Olympics.

GlobeSt.com: We are seeing new construction take shape, particularly west of Miami International Airport. Does current market demand justify this building boom—or is there reason to think this may be a bubble?

Medwin: Fundamentals show that the market is ready for new development. As local businesses grow, they are absorbing vacant space and the market is returning to a point where additional product is warranted. The vacancy rate is below 10%, which tends to be a benchmark for starting new construction. The market experienced three years without speculative industrial development until the newest projects broke ground earlier this year. We expect to see about 1.5 million square feet of new development in the next 12 to 18 months in Miami-Dade and Broward, but this represents less than a 1% increase in total supply.

GlobeSt.com: With office users and residents migrating back toward the urban core, are we likely to see new industrial infill development or the redevelopment of existing properties?

Medwin: We expect to see some infill development take place, but for the most part industrial uses will be displaced to the western suburbs and redevelopment projects in the urban core will focus primarily on residential and commercial uses. With population growth underway in the urban core, the highest and best use for existing industrial properties in central areas will gravitate towards these other uses.

GlobeSt.com: How will new improvements at the seaport, including the tunnel, rail link, and deep dredge, affect the local landscape? Do these projects give Miami an edge over competing markets?

Medwin: The positive impacts of the deep dredge, port tunnel and highway connection, and the reconnection of on-dock rail for container traffic can’t be overstated.

These improvements will give Miami an edge over competing markets like Jacksonville, Savannah, and Charleston, since we are the nearest east-coast port to the Canal that will offer the infrastructure necessary to handle the largest ships from Asia passing through Panama. New York is height-limited due to the Bayonne Bridge and Norfolk has the depth to handle these vessels, but most shipping companies will opt to stop in Florida first to avoid having to backtrack south.

GlobeSt.com: With all eyes on Miami-Dade, what can we expect from markets across the rest of the state? Does the activity in South Florida have an impact in Central and North Florida?

Medwin: It will. The one constraint on Miami’s growth is the limited supply of industrial land—and therefore the high cost relative to other parts of the state. When port traffic increases following the opening of the expanded Panama Canal, there will be a need for an “inland port” away from the congested Miami market that can serve as a cost-effective interim destination for cargo until it can be distributed statewide.

This is a critical component for growth in international trade, since PortMiami is land-constrained. Cargo needs to move off the port as quickly as possible to make room for other ships. The “on-dock” rail connection can facilitate this increase in volume so long as it has a destination to deliver the goods.