Miami's Industrial Sector Sees Record High Deliveries

Miami’s industrial sector is currently dealing with a surplus of supply, according to an analysis by Avison Young of the area’s third quarter performance for the asset class. It found that the city has received more than six million square feet of new inventory, setting a new record, according to the CRE firm. But construction development in the pipeline has eased down slightly to 3.3 million square feet.

“Elevated interest rates, rising material costs, and weaker demand have prompted developers to pause activity, awaiting clearer economic signals from the Federal Reserve on interest rate reductions and the results of the upcoming election,” Avison Young said.

In addition, absorption hit the negative territory at -155,122 square feet, following a positive two straight quarters.

Along with Miami, Avison analyzed the industrial performance in West Palm Beach and Fort Lauderdale. Supply wasn’t as big of an issue in those two regions. West Palm absorbed positive 301,000 square feet of new product, and Fort Lauderdale’s was 24,000.

Asking rents saw “steady growth,” reaching $16.72 per square foot NNN in Fort Lauderdale; West Palm shot up 12 percent year-over-year to $15.81 per square foot NNN; Miami’s “stabilized” at $17.10 per square foot NNN, according to Avison.

Vacancies inched up in each market, with Miami seeing a 2.8 percent increase year-over-year at 5.4 percent. West Palm was at 6.4 percent (up 0.6 percent year-over-year), and Fort Lauderdale climbed to 5.3 percent (increase of 0.5 percent).

The top three biggest recent leases occurred in Miami, with Starboard Holdings striking the top spot for a renewal of an 184,968-square-foot space. That was followed by Miami International Freight Solutions, with its 105,960-square-foot new lease and Schwarz Partners Packaging, with a 90,000-square-foot renewal. The largest acquisition went to Property Reserve, with its $55.86 million purchase of a logistics park in Miami.

For Fort Lauderdale and Miami, Avison provided an outlook for asking rates, which are expected to remain stable in both markets.

However, Avison noted that there might be a little more hesitancy in Fort Lauderdale.

“As leases expire from pre-COVID pricing, tenants are still experiencing sticker shock at current market rates, leading some to consider consolidating or staying in their existing spaces rather than expanding,” Avison said.