The Sarasota and Fort Myers industrial space markets, long a rising star in commercial real estate, have begun to slide backward, according to a new report looking at 2024 first-quarter data.
The report, from Chris DiBitetto, managing broker of The Eres Cos.’ Sarasota office, highlights what he calls “the notable gap between supply and demand in Sarasota’s industrial real estate market.” (Eres has nine offices worldwide, including locations in New York City; Denver; Bozeman, Montana; and Argentina.)
To wit, there were 1.6 million square feet of industrial space delivered in the past year in Sarasota with 470,000 square feet absorbed. That’s a vacancy rate of 3.7% — the highest in eight years, the report states, and up from 1.8% in the 2023 first quarter.
Rents are on the rise, even with supply lagging behind demand. Average asking rents, DiBitetto’s report found, increased 6.5% year-over-year from the 2023 first quarter. That’s down from this time last year when the average asking rents for industrial space was up 12%.
The industrial story is pretty similar in Fort Myers. The vacancy rate there increased 6.1% in the first quarter, the report states, “largely due to new construction outpacing leasing activity.”
With 2.9 million square feet of industrial space delivered, and another 1.2 million square feet underway “competition for industrial users is intensifying,” the report adds, “which will likely lead to a further decrease in asking rental rates.”
Leasing volume has decreased, too, in Fort Myers with over 80% of the active pipeline available for lease.
One bright spot in the report comes from Naples, where industrial vacancies are at 1.6%, with 880,000 square feet delivered and 790,000 square feet absorbed over the past 12 months. Along with the tighter vacancy rate, rents are going up, rising 6.4% in the first quarter. The average asking rent for industrial properties is now $17 a square foot, “significantly higher than the national average,” the report states.
“Despite its smaller market size, Naples has seen consistent sales activity, particularly in the logistics space.”
