Industrial asking rents in Broward and Palm Beach counties climbed at least 40 percent in the first quarter, year-over-year, while Miami-Dade County saw a 14 percent jump, according to a newly released report.
The first quarter findings show the South Florida industrial market remains on a stable trajectory, as demand continues to outpace supply, said Tom O’Loughlin of CBRE, which authored the report.
“Companies keep wanting to take industrial space,” O’Loughlin said. “Population growth and other factors all seem to be pointing in a positive direction.”
Industrial landlords are getting an influx of tenants that service the cruise and hospitality industries, as well as in third-party logistics firms that deliver products to end user customers.
“When you buy an appliance at Home Depot, third-party logistics providers will deliver it to your door,” O’Loughlin said. “These companies are taking a lot of space.”
Over the next couple of quarters, South Florida industrial landlords may experience a slight drop in occupancy, as new projects come online, O’Loughlin said. “But there hasn’t been any dramatic changes in occupancy levels that would justify any type of rental rate cuts,” he said. “The market is still operating at a healthy, high level.”
Industrial developers in a few South Florida submarkets that are farther from airports, ports and urban centers are showing more caution.
“We are seeing them tap the brakes a little bit in some locations,” O’Loughlin said. “Maybe they are doing one building at a time, instead of doing the entire project. That is a result of the higher cost of capital and cost of construction loans.”
And if interest rates continue to rise, the flow of capital into South Florida projects could slow down, O’Loughlin said.
“The big one to keep an eye on is consumer spending,” he said. “So far, consumers have stayed in the game and are flush with money. If consumers call a timeout, that could potentially impact overall demand.”
The asking rent in Miami-Dade County jumped 14 percent to $14.25 a square foot in the first quarter, compared to $12.41 a square foot during the same period of last year, according to CBRE. The vacancy rate remained flat at 3.2 percent, the same as the first quarter in 2022. Tenants absorbed 1.4 million square feet, as developers delivered 3.1 million square feet of new industrial space during the first three months of the year.
In the first quarter, Ares Management acquired a development site at Countyline Corporate Park in Hialeah for $111.1 million. The Los Angeles-based firm is planning a three-building industrial complex.
In another deal, eBay car electronics retailer Techronics paid $10 million for a 37,000-square-foot warehouse in Hialeah.
In Broward County, the asking rent catapulted to $15.25 a square foot in the first quarter, compared to $10.88 a square foot during the same period of last year, the CBRE report shows. That’s a 40 percent increase, year-over-year. The vacancy rate dropped to 2.7 percent during the first three months of the year, compared to 3.1 percent during the first quarter of last year. And supply is getting tighter. Broward had a net absorption of 287,000 square feet, but no new projects were delivered during the first quarter.
In January, Harbert Management Corporation, a Birmingham, Alabama-based investment management firm, purchased the Lauderdale Lakes Industrial Flex Park in Lauderdale Lakes for $65.8 million.
Palm Beach County
Landlords in Palm Beach County enjoyed a 47 percent markup in asking rent, according to CBRE. The rate hit $16.50 per square foot in the first quarter of this year, compared to $11.20 a square foot during the same period of last year. The vacancy rate dipped to 2.5 percent during the first three months of this year, compared to 3.4 percent in 2022’s first quarter. Palm Beach County industrial tenants absorbed 186,000 square feet, and 250,000 square feet of new industrial space was added in the first quarter.
In March, Atlanta-based TPA Group paid $36 million for a 60-acre industrial development site west of Loxahatchee Groves.