A new report published by the Miami Herald indicates an interesting fluctuation in the South Florida industrial market. In 2019, warehouses saw a dip in average sale price but an increase in price per square foot.
According to the report, the average sale price for industrial spaces in Miami-Dade, Broward and Palm Beach counties dipped from $1.9 million in 2018 to $1.6 million in 2019. Vacancy rates also rose by 1.5% over that same time period, although they remain relatively low (4.2% in Miami-Dade and 4.9% in Broward).
This increase in vacancy rates could be attributed to fewer large transactions among REITs. Earlier this year, there were several purchase/sales of portfolios, which likely drove up the average sale price.
“We always look at the price per square foot, and that’s up,” said Edison Vasquez, Managing Member of ComReal’s Industrial Team. “Looking at average sales price total is not a good indicator.”
In Miami, sale price per square foot rose by 6%, while in Fort Lauderdale, it rose by 10%. What’s more, the Fort Lauderdale metro market had a record-breaking sales volume in Q3 2019.
With an increase in demand for online shopping, investors are pointing to eCommerce storage and shipping to absorb some of the vacancies in the year to come. Vacancy rates below 5% are still in a healthy range.
“Going into 2020, we see one of the strongest industrial markets in over a decade, if not history,” Vasquez said. “Strong economy, plus a shift from retail to online delivery will keep industrial real estate strong.”
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