INDUSTRIAL MARKET SUMMARY
The Miami industrial market’s Q1 vacancy rate was 4.6% at the close of the quarter with a $13.16 per sq. ft. average (gross) lease rate. Industrial vacancies are back below the National Index rate after climbing higher in 2020 for the first time in 20 years. Deliveries have totaled 4.7 million sq. ft. over the past 12 months. After trending in line with the country for most of 2020, Miami is now two percentage points stronger in recent quarters.
There is over 3 million sq. ft. of new construction in the works, and about 4.5 million sq. ft. was delivered over the past year. This is including the one million SF Home Depot distribution center in Hialeah, which completed construction in early 2021. Most of what is being built is speculative. The largest speculative projects are in the 200,000 SF – 300,000 SF range.
Vacancy rates in Miami are around 4.6% and are back below the National Index rate. Though international trade has been impacted by the pandemic, the e-commerce sector, including Amazon, has been responsible for many of South Florida’s largest lease deals in the past seven months. Amazon signed two large deals in 2020. In April, the company leased about 220,000 SF at the newly built Prologis Beacon Lakes Industrial Distribution Center in the Miami Airport West Submarket. The company also leased a 210,000 SF property in the Hialeah Submarket, which it will occupy following extensive renovations. Vacancies could stabilize once the three million SF under construction delivers and leases.
Annual rent has been rebounding after two years of slowing. Still, at nearly $13/SF, the average rent in Miami is one of the highest in the country and is more than 40% higher than the national average. Within the market, average rents reach as high as nearly $20/SF in the South Central and East Miami Submarkets which are nearest to downtown. These submarkets have had the most trouble maintaining growth and have had some of the lowest rent growth in the market in the past year. Still, at 4.5% or higher, annual growth in these submarkets has been considerable.
Industrial investment volume is down in Miami year-over-year but remains at more than $1 billion in the past year. Volume is slightly higher than the market’s 10-year annual average, but turnover has dropped below 5% for the first time in nine years. Deals over $20 million have become less frequent during the past year, with only nine deals in that range versus 17 deals in 2019.
Though the region has regained some of its jobs toward the end of the year, as of the Bureau of Labor Statistics’ (BLS) release of January jobs figures, the metro was still down about 115,000 jobs since February 2020. Tourism has been greatly interrupted and the cruise industry with which Miami is intertwined will likely feel the lingering effects for some time. While the shape of the economic recovery from the past year is yet to be seen, in Miami it is likely to be prolonged. Still, the market should benefit from its diversity. No one industry accounts for more than 15% of Miami’s jobs, helping to insulate the city from higher losses as a proportion of the workforce during downturns.
South Dade Focus
Many industrial investors and developers are turning their focus to South Dade for the first time. This is largely driven by the lack of available industrial land in the northern parts of the County. Two large developers filed an application in March for the South Dade Logistics and Technology District, which is an 800-acre parcel of land located on the south side of Florida’s Turnpike and north of Southwest 268th Street, between Southwest 122nd Avenue and Southwest 107th Avenue. It would be just north of Homestead Air Reserve Base. The project would feature 5.9 million square feet of warehouses, 100,000 square feet of commercial space and a 150-room hotel.
In 2021, Amazon plans to open four new delivery stations in South Florida. Two of the facilities are in the South Dade market – one will be located at the corner of Southwest 136th Street and Southwest 132nd Avenue in Kendall (65,536 SF) and the other will be located at 3750 Palm Drive, in Homestead (145,125 SF). This is in addition to the 1,000,000+ SF distribution center Amazon got approved in 2020 just north of the Homestead Air Reserve Base.
ComReal recently sold 117 acres to Copart USA in the Homestead Park of Commerce for $35mm. With land prices at 30 – 50% of the value of industrial land in Northern Miami-Dade, investors and users should consider the growing South-Dade market as an option for their investments and/or business operations.