Miami-Dade Industrial Market Perking Up

By Hortense Leon

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Swanson

MIAMI-The industrial market in Miami-Dade County is picking up, says Eric Swanson, executive vice president at Flagler based in Coral Gables. One indication of the upswing is a report in the July 21st issue of the online newsletter Real Estate Alert, that TA Associates Realty, which owns the 881,000 square foot Palmetto Distribution Center in west Miami-Dade, has a contract to sell the property to AMB Property for $67 million.  The five-building complex, which is about five miles from Miami International Airport, was built from 1992 through 1997 and has an occupancy rate of 95%.

The cap rate on the AMB deal is just under 6%, which is very attractive, says Swanson. There has been lots of interest in this property, which is about to trade at $75 per square foot, he says.

“The (Palmetto Distribution Center deal) is the biggest sale that has happened in a while,” says Swanson. In April, IDI, in a joint venture with institutional investors advised by J.P. Morgan Asset Management, sold four of the six buildings in the 1.1 million square foot Weston Business Center in Weston, Fla. near Ft. Lauderdale, for $65 million, or $96 per square foot. “These are the only two big sales which have occurred recently,” he says . “But they are indications that values for high quality properties remain high,“ says Swanson.

Miami-Dade’s industrial market is improving, says Swanson, as traffic at the Port of Miami, Port Everglades in Ft. Lauderdale and Miami International Airport has increased.

During the first four months of this year, trade through the entire Miami Customs District—which includes ports from Palm Beach County on the north to the Florida Keys on the south—is ahead of levels seen in 2008—the best year ever, according to a June 17, 2010 Miami Herald article reporting on trade data. During this period, total trade through the Miami Customs District was up 18.4% to $29.2 billion, according to WorldCity, a Coral Gables company that analyzes trade figures. 

“What we also know from our sister company, the Florida East Coast Rail Road (Flagler and the FEC Railroad are both owned by the Fortress Investment Group) is that the volume of goods carried by rail has increased as well,” says Swanson. An increase in freight traffic is an indication that there is demand for warehouse space, he says.

“Occupancies continue to improve at the parks we own or represent,” says Swanson. At Flagler Station, the largest industrial park in South Florida with 4.5 million square feet, the occupancy is around 90% compared to a year ago, when it had an 88% occupancy rate, he says.

According to Marketbeat, Cushman & Wakefield’s second quarter 2010 Miami-Dade industrial report, the overall vacancy rate for the county fell 0.6 percentage points from first quarter to 8.3% at mid-year. This rate was the lowest reported in the last four quarters. Overall absorption was positive for the second consecutive quarter (nearly 1.2 million square feet year-to-date) after two years of negative figures, according to Cushman & Wakefield.

Categories: Southeast, Industrial, Acquisitions/Dispositions, Miami