MIAMI—While there will be little industrial spillover from the port into Broward and Palm Beach counties, these South Florida counties are also experiencing a resurgence. Steve McCraney, CEO of McCraney Property, tells GlobeSt.com unemployment rates are way off their recession highs, home prices are rising in the face of continued foreclosures, and corporate bankruptcies are becoming rarer.
“Total vacancy rates in Broward and Palm Beach counties were a full percentage point below the state average at the end of 2013, according to CBRE,” McCraney says. “Builders in Broward delivered 473,789 square feet and have 586,516 feet under construction. Palm Beach contractors added space, too, led by the 650,000-square-foot Aldi Foods distribution center in Royal Palm Beach. This year, my company plans to develop two class A dock-high warehouse-distribution buildings totaling 100,000 square feet in Vista Business Park in the West Palm Beach submarket.”
While the South Florida industrial market dominates the state, the greatest improvements in 2013 were made in Orlando and Jacksonville, where year-over-year vacancy rates decreased by 1.5 percentage points. Again, McCraney notes, the economy is the story, as Orlando’s unemployment rate has dropped to the state average of 6.3%. Jacksonville’s rate fell below 6% in April.
According to McCraney, North Florida’s lack of class A space and rent growth can support speculative development. Hillwood Investment Properties plans to complete a spec 400,000-square-foot building in its industrial park that will complement a new, larger FedEx warehouse-distribution center.
“Orlando may boom for several years as it becomes more of a hub for domestic shipping,” McCraney says. “The metro market finished the first quarter of this year finished with 402,484 square feet of positive net absorption, most of that in the southeast Orange County submarket.
“Tampa Bay will soon be the home of everyone’s favorite online store, Amazon. The company is building a 1.1 million-square-foot sorting and distribution facility there and a 1 million-square-foot distribution facility in neighboring Polk County. Those facilities should attract servicers and other industrial tenants.”
Looking forward, McCraney says economic trends and support from state government bode well for Florida. CSX opened a $432 million, state-funded terminal near the Tampa Bay Interstate 4 corridor and plans to close on 930 acres in Winter Haven and develop a business park.
“Florida is expected to pass New York in population this year, making it the third-largest state in the nation. With more people will come more demand for warehouse and distribution space,” McCraney says.
“Jobs will follow. Boston Consulting Group says more companies are beginning to see the cost-saving benefits of re-shoring. The firm estimates that US manufacturing jobs could bring back $70 billion to $115 billion of export business by 2020. That, too, should support the Florida industrial market for years to come.”
Click here to read part one of this two-part series, called Industrial Guru: Miami Poised for Explosive Growth.