(Crystal Proenza is associate editor of RealEstateFlorida.)

|

MIAMI-During the first quarter of 2008, the South Floridaindustrial real estate market has experienced an increase invacancy rates and stabilizing rents. However, market reports andexperts say the region is just experiencing equalization after 2007saw rising rents, sometimes in the double digits, and record-lowvacancy rates under 5%. Rising fuel costs are also putting a strainon the industrial market, making it more expensive to operatecommercial vehicles.

|

In Miami-Dade County, the current vacancy rate is 6.3%, which ishigher than last year, but still below the statewide average of6.5%, according to research by Cushman & Wakefield of Florida.Meanwhile, a first-quarter report by CB Richard Ellis points to anincrease in sublease space in the region, offering more leasingopportunities than at any time in the last four years.

|

"I think the biggest impact to our market is downsizing inwarehouse industrial users related to the housing industry," saysJose Juncadella, principal of Coral Gables-based FairchildPartners. "Companies producing building products, appliances, tiledistributors, etc., have been adversely affected with the downturnin the economy."

|

Supply and demand in Miami were balanced in the quarter,creating a flattening of rental rates. The average rental rate forall of South Florida is around $7 triple net, says Juncadella,noting that less movement in the industrial market has pushed rentsto stabilize. CBRE reports that the decrease in activity ispartially due to potential investors having difficulty gettingfinancing.

|

"In terms of the rental rates there has definitely been a shift,especially in the last six months or so, that the tenant may havegained some ground," says Audley Bosch, C&W associate directorof industrial brokerage. "In previous quarters, it was a dominantlandlord's position."

|

That seems to be the case in Broward County especially, wherelandlords have begun offering concessions as a reaction to alessening demand. C&W reports a continued equilibrium in theBroward market for the first quarter, with a negative absorption of558,369 sf.

|

The biggest industrial sale in South Florida during the firstquarter was the 207,737-sf Broward Office Flex Portfolio, a$22.2-million deal taking place in Fort Lauderdale. Mizzen LLCpurchased the property, which consists of three sites includingoffice, showroom and warehouse space situated on 17 acres, fromJamie Danburg. Both the buyer and seller were represented by Marcus& Millichap.

|

Broward's industrial vacancy rate was unchanged over the quarterat 5.4%, but was slightly higher than the rate a year earlier.Big-box industrial facilities, which CBRE defines as buildings over100,000 sf, reported a higher vacancy rate of 7.7 percent andavailability rate of 9.6%, inching closer to the nationalindustrial vacancy rate of 10%. Projects under construction inBroward totaled 3.3 million sf, which C&W cites as a sign ofdevelopers' confidence in the local market.

|

Palm Beach County's industrial market remains tight with vacancyat 3.6%, the lowest rate in six quarters, according to C&W.Leasing activity increased 29% from a year ago, with the averagelease rate at $8.54 price per sf triple net, according to CBRE.More than a million sf is under construction, which is expected toraise the vacancy rate slightly when projects are complete.

|

Despite the rise in vacancy and stabilized rental rates, expertsbelieve the region is insulated from major effects of theresidential downturn and corporate downsizing because ofinternational trade. With expansions going on at MiamiInternational Airport and the Port of Miami, industrialdistribution fundamentals remain strong. "We're shining in thestate as a market, especially in industrial real estate in relationto our international population and companies," Bosch tellsGlobeSt.com, noting the short distance to Central and South Americaduring times of rising fuel costs.

|

"Overall the market is slow," says Juncadella. "We're not seeinga tremendous velocity of deals, but there are still strongindicators that things will get better once the perception ofrecession dies down."

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.