Miami-Dade Industrial Developers: What Softening Market?
Seventy-five percent of South Florida owners see a stable market ahead.
To say that the industrial market in Miami-Dade County is going gangbusters is almost an understatement. Even though the industrial sector in many parts of the country is one of the healthier components of the CRE ecosystem, some fear signs of softening. Developers in Miami-Dade, however, appear to have no such concerns.
“A live poll taken during the Colliers South Florida Industrial Owners Forum 2023 found that owners in South Florida were not concerned about an overbuilt market for 2024, with 75% foreseeing a stable market ahead despite the growing development pipeline,” Colliers stated in its Q1 2023 industrial report on Miami-Dade.
This is the view even though the region has 1,344,000 square feet of new construction and a further 9,882,100 being built. That’s because the overall vacancy rate is 1.8%, compared with 2.7% in Q1 2022, leasing activity is healthy, and record-breaking high triple net lease rents of $14.61 a square foot are being achieved – up from $11.77 in Q1 2022, a 24% increase.
“Last-mile hot spots” in the Medley/Hialeah Gardens and Northeast Dade submarkets saw most of the leasing activity.
“Steady demand spurred by the ongoing flood of new-to-market tenants and population growth will bode well for Miami-Dade County,” Colliers commented. Other positive factors were a diversified tenant mix and residential development that increased demand.
Prices for construction materials also appear to be stabilizing after soaring by 20% in the previous 12 months, Colliers stated. Costs for core building materials like steel and roofing were down by 5% in the same period. However, costs of concrete, wallboard, and aluminum still rose significantly, and attendees at Colliers’ Owners Forum viewed the financial markets and the lack of developable land as ongoing challenges.
“Speed to market is often still hindered by permitting and approval delays,” Colliers noted. “Consensus among developers and landlords is that speed to market is critical, with pre-leasing still being high.”
The quarter also saw a slowdown in trades. “Although demand remained high, there continues to be limited supply available for sale in the first quarter of 2023,” Colliers added. The largest sale transaction in the period was a 90,000 square foot warehouse sold for $17.3 million or $193 per square foot.