Industrial in Southwest Florida has gotten off to a rough start of the year on the heels of the holiday season demand waning, causing move-outs.
In the first quarter, CBRE reported that the market saw -110,000 square feet of negative absorption after two straight three-month periods of positive demand. The slowdown in the fourth quarter came as "holiday seasonality tempered demand," according to CBRE.
"This was largely driven by Suncoast Beverage Sales vacating and, in many cases, listing former locations for sale across the tri -county area after they consolidated operations into a new Fort Myers facility last year," the CRE firm added in comments.
Also, development has surged in the market, causing a 70 basis point quarterly spike in the vacancy rate, which was 11.7 percent at the end of March. The Airport Corridor submarket was a big culprit, with 53 percent of its inventory delivering to the market over the last five years.
However, this trend is improving, with Southwest Florida industrial construction now down by 53 percent from its peak in 2023. As a result, CBRE expects that fundamentals will improve, forecasting that less product underway will "alleviate" vacancy pressure, with absorption poised to recover in the Airport Corridor, calling the submarket a "key growth" area.
"The Southwest Florida industrial market is on a path toward stabilization as a slowing development pipeline allows demand to catch up with the record deliveries of recent years."
Meanwhile, average asking rents are performing well already. In the first quarter, they rose by three percent year-over-year to $15.10 per square foot NNN.
Also, Southwest Florida's industrial transactional volume was more than $250 million, with CBRE adding that signals "investor appetite remains."
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