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MIAMI-Third-quarter industrial vacancies rose in Miami-Dade and Broward counties but declined in Palm Beach county, a new analysis by Cushman & Wakefield of Florida Inc. shows.

Year-to-date net absorption is improving sharply and rents are rising or holding steady, giving brokers and analysts confidence the total 268 million-sf market is stable and showing signs of improvement.

The vacancy rate increased by only eight-tenths of a percent over second-quarter estimates in Miami-Dade County; by 1.4% in Broward County; and actually decreased by 1% in Palm Beach County.

Miami-Dade’s inventory increased to 149.37 million sf, up from 148 million sf in the second quarter. Vacancies increased to 8.3%, up from 7.5% during the second quarter.

Year-to-date net absorption increased to 593,357 sf, up from a negative 232,997 sf. Direct rental rates for warehouse/distribution space averaged $6.20 per sf, down slightly from $6.50 per sf in the second quarter. Rents for office/service space also decreased to $10.36 per sf from $11.88 per sf.

Broward’s inventory increased to 78.5 million sf, up from 77.7 million sf. Vacancies increased to 9.5%, up from 8.1%. Year-to-date net absorption increased to 442,305 sf, up from 70,411 sf in the second quarter.

Rental rates for warehouse/distribution space averaged $6.29 per sf, down slightly from $6.36 per sf in the second quarter. Rents for office/service space increased slightly to $9.72 per sf, up from $9.33 per sf.

In Palm Beach, the inventory increased to 40.1 million sf, up from 39.8 million sf in the second quarter. Vacancies dropped to 6.1% from 7.1% in the second quarter. Year-to-date net absorption increased to 417,830 sf, up from a negative absorption of 377,380 sf in the second quarter.

Rental rates for warehouse/distribution space averaged $6.11 per sf, down from $6.50 per sf. Rents for office/service increased slightly to $10.19 per sf from $9.79 per sf.

All things being equal, industrial real estate specialists Walter Byrd and Chris Metzger are feeling pretty confident about the future of sales and leasing in the tri-county South Florida market.

These Cushman & Wakefield industrial specialists are finding room for optimism in their company’s research.

“It won’t be getting a whole lot worse,” predicts Byrd, a C&W senior director. “We’re in a period of continuous contraction of speculative development of new construction over the past nine months to a year. Leasing activity remains healthy. Year-to-date net absorption is positive, though a little softer in the third quarter.”

The same is true in Broward and Palm Beach, says Metzger, a C&W senior director, despite the 1.4% increase in the Broward County industrial vacancy rate. He says a flood of vacancies in the southwest submarket is skewing the overall figures.

“There is a vacancy rate of 16.6% in southwest Broward; that climbed, but it represents space vacated by big-box users,” Metzger says. “But take into consideration that the vacancy rate in the Pompano Beach, one of the hot submarkets, is only 6.7%. That’s damn good.”

It also appears that property owners in key South Florida industrial submarkets are still controlling terms on leasing rates and transaction structures. That’s especially true, Byrd says, in locations such as the active airport-west submarket in Miami-Dade.

“Some landlords are giving a little more on rents and structuring of terms,” Byrd says. “They’re showing a little more flexibility. If a prospective tenant has the ability to be flexible, location-wise, they can negotiate a better deal than we could have a year or two years ago.”

And tenants are still looking for space, Metzger says, though they may have scaled back desired expansion, consolidation or relocation plans.

“What they’re looking at is a little less grandiose, especially compared to what they were looking at prior to Sept. 11,” Metzger says. “Prospective tenants who were looking for 50,000 sf are now looking for something like 30,000, dropping down about a third from what they’re were looking for previously. So the activity is still there.”

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