South Florida’s industrial market is reaching something of an equilibrium after years of frenzied growth.
Vacancy in Miami-Dade County ticked up to 2.4% but remains well below long-term averages even as more than 3M SF of new space has delivered this year.
Third-quarter leasing activity was down 12% from the second quarter at 2.1M SF, and negative absorption totaled 319K SF, marking the first time since the third quarter of 2021 that more space became available during the period than was taken up.
The number of deals for between 100K SF and 250K SF has slipped by 71.5% since 2022, and leases between 20K SF and 50K SF accounted for 36% of leasing activity in the third quarter.
“There’s never been anything like the spike in 2021. Whether that was from e-commerce, whether it was post-Covid, whether it was pent-up revenge spending, population — all of those added to that surge,” said Wayne Schuchts, managing principal at SRS Real Estate. “The right way to look at the market is to go back to pre-Covid and look at that as a normalized market.”
“Industrial got like high-end homes when New Yorkers came in, where you had a line and you had to pay cash and you had to close tomorrow,” Schuchts said. “We don’t have that anymore. You do have options when you’re out with a tenant.”
Vacancy in Broward County, at 4.5%, is at its lowest level since 2018, and unlike Miami-Dade, the area had 225K SF of positive absorption in the third quarter. Of the 991K SF of industrial space under development in Broward, 21% is pre-leased.
The relatively strong pre-leasing in South Florida and a vacancy rate that is still well below historical averages signal that the region is well positioned to return to a normalized market as the pandemic wanes, Schuchts said.
“Maybe there’s a little more supply than we’re used to, and maybe there’s a little less demand than we saw a couple years ago,” he said. “Maybe it’s a two-year absorption as opposed to a one-year.”
For the full story, click here.