It’s a familiar refrain for South Florida industrial owners.
Asking rents continued on an upward trajectory during the third quarter as premium warehouse space remains hard to find in the tri-county region, according to a JLL report. New developments in Miami-Dade, Broward and Palm Beach counties are experiencing strong pre-leasing activity, leading to landlords setting the market for asking rents.
In addition, tenant demand and rising rents in South Florida’s industrial market show no signs of slowing as the year winds down, JLL found. “As vacancy rates continue to remain low and demand outweighs supply, asking rates are expected to increase,” the report said.
In the third quarter, the average asking rent in Miami-Dade jumped to $14.35 per square foot, compared to $8.84 per square foot in the same period last year. Sustained demand, tight supply and record low vacancies have allowed landlords to push up rents, JLL found.
The vacancy rate hit an all-time low of 1.8 percent in the third quarter, compared to 4.5 percent in the same period last year. Landlords can’t keep up with demand as Miami-Dade absorbed more than 600,000 square feet of new industrial space in the third quarter, the report said. Developers have pre-leased 40 percent of new warehouse and industrial buildings currently under construction that command rents above $15 a square foot, JLL found.
With its strong performance, the Miami-Dade industrial market continues to attract interest from institutional investors. For example, Atlanta-based Truist Securities paid $59.4 million for a national food distributor’s cold storage facility in Medley in September. Truist is leasing the property back to the seller, Coral Gables-based Quirch Foods.
Asking rents in Broward rose to $12.89 per square foot during the third quarter, compared to $9.70 per square foot in the same period last year. Similar to Miami-Dade, renter demand in Broward is outstripping the tightening supply, motivating landlords to continue raising asking rents.
During the third quarter, Broward’s vacancy rate fell to 3.3 percent, compared to 6.5 percent in the same period last year. During the first nine months of the year, Broward absorbed more than 2 million square feet of new industrial space.
Blackstone subsidiary Link Logistics is among Broward’s on-demand industrial lessors. Outsourced logistics provider Challenge Warehousing has signed an 82,000-square-foot lease at Link Logistics’ recently completed Port Everglades distribution center in Dania Beach.
Palm Beach County
In the third quarter, average asking rents in Palm Beach County climbed to $11.84 per square foot, compared to $9.34 per square foot in the same period last year. In submarkets such as Boca Raton and North Palm Beach, landlords have ordered asking rents above $13 a square foot, the report said.
Palm Beach County’s vacancy rate reached 3.1 percent in the third quarter, compared to 3.6 percent in the same period last year.
With a total inventory of 47.5 million square feet, Palm Beach County’s industrial market is relatively small compared to Miami-Dade and Broward, the report said. However, the county is also experiencing tenant demand that is rapidly filling new industrial buildings. Year-to-date, the Palm Beach market has absorbed more than 500 million square feet, slightly outstripping supply, JLL found.
Boca Raton-based real estate investor James Batmasian is among real estate speculators betting on Palm Beach County’s industrial market. In August, Batmasian paid $15.5 million for a portfolio of three industrial sites in Mangonia Park, Lake Park and Riviera Beach.