Miami industrial realty market turns around, among nation's lowest in vacancies
By Yudislaidy Fernandez
After a slow start this year, Miami-Dade's industrial market is turning around, with areas like Airport West and Doral stabilizing and leaving little Class A space available for lease.
Industrial vacancy rates in the tri-county area rank among the lowest in the nation, a new report shows, as tenants take advantage of more competitive rental terms.
Brian Smith, executive director of industrial brokerage services at Cushman & Wakefield, says this year has been unpredictable for the industrial segment.
While the market saw decent activity the first quarter, he said, the summer months were slow and now in the past two months major transactions have closed that are bolstering the market.
"A lot of companies have decided to make moves, where before they were on the sidelines," Mr. Smith said. "A lot of lease transactions have taken place that have taken up a substantial amount of space, which is very healthy for the market."
He cited the area west of Miami International Airport and the City of Doral as examples of two heavily industrial areas that have absorbed much of the available class A space, with few spaces under 30,000 square feet up for grabs.
"Airport West has always remained at the top of the food chain," he said. "The Airport West/Doral area has clearly outpaced the rest of the submarkets and has definitely stabilized."
Medley is another example of a city that is strengthening, Mr. Smith said, as close to 600,000 square feet of leases have been completed.
Tenants shopping for 75,000 square feet of industrial space today have a limited selection, he said, whereas before they could choose among about a dozen listings.
Miami-Dade, Broward and Palm Beach counties ranked among the top 12 industrial markets with the lowest overall vacancies, out of 34 US industrial markets that Cushman & Wakefield tracks, a third quarter statistics report shows.
Miami-Dade has the region's lowest vacancy at 8.3%, followed by Broward with 9.1% and Palm Beach at 9.9% — with all three, which were adding to vacancy totals this time last year, seeing space being absorbed year-to-date.
"We think the (local) market has certainly bottomed out.... The worse is either here or probably over," Mr. Smith said. "Rates really came down to the point that companies felt in a position to take advantage of this market. They feel like they better make moves now or they might miss the boat."
In Miami-Dade, nearly 3.9 million square feet have been leased this year, according to the third quarter report. It also says that overall absorption has improved, with 1.5 million square feet filled year-to-date compared to a negative 3.2 million square feet at this time last year.
The market activity seen so far this year, particularly in recent months, shows the window of opportunity is starting to close, Mr. Smith said, especially in top-performing areas like Airport West and Doral.
In the past two months, industrial tenants have been taking advantage of competitive rates, scooping up big chunks of industrial space throughout the county.
For example, promotions firm Bel Inc. leased 342,750 square feet at Lincoln Logistics Park in Medley and two freight forwarding and logistics companies, Amcar Freight and Martainer, leased a combined 120,000-plus square feet at Beacon Lakes Business Park in the Airport West area.
Mr. Smith said his firm is working on a couple deals that should further boost the industrial market but he couldn't announce them yet.
If the industrial division continues to strengthen with more of the available supply taken off the market, he said, that will drive up rates again.
Although the Airport West area is already seeing less space available and an uptick in rates, Mr. Smith said that's not the case yet in North Central Dade, made up of areas like Hialeah, Palmetto Lakes and Medley.
"But once these secondary and tertiary markets start to see that activity, you'll have a better overall occupancy rate and a stable market," he said. "When that is, that's anyone's guess."