Land scarcity drives up industrial rents in Miami-Dade

The industrial real estate market continues to be a hot topic in Miami-Dade as land is scarce and rental rates averages increase, according to local industry experts.

The market is in such demand due to a combination of increased e-commerce, warehousing and logistics, said Louis Archambault, partner for law firm Saul Ewing Arnstein & Lehr, which advises commercial real estate developers, lenders, sellers, owners and investors across Miami-Dade, Broward and Palm Beach counties.

“Plus, based upon people moving around and being more remote, you also have a lot of people that will relocate portions of their business to South Florida, and Miami is always a great hub for that,” he said. “But as far as overall square footage, we’re actually not one of the larger industrial markets in the country. But because of the population and the demand, It’s a thriving market.”

Developers will have to make better use of the industrial space and find other ways to use every inch of available space, which are typically 200,000-square-foot buildings, Mr. Archambault added, “because of land constraints. It allows for people to think more creatively and opens up some additional possibilities for those uses.”

Examples of potential use could be redeveloping properties into residential/industrial mixed-use buildings or converting rooftops into storage space, he said.

The overall industrial market in Miami-Dade has a vacancy rate of 2.9% and the direct asking rate for warehouse distribution increased from $10.85 per square foot in the fourth quarter of last year to currently $11.21, with approximately 225,233,000 square feet of available industrial space, according to Colliers’ preliminary statistic market report for this year’s first quarter.

“I think that the rental rates will continue to increase as the demand outpaces the supply,” said Erin Byers, managing director in industrial services at Colliers. “So, the investors that have come in and been able to purchase land and build new developments are going to be able to capture the increase in rental rates and have a higher return on investment.”

Colliers recently facilitated the $21.75 million sale of 10.35 acres of industrial land at 501 NE 181st St. The site, once occupied by the Borden Dairy processing facility, was purchased by Panattoni Development. The commercial real estate development company has plans to redevelop the property into a 126,000-square-foot Class A warehouse by late 2023.

The community has changed the way consumers shop, Ms. Byers added, while the suppliers of all of the warehouse goods are still trying to catch up.

“I think the statistic is 1,000 people a day are moving to South Florida, which has been a driver,” she said, “and they all have consumption that takes place in our local economy. Essentially, everything that ends up on your doorstep from delivery, it’s coming from a warehouse in South Florida.”