Industrial Rents In South Florida Eclipse $9 Per SF For The First TIme
The 20-acre site of a former dairy plant in Miami has sold for $24M, highlighting the continually hot market for industrial property in land-constrained South Florida.
Newmark Knight Frank's Q3 report, released Friday, found that the average asking rent for industrial space across South Florida hit a record high, $9.05 per SF, up $0.55 from one year ago. The quarter broke the previous high-water mark of $8.54, set in Q3 2007, right before the Great Recession, according to NKF Research Services Manager Eric Messer.
The site of the old McArthur Dairy facility at 3000 NW 123rd St., also known as Centro Logistics, had been held by a New York-based financial services firm under the corporate entity ZSF/WD Opa Locka LLC. The buyer, Panattoni Development Co., will build Gratigny Logistics Park, with speculative warehouse space.
Just east of the dairy property, Panattoni is completing construction on Eastview Commerce Center, a $100M, 800K SF, Class-A business park that is more than 50% pre-leased. NKF represented the buyer and CBRE represented the seller. In statements, both said there had been competition for the site.
The third quarter of 2019 was the 38th in a row in which South Florida's industrial market has grown, almost nine years, the longest growth streak recorded, according to NKF. For just warehouse and distribution centers, rents hit $8.56 per SF triple-net, surpassing Q2 2008 as the highest recorded, when the wave of pre-recession development came online and rents hit $7.62 per SF, Messer said.
Despite the new regional high, demand in South Florida fell by almost half from the previous quarter to 376K SF of positive net absorption, and new industrial developments that have come online — there have been 9.5M SF of new industrial inventory in 24 months — pushed vacancy up to 4.2% from 3.6% one year ago.
Still, strong demand has kept market occupancy above 95%. Unsurprisingly, warehouse/distribution, the sector e-commerce companies have dominated, accounted for 90% of all transactions.
Looking at individual counties, NKF found that Palm Beach was the only market in Florida with industrial rents eclipsing $10 per SF, at $10.38. Broward had the strongest growth with more than 450K SF of positive absorption. Miami had 1.2M SF of positive net absorption year-to-date, but the vacancy rate inched up to 4% from this time last year, due to 2.2M SF of new inventory delivering in Miami so far in 2019.