South Florida Industrial CRE Broke Several Records In 2018
South Florida is one of the country's industrial real estate darlings, and last year proved it once again.
South Florida's industrial sector smashed several records in Q4 2018, a new report from Newmark Knight Frank found. An NKF spokesperson pointed out key findings:
- The average rental asking rate hit $8.75/SF, breaking the previous record set in 2007.
- In Miami, the average asking rate climbed above $8/SF for the first time ever, up nearly a full dollar from just one year ago.
- 2018 industrial leasing activity eclipsed 17.2M SF, smashing the 2017 total of 10.6M SF (378 transactions total last year).
- Investment sales of premier industrial properties reached record-breaking levels, with 38 sales totaling almost 3.9M SF in Q4 alone.
The spokesperson said 4.7M SF of new inventory came online last year, yet demand still considerably outpaced supply. This is due in part to the widening of the Panama Canal, which promoted U.S. ports to expand and industrial properties near ports to proceed with capital improvements.
NKF Executive Managing Director Steve Medwin told Bisnow in an email that what jumps out at him most from this report is the record-high average asking rents from 2007 were surpassed.
"This demonstrates the strength of the industrial market with demand continuing to outpace supply," Medwin said. "And with the limited industrial land availability in South Florida, development costs will continue to be pushed higher, which in turn necessitates higher rental rates."
He pointed to some of South Florida's notable deals from the past year: Postal Center International leased 225K SF in Weston for a major expansion. ShipMonk leased 170K SF in Fort Lauderdale, also for a major expansion. More than 1M SF of new warehouse space in Countyline Corporate Park (in Hialeah) was sold to Duke Realty for $180 per SF, and the 36-acre Aljoma Lumber site (in Medley) was also sold to Duke, for $1M per acre.
Despite the record high prices, "tremendous opportunity still exists for industrial in South Florida," Medwin said. "Fundamentals are very strong with new-to-market tenants continuing to open in the region, local companies continue to grow and absorb more space, and the population continues to grow. Tourism is still booming, and all of the millions of visitors consume items stored in local warehouses. In addition, international trade with Latin America and the Caribbean remains strong, which also creates demand for more industrial space in South Florida."