Miami’s industrial market encountered significant challenges as 2024 closed, navigating a surge of new supply and rising vacancy rates.

But the peak could be nigh.

An unprecedented 5.6M SF of industrial space delivered in Miami-Dade County in 2024, according to a fourth-quarter CBRE report. The influx of new space coincided with a rise in vacancy rates, which climbed to 5.7%, the highest that metric has reached in eight years.

While vacancy rates are higher than in previous years, Colliers South Florida Executive Vice President Erin Byers said they are in line with what is seen as historically healthy, with rates still below 8% and likely on the way to topping out.

“I think that we are probably at our peak, or close to it, with some deliveries coming online this quarter,” Byers said. “That being said, we've had a high velocity of activity just in the first few weeks of the year where there's been some deals that are signed or about to be signed that will account for some absorption.”

With the flurry of new deliveries, a disconnect between new supply and tenant demand characterized the market in 2024. The discrepancy between new deliveries and tenant absorption became a defining theme in Miami’s industrial market.

During the second half of 2024, the market witnessed significant move-outs. Imperial Bag & Paper Co. leased more than 506K SF in the first half of 2024 but also vacated 226K SF, the CBRE report says. This and other large move-outs contributed to the lowest total net absorption in 10 years.

The imbalance between supply and demand was evident in last year's soft net absorption, which closed 2024 at just 1.1M SF, the lowest annual figure in a decade, according to CBRE.

“I would say, really postelection, a lot of groups are getting back to focusing on their businesses, and I think there was some uncertainty to the majority of last year that kind of swayed the demand,” Byers said.

As more space became available, tenants became more hesitant to sign new leases. When they did, they took longer to finalize deals.

Locally, higher vacancy rates have resulted in a moderation of rent growth, which peaked at 18% year-over-year in mid-2022. That slowed to 7.7% by Q4 2024, according to CBRE.

Asking rents sat at $16.03 per SF at the end of Q4, up from $15.72 in the previous quarter.

Much of this increase can be attributed to the higher asking rents of newly delivered space, said Eric Messer, Cushman & Wakefield senior research manager for Florida.

“I don't see a significant decline in asking rents or asking rent averages just because we're going to see some more higher-end new development come in line with especially Miami-Dade and then Broward County,” Messer said. “You're going to see higher asking rents from those buildings.”

Developers are now pulling back on new projects. Construction starts declined by 37.1% year-over-year, with developers scaling back in response to the oversupply, according to Cushman & Wakefield's Q4 report. The decline in construction activity may signal stabilization ahead for the market.

“I think certainly with the increase in deliveries and kind of pent-up demand, I think that our market will start to stabilize, and we'll have some much-needed spaces leased up over the next probably three to four months,” Byers said.