More warehouse spaces are sitting empty in South Florida. The delivery of new construction combined with the pandemic are to blame.
Vacancies rose from the first to second quarter in Miami-Dade and Broward, according to the latest Colliers International industrial reports.
“Pre-Covid, we expected to see increased vacancies because of new development. It takes 12-to-18 months to lease up,” said Jonathan Kingsley, executive managing director of office development for Colliers International.
Demand from cruises and freight shipments to Latin America shrank; both are significant drivers of warehouse demand.
“Once cruise lines start running again and shipping to Latin America picks up, then the recovery will be quick,” Kingsley said. “On the positive side, e-commerce has bumped demand for warehouse space, with more people shopping online. Those looking for space include the Amazons of the world and last-mile distributors that focus on delivering from an Amazon warehouse to someone’s door.”
Total vacancy grew from 4.7% to 5.3%. About 1.58 million square feet of new construction were delivered, bringing the total square feet on the market to 220.28 million square feet, while 214,072 square feet were absorbed. New construction delivered in the second quarter included Miami Central Commons in Doral, Bridge Point Commerce Center and Eastview Commerce Center in Miami Gardens, and Miami International Tradeport in Medley.
“The average direct asking rate increased from $9.75 to $9.77 per square foot. Rates are expected to remain the flat,” Kingsley said. “Landlords are firm on rent. A landlord would rather wait instead of giving a great deal.”
Total vacancy rose from 6.5% to 7.2%. The overall industrial market had a total of 120.58 million square feet, including 732,956 square feet of new construction. The county experienced a negative net absorption of 282,127 square feet.
The average direct asking rate inched up from $9.18 to $9.19 per square foot.