Miami-Dade County is among the Top 15 U.S. markets that have lagged behind in building new industrial space to meet demand, according to a recently released report from Newmark Group.
“Pandemic-related labor disruptions” and “community pushback” against industrial development are to blame for the nationwide slowdown in new construction for logistics companies, according to the New York City-based real estate advisory company.
“Another factor that’s propelling demand for industrial space despite the lack of supply: companies hoarding materials — including construction materials — in the wake of continued supply-chain issues spurred during the pandemic,” said Steve Medwin, executive managing director of industrial at Newmark’s Miami office. “Instead of just-in-time inventory, companies are stockpiling more so they don’t run out. Both of those factors cause more problems in the supply chain. And those supply chain issues, in turn, have made it so projects take longer to construct, including industrial developments, especially in the speculative space. These supply chain issues will persist for sometime. From what we’re hearing, 2023 or 2024 is when things will return to normal.”
For South Florida and other big markets, consumer habits come into play. As residents increasingly order from e-commerce companies including Amazon, demand from these companies for local warehouse and distribution centers accelerates even faster.
“In the past, it would take nearly a year for new industrial spec space in Miami-Dade to be 100% leased. Now, they’re being filled in less than three months,” Medwin said. “We’re seeing pre-leasing activity that’s not been seen before.”
Within Miami-Dade, only 14.2 million square feet of the county’s 223.6 million square feet of industrial was constructed between 2015 and 2021, according to Newmark. The county’s vacancy rate in the fourth quarter was 2.7%, a historic low for Miami-Dade, according to another recent industrial report put out by Colliers International. The industrial square footage developed in Miami-Dade in the last five to six years was far smaller than what was built in 14 other markets listed in Newmark’s report during the same time.
Miami-Dade’s vacancy rate in the fourth quarter was also lower than 11 of the 14 other markets listed in the Newmark report. The three places that managed to have lower rates than Miami-Dade were the Inland Empire (0.8%), Salt Lake City (1.8%), and Los Angeles (1.1%) areas. Other regions had vacancy rates ranged from 3.1 % (for northern New Jersey) to 7.2% (for the I-81/78 Corridor in Pennsylvania, where 71.8 million square feet of industrial was built in the past six years).