Miami Industrial Real Estate Market Shows Signs Of Correction As Construction Slows

Miami’s industrial real estate market is shifting as demand eases from recent highs, according to Edward W. Easton, chairman of The Easton Group.

While deals are still being made, transaction volume has dipped due to a growing gap between buyer and seller price expectations.

Rental rates remain relatively stable, but Easton foresees a modest correction of around 8% over the next year. Occupancy has slipped slightly from about 98% to 95%, pointing to a more balanced market. At the same time, capital has become more cautious, and deal timelines are stretching as decision-making slows.

New development has cooled significantly. With total development costs—land included—averaging about $350 per square foot, and market rents hovering near $15 per square foot, projected returns of roughly 4.28% fall short of justifying new projects. As a result, most developers, including The Easton Group, are holding off on new starts. Projects already underway will continue, but future developments are likely on hold until construction costs drop or rents rise enough to make them viable.

Given ample existing supply, there’s little urgency for new construction. Instead, The Easton Group is focusing on acquiring existing buildings, especially those with below-market in-place rents. This strategy allows the firm to sidestep current development hurdles while positioning for future rent growth.

Despite some pressure in the commercial mortgage-backed securities space, Easton doesn’t expect widespread distress. Banks are generally stable, and both debt and equity markets remain active. Although certain asset classes may see isolated trouble, the broader industrial market in Miami appears resilient, with no signs of systemic weakness.

Source: citybuzz