Doral’s commercial industrial rental rates has seen a climb to the point where multi-story vertical warehousing projects are being considered, according to local real estate experts.
The process of developing and planning vertical warehouses is more expensive for owners due to specific accommodations to operate, said Matt Rotolante, president of Lee & Associates.
“In order for a multi-story warehouse, which has been feasible in New Jersey, ramps need to be created for the trucks to get in and out without too many issues,” Rotolante said, “and in order to accommodate all that, you have to have rental rates that are high enough where such a project becomes feasible. We’re definitely getting to that point. E-commerce style companies, like Amazon, are taking up large boxes to support the amount of demand and traffic their websites are creating.”
Anything under construction in Doral has already been absorbed and leased, said Dalton Easton, a commercial industrial associate at Easton & Associates.
“Pre-leasing activity in Doral on new industrial construction historically was like 40%. Now, I think that number’s up in the 70 % range,” Easton said. “With warehouse space demand only getting stronger, construction costs are going up along with the rental rates, which are at record numbers.”
There are plans to demolish an existing industrial property, formerly known as America’s International Center, at 9380 NW 13th St. in Doral and develop a multi-story building, he said.
“Now, it’s going to be warehouse when they finish but it’s going to be a 32-foot clear reload Class A product,” Easton said. “So, you’re seeing a little bit of that here and around I would say it’s a little bit too expensive for existing product to do that right now. People who are buying existing assets right now they’re just painting, lighting them and making them look nice with new flooring and new offices, and leasing them for a premium.”
Up to 30 days ago, there were zero new deals for above 100,000-square-feet buildings in terms of being vacant and a tenant leasing in the past year, he said.
“The trend we’re seeing now more of is bigger footprints of tenants coming in Airport West and leasing bigger blocks of space. And again, that could be skewed because there hasn’t been much available,” Mr. Easton said.
An example of this trend is a new $64.2 million construction deal of Modlo Air Logistics Center, a three-building, Class A industrial logistics park totaling 495,073 -square- feet in Doral.
Once completed in the spring of 2022, Modlo Air will be a state-of-the-art warehouse facility with modern features such as a 36-foot clear height and 110 dock-high doors. The center will be constructed on a 23.4-acre site at 7777 NW 41st St.
The demand has consistently outpaced net deliveries over the past few quarters, and the vacancy rate has fallen to a decade low of 3%, JLL Capital Markets reported, the firm that finalized the center’s construction deal. Vacancies in the Airport West Industrial submarket have also compressed steeply and sit at 4 %, with submarket rates at a historical high of $16.45- per-square-foot, among the highest in the Miami-Dade Industrial market, according to JLL.
“The stellar location of the asset in Airport West coupled with surging leasing demand and best-in-class sponsorship in Modlo resulted in a seamless execution on the construction financing.” Said Melissa Rose, who led JLL’s transaction team.