Miami’s already-robust industrial market experienced its best year ever in 2021, according to a report released this week by real estate brokerage JLL.
Vacancy rates fell to new lows, rental rates reached new highs and absorption crushed the old record, JLL said. Miami-Dade’s industrial boom comes with downsides, too, as users struggle to cope with rising costs.
“The tight market will continue as the industrial sector runs out of development sites,” Sky Groden, an industrial real estate adviser and executive managing director at JLL, told Commercial Observer. “There’s just a fixed amount of land for future development in South Florida.”
On the vacancy front, just 2.6 percent of Miami-Dade County’s 193 million square feet of industrial space stood empty at the end of 2021. That was down 2.7 percentage points from a year earlier. Among submarkets, North Central Dade led the way with a 1.4 percent vacancy rate, followed by East Dade with 1.6 percent vacancy. Airport West, the county’s largest submarket with 44 million square feet of industrial space, reported a 3.1 percent vacancy rate.
Among the year’s big deals, Home Depot occupied more than 1 million square feet in Northwest Dade, and City Furniture moved into 290,000 square feet in North Central Dade. And Amazon has been aggressively shopping for space.
With demand strong and vacant space limited, rental rates are rising. Average asking rent rose to $10.30 per square foot at the end of the year, JLL said. And every submarket experienced increases. Landlords across South Florida boosted rents by $1 to $3 per square foot during 2021.
One crucial factor was absorption. The Miami-Dade industrial market absorbed 7.8 million square feet for the year, easily outpacing the previous record of 4.3 million square feet of absorption, set in 2015. More than a third of the market-wide absorption occurred in the Northwest Dade submarket, which recorded 2.8 million square feet of positive leasing activity for the year.
Miami’s industrial market has long been driven by cargo traveling through Miami International Airport and PortMiami. But a new generation of e-commerce users is creating additional demand, JLL said.
The county’s industrial market also has experienced a flurry of sales activity.