The industrial party in South Florida seems poised to roll on in 2020.
As e-commerce giants increasingly seek out large warehouse spaces and interest from investors like Blackrock and Prologis grows, industrial prices in South Florida have skyrocketed over the past few years. Miami-Dade and Broward counties outperformed Palm Beach in the fourth quarter, the latter of which suffered due to the ongoing trade war.
In Miami-Dade, industrial completions reached an all-time high, according to a recent report by Avision Young. Over 5.6 million square feet of industrial product was added to the market, growing local inventory by nearly 3 percent. Most of the product is being absorbed, with net absorption totaling 3.4 million square feet at the end of 2019.
Despite the sprawling industrial properties being completed in Miami-Dade County, vacancy rates still remain low at 4.06 percent for the year.
Rents to continue rise, increasing to $8.89 per square foot in the fourth quarter of 2019 from $8.36 per square foot in the fourth quarter of 2018, according to Avison Young.
In Broward County, nearly 2.7 million square feet of industrial space was completed. This was the highest amount of completions in a single year since 2002, according to Avison Young.
Of the total construction completions during 2019, 1.1 million square feet was delivered in Pompano Beach alone, which included three buildings at Bridge Point Powerline Road and buildings at Rock Lake Business Center.
Vacancy rates rose to 4.9 percent in the fourth quarter of 2019 from 2.98 percent in the fourth quarter of 2018, according to Avison Young. Most of the new industrial projects were delivered in the second half of 2019, which means the vacancy rate could decrease in 2020 as these properties get leased, according to Avison Young. The overall average asking rate continued to rise to $9.75 per square foot in 2019, an increase of 5.2 percent increase from year-end 2018.
Palm Beach County
Palm Beach County’s industrial market, which has a strong foothold in manufacturing, slowed in 2019 compared to 2018 due to the ongoing trade war and tariffs, according to Avison Young.
Vacancy rates increased slightly to 3.52 percent in the fourth quarter of 2019, from 2.84 percent in the fourth quarter of 2018.
Vacancy rates rose due to an additional 220,000 square feet of speculative space at the Palm Beach Park of Commerce being completed, according to Avison Young. The average asking rental rate also saw a 4 percent dip year-over year to $8.42 per square foot due to the addition of bulk distribution space.
In Palm Beach County, industrial investment activity rose significantly in 2019 with investment sales volume totaling $283.6 million, an 50.2 percent jump over the investment sales recorded at the end of 2018.