South Florida’s industrial real estate market’s second quarter proved to be its strongest period in three years, according to a recently released report from Newmark Knight Frank.
In the second quarter, South Florida’s industrial market saw a 51 percent uptick in net absorption, representing the amount of space leased rather than vacated. Net absorption totaled 1.4 million square feet in the second quarter, up from 926,350 square feet in the same period of last year, according to the report.
The absorption comes amid an influx of more than 7.2 million square feet of new supply developed in the past 12 months, which led to increased vacancy rates. According to the report, South Florida is on pace this year to exceed the record-setting 8 million square feet of midsize to large lease deals recorded in the previous two years.
Miami-Dade County accounted for most of the absorbed space, with about 1 million square feet of space absorbed in the second quarter, up from about 850,000 square feet in the second quarter of 2019.
Amazon inked the two biggest leases in the county. The e-commerce giant leased 216,000 square feet at Prologis Distribution Center near Miami International Airport, and 211,000 square feet at 5700 Northwest 37th Avenue in Hialeah.
The average asking rent in Miami rose to $8.31 per square foot from $8 per square foot in the second quarter of 2019. The vacancy rate rose to 4.5 percent from 3.7 percent over the same period. The delivery of space increased, year-over-year, to 1.1 million square feet from 668,214 square feet, according to the report.
Broward also saw a big uptick in absorption in the second quarter. Over 316,000 square feet of industrial space was absorbed, up more than threefold from 94,216 square feet in the second quarter of 2019, according to the report.
Amazon again signed the largest lease: 252,000 square feet at 2800 North Andrews Avenue in Pompano Beach.
Asking rent increased to $9.60 per square foot in the second quarter from $9.29 per square foot in the same period of 2019. The vacancy rate increased to 5.4 percent from 4.4 percent over the same period. The delivery of space fell to 534,727 square feet from 623,345 square feet, according to the report.
Palm Beach County
Palm Beach County experienced a sharp uptick in absorption, year over year. Absorption totaled 118,782 square feet in the second quarter, up from a negative absorption of 23,839 in the same period a year ago.
Millwork Sales inked the largest lease, renewing its 152,390-square-foot lease at the Southern Mills Business Park in Royal Palm Beach.
Asking rent rose to $9.74 per square foot from $9.68 per square foot in the second quarter of 2019. The vacancy rate increased to 4.9 percent from 4.1 percent, while the delivery of space nearly doubled to 146,253 square feet from 77,870 square feet, according to the report.
South Florida has also seen a number of industrial deals during the pandemic, as developers seek to buy or build facilities to accommodate the rise in e-commerce and last-mile distribution.
Earlier this month, Bridge Development Partners and PGIM Real Estate bought a 20-acre site in Hialeah, with plans to build a spec cold storage facility. The project could be South Florida’s first-ever cold storage project built on spec, or with no immediate buyer.
Also in July, Dalfen Industrial acquired a West Palm Beach industrial facility leased to Serta Simmons for $25.3 million.