Last week Andrew and I presented the 2014 Miami-Dade County Industrial Market Study to over 170 members of the Commercial Industrial Association of South Florida and guests. This is the 18th year we have reported on the industrial market conditions in South Florida.
The Market Trends Section reported a growth in industrial space for the year of 2012 of just over 456,000 SF a decrease of 336,000 SF from the prior year. The industrial employment sector shows an increase of 6,800 to over 172,300 employed. For the year of 2013 projected total freight at the Port of Miami decreased by 1.6% while freight through Miami International Airport increased by 3.3%.
The Market Activity Section shows volume of warehouse sales over 10,000 SF at 137 properties with an increase in the average sale price to $56/SF. While the dollar amount of sales increased by 54% to $397,870,850 with an average building size of 49,000 SF.
All though the market continues to improve there is concern that rental rates and sales prices are reaching a peak. This results from an increase in the supply of quality industrial buildings coming online in 2014 and sales prices of existing buildings not supported by rental rates.
The newer industrial buildings feature a minimum 30’of clear interior height, 54’ wide column spacing allowing for 4 loading doors, rear loading truck access with large parking aprons and easy truck access. Interior improvement include T-5 high efficiency lighting systems combined with motion activated switches, EFSR sprinkler systems , windows over the loading door for natural light and high quality interior finishes in the office areas with 9 to 12’ ceiling heights.
Strongest demand is for space between 10,000 SF and 30,000 SF. Landlords should reposition larger blocks of vacant second generation space, or older 24’ clear height product and subdividing these larger vacant spaces into smaller bays in order to target smaller tenants in the market seeking from 20,000 to 50,000 SF.
Some landlords are offering a Rent Abatement. Typically, tenants are able to receive one month of total free rent for every three years of lease terms and two months free rent for every five years of the lease term.
Unlike previous years where we noted that Miami had become a temporary storage and transportation hub, manufacturing is on the rise. Latin America companies are moving their operations to Miami-Dade for political and economic reasons. These include food processing and aviation companies. In addition, medical drug and equipment manufacturing is active with some tenants purchasing their own facilities.
The market continues to improve, with lower vacancy rates, rental rates $.50 to $1.00/SF higher than last year and continued demand for industrial space from both a rental market and purchase market perspective.
Tenants seem doubtful that the new Panamax Ships/Larger Port will benefit them directly. However we do see the possibility of larger amount of perishable goods that need cooler space coming through on the ships from South America.
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