South Florida industrial landlords experienced less tenant demand in the first quarter, but asking rents remained high across Miami-Dade, Broward and Palm Beach counties, a recent report shows.
As the year progresses, warehouse owners will likely curtail rent increases, as some landlords are already lowering their asking rents to maintain leasing momentum, the CBRE report states.
The first quarter also didn’t produce much action on the industrial deal front. Broward and Palm Beach counties did not record any major sales, while only a handful took place in Miami-Dade during the first three months of the year.
In January, Miami-based Midtown Capital Partners bought an Opa-locka warehouse complex for $22 million from Boston-based TA Realty. A month later, Boca Raton-based IP Capital Partners paid $25.7 million for a cold storage facility near Miami International Airport. And in March, Boston-based Longpoint Partners sold a warehouse near Miami Gardens for $43.5 million to New York-based Corebridge Real Estate Investors.
Once fueled by scorching demand for e-commerce distribution facilities during the pandemic, South Florida’s industrial market could experience short-term volatility in the coming months due to economic uncertainty resulting from the Trump administration’s trade war, the report states.
Miami-Dade County
Construction of new industrial space in Miami-Dade dropped to 5.1 million square feet in the first quarter, down from 7.5 million square feet in the same period of last year, the report shows. Landlords also saw more empty spaces, as the vacancy rate rose to 5.7 percent during the first quarter, compared to 3.6 percent during the same period of last year.
Still, the average asking rent in the first quarter climbed to $16.04 a square foot, compared to $15.55 a square foot during the first three months of 2024, the report shows.
Broward County
After several years of “robust development activity,” construction of new warehouses in Broward is starting to taper, the report states. No new projects broke ground in the first quarter. Landlords experienced an increase in empty warehouses too. The vacancy rate jumped to 4.1 percent in the first quarter, compared to 3.8 percent during the same period of last year, the report shows.
During the first quarter, only one tenant, Transpire Bio, signed a lease for more than 100,000 square feet, CBRE found. A majority of the leasing activity was the result of tenants signing for spaces under 25,000 square feet.
Still, the average asking rent rose to $15.48 a square foot during the first three months of this year, compared to $14.79 a square foot during the same period of last year.
Palm Beach County
The pain is getting real for industrial landlords in Palm Beach County. In the first quarter, the county’s warehouse market experienced a negative absorption of 50,000 square feet as a result of a large number of tenants moving out of spaces of under 10,000 square feet, according to CBRE. Palm Beach County is also seeing less demand for tenants seeking warehouses larger than 50,000 square feet.
As a result, the vacancy rate soared to 7 percent in the first quarter, compared to 3.9 percent during the same period of last year, the report states.
Landlords took notice, as the average asking rent in the first three months of the year dipped to $15.20 a square foot from $15.88 a square foot during the same period of last year.
