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Five developers filed land use amendments for industrial development in the Agricultural Reserve in southwest Palm Beach County.

All five applications are in response to a county-initiated process to establish a Commerce Future Land Use category in the Agricultural Reserve to allow light industrial projects. The County Commission is set to vote on this in August.

The Agricultural Reserve is traditionally a rural and agricultural area. Most of the development allowed there has been for single-family homes, creating one of the fastest growing neighborhoods in South Florida. Residential developers must set aside land for preservation in the Agricultural Reserve, and industrial developers would be required to do the same.

Five sites in the Agricultural Reserve in Palm Beach County have been proposed for light industrial development.
(MAP CREDIT: JMORTAN PLANNING & LANDSCAPE ARCHITECTURE)

Amid huge demand for industrial space throughout Palm Beach County, all of the industrial land along Atlantic Avenue just east of State Road 7 has been approved for development and there’s a need for more development to serve the residents, said Lauren McClellan, senior project manager for Palm Beach Gardens-based JMortan Planning & Landscape Architecture, which represents all five land use applications.

“Now that most of that pre-existing industrial land has been entitled, it is apparent that the demand for various types of industrial space (including but not limited to office warehouse, landscape services, cold storage, and last mile distribution) continues to grow,” McClellan said. “If the Board of County Commissioners adopts the Commerce language in August these five applications will become requests for the Commerce Future Land Use designation.”

Gunster attorney Brian Seymour, who represents Fort Lauderdale-based BBX Capital Corp. in the largest application, said it was filed so the company could get a head start on the long process of a land use change amendment so it will already be in the works should the County Commission approve the Commerce designation. He noted that the light industrial category would not permit heavy industrial uses or self-storage facilities, but it would be appropriate for small-bay warehouses, last-mile distribution centers, and cold storage.

David A. Menchof, an associate professor of supply chain and operations management at Florida Atlantic University, authored a letter for BBX stating that building last-mile distribution centers in the Agricultural Reserve would reduce traffic because goods can reach residents there faster without having to be delivered from distribution centers further away.

Here’s a look at the five applications:

  • State Road 7 Business Plaza: BBX Capital has 40 acres at 9863 and 9773 Happy Hollow Road under contract from Suzanne, Diana, and James Mulvehill. The maximum potential would be 600,000 square feet of light industrial space or 315,000 square feet of flex space with office and light industrial.
  • Boynton Land Commerce: The 8471 Boynton Beach Land Trust, led by Peter Patel in Boca Raton, acquired 15 acres at 8421 S. State Road 7 for $8.53 million in 2021. The land use amendment would permit up to 294,030 square feet of light industrial.
  • BC Commerce Center: BC Boynton Industrial LLC, managed by Malcolm Butters of Coconut Creek-based Butters Construction & Development and Jon Channing in Palm Beach Gardens, has 9.3 acres at 8255 Boynton Beach Blvd. under contract from Paul B. Dye, Randall Thorne, Kimberly Tiernan, Martha Ely and Randy T. Ely. The land use amendment would permit up to 181,515 square feet of light industrial.
  • EJKJ Industrial: Fort Lauderdale-based EJKJ Development LLC, managed by Donald M. Allison and Edward Jackson, paid $3.36 million in April for 7.9 acres on the west side of State Road 7, across from Rio Grande Avenue and just south of Atlantic Avenue. The land use change would allow up to 155,444 square feet of light industrial.
  • Morin/Connolly Commerce: Howard C. Morin, the Robert Morin Trust, and Carol A. Connolly are the long-time owners of 3.4 acres at 9819 S. State Road 7, which currently has 4,040 square feet of warehouse and storage space, along with truck parking. The land use change would permit up to 66,843 square feet of light industrial.

The County Commission is also considering a county-initiated land use change to permit apartment projects there.

 

Source: SFBJ

 

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Bridge Industrial paid $20 million for the Park ‘N Fly lot serving Fort Lauderdale/Hollywood International Airport.

Atlanta-based PNF-FLL LLC, part of the company that operates Park ‘N Fly in multiple cities, sold the 22.4-acre site at 2200 N.E. Seventh Ave. in Dania Beach to Bridge Point Dania 161 LLC, an affiliate of Chicago-based Bridge Industrial. It’s located between the airport and Port Everglades.

The property last traded for $4.8 million in 2017.

On its website, Park ‘N Fly says the Dania Beach location will close after June 26. Two privately-owned off-site parking lots remain for the airport.

 

Source: SFBJ

Paris, France - December 15, 2016: Amazon Prime Parcel Package. Amazon, is an American electronic commerce and cloud computing company,based in Seattle, Washington. Started as an online bookstore, Amazon is become the most importrant retailer in the United States by market capitalization

Amazon.com Inc. is expected to scale back its warehouse holdings nationally, including in Broward County.

At a June 8 public meeting, John Biggie, chairman of the Coral Springs Economic Development Advisory Committee and principal of JBI Development, said the Seattle-based e-commerce giant has “nixed” plans to move into 225,000 square feet within the Commerce Park of Coral Springs, at 4000 N.W. 126th Ave. The facility was slated to hire 200 people, according to previous announcements from Amazon.

Yuri Quispe, a broker with JLL and a member of the committee, said Amazon will also pull out out of a lease deal that it signed 2.5 years ago at a couple warehouse facilities near Sample Road and the Florida Turnpike.

In May, it was widely reported that Amazon executives said the company was losing billions of dollars due to fewer e-commerce sales and an overabundance of warehouses. As a result, the company planned to shrink its national industrial footprint.

Within South Florida, Amazon controls 8.7 million square feet of distribution space. Of that amount, about 2.3 million square feet has yet to be occupied, according to figures from CoStar Group.

Aside from Commerce Park, a source said Amazon has yet to fill an 823,000-square-foot facility at 4600 N. Hiatus Road in Sunrise, a 216,000-square-foot facility at 3750 Palm Drive in Homestead, and 1 million square feet at 13200 S.W. 272nd St. in unincorporated Miami-Dade that it purchased in 2020.

Keith Graves, senior VP of Berger Commercial, said that in the “big scheme of things,” Amazon will have a minimal impact in this industrial market, which has more than 45 million square feet of inventory.

“We are in the single digit vacancy rates. It’s not going to have a dramatic effect,” Grave said.

Nationally, the industrial market is shattering records. However, Quispe and Biggie warned that rough times may be ahead for Coral Springs’ industrial sector.

“We are starting to hear key indicators of leasing activity drying out and demand slowing, of not enough money to put a down payment,” Quispe said during the meeting. “All these ingredients are adding up … and if we are not proactive … when it hits it is going to be very bad.”

Biggie added: “The market has changed dramatically in the past 60 days.”

The 430,000-square-foot Commerce Center of Coral Springs was built in 2018 by Pennsylvania-based EQT Exeter. Exeter paid $14.88 million for the site a year prior. EQT Exeter sold Commerce Center to an unknown buyer in late 2021 as part of a $127.8 million deal. EQT Exeter still manages the site.

 

Source: SFBJ

 

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It’s rare for a property type to extend a growth cycle beyond a decade. But industrial real estate’s dominance only seems to grow — attracting newcomers while big players scrap for the materials and land they need to keep their projects moving and potential clients happy.

While longtime powerhouses like Prologis and Panattoni plow forward with their own mammoth projects — and Amazon admits that it has too much industrial space on its hands — other companies are making their debut, hoping to seize on some of the continued demand and expanding yields.

Although the industrial market has been on an expansion trajectory for years, there seems to be plenty of room for newcomers.

“It’s no secret why industrial is doing so well, with the e-commerce boom really accelerated by what’s happened in the last couple of years with the pandemic,” said Scannell Properties Director of Development in Southern California Jay Tanjuan. “People were almost forced to order online, and many realized how convenient it was. E-commerce has huge demand, and so there’s the need for warehouse.”

There seems to be widespread consensus that the industrial heyday is far from over.

“We’re in an ongoing industrial real estate boom. We had been in an above-average growth phase pre-pandemic and obviously, the pandemic accelerated that. Post-pandemic, it continues to grow,” said RBC Capital Markets Director Michael Carroll, an analyst who covers Prologis and other REITs. “I don’t think we’re at the end of it, it’s still ongoing.”

Carroll pointed to the nationwide vacancy rate for industrial space — 3.3% in the first quarter, according to Cushman & Wakefield, with lease rates up 15.2% on average compared to a year ago — and a rapid pace of leasing that means new spec development is snapped up as soon as it’s finished, if not before.

Among the industrial newcomers is Peterson Cos., the Virginia-based developer of residential communities, huge retail districts and data centers. Peterson took the plunge into industrial development last year, and has two projects totaling 334 acres underway in the Washington, D.C., area, with another 915 acres in the planning stages, according to Peterson President of Development Taylor Chess.

“We started looking at industrial eight to 10 years ago, seeing that as the wave of the future,” Chess told Bisnow. “We felt as though distribution was going to become a much more integral part of the retail market. But we kept getting beaten out by people buying land for data centers, so we pivoted to data centers.”

Now, as the company’s initial prediction proved out, hastened along by the pandemic, Peterson doubled down on its efforts, launching an industrial arm in earnest to capitalize on the staggering demand.

 

“There’s no question that internet sales and distribution were going to become a key industry eight years ago, and that’s why we started teeing it up. We had no idea it was going to accelerate as fast as it did,” Chess said.

Peterson’s not alone. Nationwide companies that have operated successfully for decades in other property types are also diversifying their efforts by turning to industrial.

South Carolina-based Greystar, for example, is a bastion of multifamily development and management, with thousands of units in major markets across the country. But Greystar in March paid $43.7M for 154 acres near the Phoenix airport, setting up the company’s first large-scale industrial project. Greystar got a leg up on its foray into a new product type by purchasing a parcel with plans that were already approved by the local planning authority. Greystar will work with a development team assembled by the former owner of the land, a Phoenix-based company called Unbound Development, according to a press release announcing the deal.

Similarly, private equity giant KKR & Co. earlier this month announced a dramatic push into industrial development, with plans to build 1.8M SF worth of mid-sized warehouses in last-mile distribution locations in Atlanta, Dallas, Denver, and Orlando, Florida.

And Tishman Speyer, known for its office buildings, hired Andy Burke, formerly of industrial developer Terreno Realty Corp., as its managing director to oversee industrial acquisitions and development. Tishman Speyer in December 2021 announced that it acquired two middle-mile distribution centers in Colorado and Pennsylvania.

Each of these new entrants to the industrial market appears to have a focus on last-mile distribution, which is basically the white whale of industrial development right now, according to Carroll, thanks to its demand paired with a lack of available land.

“Companies are trying to build industrial warehouses close to consumers because it reduces shipping costs and labor costs,” Carroll said. “It’s important to be as close to consumers as you can, but most cities don’t want industrial warehouses because they want the highest value for their tax base and the least traffic. It’s hard to build industrial warehouses where they actually need to be.”

The lack of available land is something about which Chess at Peterson knows a lot.

“This has never been an industrial market, it’s always been a government market,” Chess said of his company’s target market around the nation’s capital. “Zoning is a challenge, as well as finding large tracts of land. Many other areas have large industrial sections of their metro area that have already been designated or are being redeveloped from manufacturing. D.C. doesn’t have that, so finding the right location has been a challenge.”

Land availability is just one of the challenges for any company trying to develop industrial properties right now. Shipping delays and turbulence in markets and foreign countries continue driving up the cost of materials, and labor is difficult to find in most markets. This doesn’t just make buildings cost more, it impacts a key factor for potential industrial tenants: speed to market.

“The biggest issue with leasing is that when tenants enter the market, they want it now. That is the biggest issue. The tenants are there, but we have to finish building to be able to put them in. That’s why going spec is so important,” Chess said.

With so much competition for land, materials and labor, the addition of new players to the marketplace could be considered a negative for existing companies that are already battling to get what they need.  But Tanjuan says that for those who are committed to the product type, there’s a way forward.

“There are opportunities out there for everybody,” Tanjuan said. “It’s competitive, and finding space is extremely difficult, but there are opportunities out there. If you’re out there and being proactive, you’re going to run into something.”

 

Source: Bisnow