Duo To Bring 250K-SF Industrial Development To Commerce Park In Jupiter

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Woodmont Industrial Partners and Butters Construction & Development have begun construction on a 250,000-square-foot warehouse logistics facility located within the Palm Beach Park of Commerce in Jupiter.

The property will sit on a 16-acre site that was purchased by Woodmont Industrial Partners and Butters Construction & Development in December 2021. The facility will feature 36’ clear height with 48 dock doors, two drive-in doors and ample automobile parking spaces. Completion is expected in Q2 2023.

Christopher Thomson of Cushman & Wakefield will serve as leasing broker for the property.

The 1,300-acre master-planned Palm Beach Park of Commerce offers rail service, foreign trade zones, heavy industrial options and access to Interstate 95, Bee Line Highway and the Port of Palm Beach.

Woodmont Industrial Partners and Butters Construction & Development currently have eight additional parcels in the Palm Beach Park of Commerce slated for development in the next 24 months that over 1.6 million square feet.

 

Source: ConnectCRE

The Buildup And Outlook For Florida’s Industrial Market In 2023

Industrial assets built throughout Florida between 2015 and 2022 have led to record-setting development totals never before seen in the state’s history.

One key measurement of the success of new supply is property stabilization rates. (Assets are considered stabilized once 90 percent of the building is leased.) Over the past five years, Jacksonville and Miami ranked as the top two markets in Florida to stabilize in the shortest period of time. Jacksonville leads the state with an average of 1.6 quarters to stabilize, while Miami trails shortly behind, averaging 2.1 quarters. The Tampa market rounded out the top three with an average of 2.7 quarters.

Florida began preparing for the industrial boom over a decade ago, adding infrastructure growth projects at the ports and rail transportation in preparation for the expansion of the Panama Canal. That, coupled with the unforeseen and expedited rise of e-commerce as a result of the global pandemic starting in 2020, pushed industrial into the spotlight of the commercial real estate industry. Since then, Florida’s robust population growth, coupled with its pro-business and low tax policies, have catapulted record demand, booming development, and limited supply of available industrial space in key markets.

The Buildup Since 2015

Industrial developers have taken advantage of the strong economic benefits. Statewide the leaders in this category include Prologis, McCraney Properties and Flagler Real Estate. Since 2015, Prologis has delivered 36 buildings totaling 7.9 million square feet — the most in the state. Primarily focused on South Florida, the company has achieved 24 deliveries totaling 4.5 million square feet in the region.

Prologis also leads in total acquisitions of industrial properties (in addition to its acquisition of Duke Realty’s portfolio), with Blackstone and McCraney trailing closely behind. Foundry Commercial is another active buyer, with a major focus on the Orlando market. With more 2023 deliveries arriving in the coming months, these buyers will likely continue to scoop properties off the market to add to their investment portfolios.

Florida construction activity also remained strong at the close of 2022, with more than 23.1 million square feet of industrial assets underway throughout the key markets, of which approximately 31 percent is already preleased. The Miami market leads the charge with fully half of its 4.2 million square feet under construction already preleased.

At the end of the fourth quarter of 2022, all Florida markets maintained their high occupancy rates with an average of only 3 percent vacancy across the state. The high level of leasing demand positions Florida as a top contender among the Southeast. Remaining available space under construction continues to be a necessity as limited supply persists and magnifies the need for a large quantity of industrial space to enter the construction pipeline.

Expectations For 2023

Following the records set during the industrial boom, we are entering a more leveled-off market starting in 2023. These slowdowns are no cause for concern and are a natural correction to the abnormal market activity we have experienced over the past few years. Looking ahead, we can expect more leveled-off activity across the state of Florida with slight growth happening in markets such as Miami and Jacksonville.

Jacksonville has been on an upward trend for many years, and the start of 2023 indicates that it should continue. The market is projected to deliver over 8 million square feet of industrial space in 2023, and the current tenant demand indicates that the majority of the new space will be full by the end of the year.  Rental rates will most likely increase as a result, but still be the cheapest option in Florida, making the northeast part of Florida an attractive option.

In Central Florida, tenant demand remains robust despite economic headwinds. Over 14 million square feet of demand from tenants is being tracked, which far exceeds the available supply, indicating that rental rates are likely to rise there as well.

Finally, in the South Florida metro area, scarcity of well-located developable industrial land, strong lease absorption and rent growth statistics, as well as the continued influx of new residents to the state and region, will help ensure the further stabilization and healthy growth of the industrial market.

 

Source: Commercial Observer

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Two CRE Signals To Watch This Year

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With uncertainty and market readjustments being some clear watchwords for 2023, knowing how and where to pivot becomes both necessary and challenging.

A recent Hines report noted that investors, owners, and operators can’t completely rely on what happened in the past because every cycle has its own quirks.

“Recognizing what is different and what may at least rhyme with previous cycles can provide insight into how to navigate what is both challenging, as it relates to existing holdings, and opportunistic, as it relates to the potential to deploy capital in a more sober and attractive pricing environment,” the firm wrote. “All parts of the cycle require a bit of both defense and offense.”

Two factors at work are upward pricing pressure of financing (if it’s available at all) and the “shortage of broader seller capitulation thus far,” which GlobeSt.com has also described as a lack of current price discovery. Defensively preserving capital and looking for opportunities will vary by global geography.

In the US, “commodity Class A office appears fairly illiquid at the close of the year, but bidding pools remain healthy in the industrial and multifamily markets, albeit thinner than at the start of 2022.”

There are two broad signals that Hines suggest watching. First is changes in transaction volume.

“With a longer time series of transaction volume in the U.S. spanning multiple cycles, we can observe the historical relationship between volume and price growth,” they wrote. “Unfortunately, the relationship is concurrent rather than predictive but the stabilization of transaction volume and subsequent increase during past cycles has been a good sign that prices found a bottom and should begin to rise if volume continues to rebound.”

Which makes sense. Given what GlobeSt.com has heard from multiple sources, with a lot of capital waiting on the sidelines ready for deployment, there’s already anticipation that transaction volumes could start changing soon. But that will likely vary significantly by region, just as markets do. Rather than settling for an eye on national transaction volumes, a focus on regional ones is more likely to give an indication whether specific markets are likely to offer an opportunity.

The second signal: rising availability of traditional debt.

“In the third quarter, the Federal Reserve’s Loan Officer Survey (from which 2022 data is derived) showed that 50% of survey respondents reported tighter underwriting standards for commercial real estate loans, comprised of 57.6% for construction and land development loans, 52.9% for non-farm, non-residential loans, and 39.7% for multifamily properties,” they wrote. “All three categories recorded a significant increase from a year ago when banks reported they were loosening their standards in the second half of 2021.”

 

Source: GlobeSt

Easton Group Breaks Ground On Riviera Beach Warehouse With $12M Loan

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An affiliate of Easton Group broke ground on a warehouse near the Port of Palm Beach in Riviera Beach after obtaining a $12.13 million construction loan.

Rosemont, Illinois-based Village Bank & Trust provided the mortgage to SFG ISF Riviera MLK LLC, a partnership between Doral-based Easton Group and Atlanta-based Stonemont Financial Group. It covers the 8.9-acre site at 1463 Dr. Martin Luther King Jr. Blvd.

Davie-based Excel Construction of Florida recently filed notice with the county that it started work on the stie. The warehouse will total 34,500 square feet, including 3,000 square feet for office space.

The developer purchased the site for $6.5 million in 2021.

 

Source: SFBJ

Industrial Vacancies Drop, Rents Increase Despite Record New Supply

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Industrial real estate rents increased and vacancies continued declining through November of 2022 despite a record amount of new supply hitting the market, according to the latest U.S. industrial market report from CommercialEdge.

Released just before Christmas, the report found that rents on in-place leases rose 6.5% nationally year over year, while the national vacancy rate dipped to 3.8%.

The new development pipeline also continued to increase, overcoming inflation-driven backlogs and bottlenecks along the supply chain. There were 742.3 million square feet of industrial space under construction as November ended, CommercialEdge reported.

Port markets led in November in both new leases and in-place rent growth. In line with trends seen in the past two years, Southern California in-place rents have climbed at the fastest rate, driven by double-digit growth in the Inland Empire and Los Angeles. On the East Coast, Boston and New Jersey saw the strongest rent hikes.

 

Source: ConnectCRE