Tag Archive for: retailers

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Bigger is better when it comes to South Florida industrial leases.

Across Miami-Dade, Palm Beach and Broward counties, major retailers and shipping services like Target and FedEx leased 2.8 million square feet of industrial space in the largest leases of 2022, far outstripping last year’s total of 2.2 million square feet.

Amazon was notably absent from this year’s roundup of the top 10 leases. The e-commerce giant clinched three of the top 10 spots last year. In May, news broke that Amazon sought to sublease at least 10 million square feet of its existing space — a reversal from its pandemic-era practice of gobbling up as much space as possible.

The average lease size of the top five leases this year came to 362,000 square feet, which is above last year’s 258,530 square feet, but still below 2019’s average of 449,000 square feet.

Here’s a breakdown of the top five industrial leases signed this year in South Florida.

Imperial Bag & Co., Hialeah, 506K sf

Five out of the top 10 largest leases were inked for properties in Hialeah, with New Jersey-based Imperial Bag & Paper Co. (ImperialDade) taking the top spot, both in Hialeah and overall. In the second quarter, company representatives signed a lease for 506,000 square feet at Countyline Corporate Park on Northwest 102nd Avenue in Hialeah. The company distributes janitorial supplies and food service packaging.

FedEx Ground Package System, Medley, 501K sf

FedEx leased 501,000 square feet in Medley in the first quarter. It’s the only non-Hialeah lease in the top five. The shipping behemoth took over one of the warehouses at Miami 27 Business Park at 10300 Northwest 121st Way, according to published reports. FedEx has long been interested in South Florida industrial properties. Last year, Industrial Outdoor Ventures outbid FedEx for the 38.5-acre site at 3055 Burris Road in Miami. The winning bid was $64M.

FreezPak Logistics, Hialeah, 312K sf

FreezPak Logistics took this year’s third largest lease at the same Countyline Corporate Park in Hialeah as Imperial Bag & Co. It signed a lease for 312,000 square feet in March. This is the first South Florida location for the New Jersey-based cold and dry-storage provider.

World Electric/Sonepar, Hialeah, 267K sf

In the fourth spot, World Electric leased 266,760 square feet at Beacon Logistics Park at 4220 West 91st Place in Hialeah during the first quarter. A subsidiary of South Carolina-based Sonepar, North Miami Beach-based World Electric in September announced it inked a deal to acquire Advance Electrical to increase the company’s presence in Atlanta. The company specializes in business-to-business electrical services and equipment.

All Florida Paper, Hialeah, 227K sf

Medley-based All Florida Paper signed the fifth largest lease of the year, during the third quarter. It took 227,700 square feet at Beacon Logistics Park at 4120 West 91st Place in Hialeah. All Florida Paper is a wholesale distributor founded in 1993, according to the company’s website.

 

Source: The Real Deal

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A recently converted warehouse in Fort Lauderdale’s Progresso Village is now 100% leased with retail and office tenants that will altogether employ about 100 people.

Called Fabrick, the former industrial space at 801, 807, 815, and 819 N.E 2nd Ave. has 24,000 square feet of office and retail. The developer, BH3 Management, moved its headquarters from Aventura to the project’s office component in April. It’s larger than BH3’s previous office in Aventura, which was only 5,000 square feet.

The other seven businesses leasing space in Fabrick will employ an estimated 75 people. The final employee count for all tenants will not be known until they have completed their build outs and are open for business, Freedman stated in an e-mail to the Business Journal.

A subsidiary of BH3, BH3 DJ Flagler LLC, bought the warehouse in November 2017 for $2.8 million, according to online records from the Broward County Property Appraiser office. Another subsidiary, BH3 DJ Sub LLC, purchased the warehouse from BH3 DJ Flagler LLC for $1.64 million in May 2020.

After receiving $350,000 in incentives from the Fort Lauderdale Community Redevelopment Agency in December 2020, BH3 launched an adaptive reuse project of the warehouse building.

Besides the incentives, the project was financed through a $5.1 million loan from New York-based Maxim Capital Group.

 

Source: SFBJ

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Retailers, third-party logistics firms and e-commerce groups alike are eating up the most big-box warehouse space in today’s red-hot market.

Retailers and wholesalers accounted for the most industrial deals at 200,000 square feet or larger last year, or 35.8% of all leasing activity, a considerable increase from 24.7% in 2020, according to CBRE Group Inc. E-commerce fell from the No. 1 spot in 2020 to third last year, accounting for 10.7% of all deals, while 3PLs grew from 25.8% to 32.2%, ranking No. 2 among large industrial leases in both 2020 and 2021.

Propelled by a surge in online ordering, and changes to consumer preferences in part because of the pandemic, retailers and 3PLs have ramped up their distribution networks considerably in recent years. That demand is expected to be sustained this year, and could become even more frenzied with the recent surge in gas prices.

The cost of regular gas has risen nationally 20.9% in the past month, from an about $3.50 a gallon to $4.32 on Tuesday, according to figures from Heathrow, Florida-based American Automobile Association Inc.

James Breeze, senior director and global head of industrial and logistics research at CBRE, said transportation accounts for at least 50% of a typical industrial occupier’s costs, even before the recent hike in inflation and oil prices. But, largely because of sanctions imposed on Russia from the war in Ukraine, oil prices have risen dramatically, although Brent crude futures — a key benchmark for oil prices — just began to decline. National gas prices were down 0.2% between Monday, March 14 and Tuesday, March 15, according to AAA.

“Any run-up in transportation costs will likely outpace warehouse rent growth, even while that’s growing at a rapid clip, which could result in even more demand for warehouse space,” Breeze said.

Carolyn Salzer, senior research manager of industrial logistics at Cushman & Wakefield PLC said higher gas prices could have a ripple effect on the industrial market, depending on the user and their supply-chain model. Both Salzer and Breeze said real estate costs for warehouse users have typically been about 5% of a company’s costs but, more recently, that’s gotten closer to 10%, Salzer said.

“If you bite the bullet and pay the more expensive rent to be close to the population center, and be more competitive with the labor pool and provide easier options for commuters to get to where you’re located, it can cut your transportation costs on gas and mileage in general,” Salzer continued.

Cushman & Wakefield is forecasting rent growth for warehouse and logistics space will rise by more than 15% in the next two years. Class A and new construction rents are anticipated to grow at an even higher rate. Those rental surges are creating a squeeze for some users, with tenants looking at lease terms sooner than what’s typical, or negotiating an early renewal or a smaller extension to resize a facility or consider real estate farther out, Salzer said.

But, Breeze said, for most industrial users today, higher rental rates generally aren’t causing companies to hit the brakes on expansion because they need the space to store inventory and lower transportation costs.

Salzer said she anticipates e-commerce users will occupy about the same share of the market it has since the pandemic, or 40%. That’s compared to 28.2% of all industrial absorption from 2016 through 2019, according to Cushman. Many retailers are opting to work with 3PLs to bolster their supply chains, which will continue to comprise demand in 2022 and beyond.

“CBRE so far this year has seen ramped-up leasing activity for groups that deal in building and construction materials, as well as medical supplies, which typically represent a lower share of the overall warehouse market, Breeze said. “That’ll likely mean a more diversified occupier base this year.”

 

Source: SFBJ

As part of Colliers International South Florida’s annual Industrial Owners Forum, more than 50 institutional owners gathered in Miami.

They converged to take part in a closed discussion on the state of the industrial market in South Florida, where they own properties.

Steven Wasserman, executive vice president of the Colliers International’s South Florida industrial services team, hosted the forum. He sat down with GlobeSt.com to highlight the main takeaways from the discussion and the sentiment these influential leaders have about South Florida’s industrial market. In part two of this exclusive interview series, he spoke about evolving industrial market trends.

“There’s still a lot of excitement surrounding e-commerce and the impact it’s having on brick and mortar retailers,” Wasserman tells GlobeSt.com. “While many retailers are downsizing their retail stores, there is a growing demand for distribution space as consumers are buying their products online. Distribution centers near urban cores are in high demand.”

Wasserman pointed out another trend shaping the industry: construction costs. Construction costs have been on the rise, but he expects they will most likely remain flat in 2017 as the condo construction market slows down.

“Institutional owners expect the cost of labor and construction materials to start to level off after years of increasing costs,” Wasserman says. “New development construction costs are ranging from $70 to $100 per square foot for new class A warehouse space and will most likely remain at that price throughout the year.”

On the other hand, he says, cumbersome environmental and permitting issues continue to slow the construction process down. That is forcing tenants to holdover because space takes so much longer to build out in South Florida.

Another topic of discussion was the trend of parking requirements. Institutional owners discussed the significant increase in employee and trailer parking requirements for all sites nationwide, especially “last mile” sites.

“This used to be a requirement from larger tenants but they’re now seeing it from smaller tenants in the 80,000-square-foot range,” Wasserman says. “We’re also seeing growing demand for cold storage facilities. As population continues to increase and lifestyle patterns change, we’re seeing increasing demand for cold storage facilities. This particularly true in South Florida where suburbs are becoming urbanized.”

 

Source: GlobeSt.