Tag Archive for: south florida industrial market

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For most of the last few years, Amazon has been the dominant force in South Florida’s industrial market, but the e-commerce giant’s recent pullback hasn’t had a negative impact on the region’s warehouse market, industry insiders said at Bisnow‘s South Florida Industrial Outlook event last week.

“The last few years it has all been Amazon, right? They were making 90% of that e-commerce growth. They were really bailing us out of all that space we could not lease,” Bridge Industrial Vice President Aaron Hirschl said at the event. “Now it’s everybody else playing catch-up. It is 85% of all the e-commerce deals are other groups other than Amazon. It’s really good to see that positive growth there.”

The vacancy rate for South Florida industrial properties dropped to 1.8% in the third quarter, according to JLL research. Rents have grown 60% year-over-year, to an all-time record of $14.35 per SF. Construction is speeding up as a result: So far in 2022, approximately 2.3M SF of new product has been delivered. Over the next 18 months, JLL projects deliveries to hit 7.8M SF.

“Much of that is still fueled by e-commerce, even in the absence of the industry’s leader,” Prologis Vice President Jason Tenenbaum said at the event, held at the GalleryOne Fort Lauderdale by Hilton. “I’d say e-commerce continues to be the predominant player, I am guessing in the majority of our portfolios, and that’s notable particularly because of Amazon’s specific slowdown this year,” he said. “I would say the vast majority of our work is centered around that space.”

Tenenbaum said that he expects more leasing in the e-commerce space to come from third-party logistics companies as retailers themselves look to outsource their distribution. Those companies, called 3PLs, have accounted for more than 35% of all warehouse leasing in South Florida so far this year, according to a just published CBRE report.

“I think as pricing and rents continue to rise and supply is constrained, you will see a lot more of all of our clients electing to 3PL their supply chain,” Tenenbaum said.

After e-commerce, the biggest driver of demand in the industrial market is in the food and beverage industry and their need for cold storage, developers at the event said. The global cold storage market was over $9.6B last year and is projected to reach $11.3B this year and hit $25.4B by 2027, according to an October market report by Reportlinker.

“If you look at where the demand is the most nationally, clearly cold storage will be it,” BBX Logistics Properties Mark Levy said. “In South Florida, if you look at the footprint of the market as a percentage of the total base, it’s a very, very small amount of cold storage space product that has been delivered.”

Tenenbaum said that the tourism industry in particular has been active in looking for cold storage properties, a piece of the market that had been largely absent for the previous two to three years.

“There was a time in the last 24 to 36 months where the tourism activity was way down. Now it’s back at a high pre-pandemic levels,” Tenenbaum said. “As tourism has come back and the cruise ships are set to sail again, that’s a really active space.”

Levy said that while the cold storage market is “still tremendously undersupplied,” building the space on a speculative basis is still a rarity. But Bridge Industrial launched a spec cold storage warehouse in Hialeah last year, and signed FreezePak to a 312K SF lease in March.

“I remember when Bridge was working on that development and we thought ‘Those guys are crazy! There is no way that they are going to get those rents,’” Hirschl said. “And sure enough, they leased it out and knocked it out of the park. They proved a thesis and it was really cool to see it happen.”

Kroger, the largest grocery chain in the country, doesn’t have a supermarket in South Florida, but it opened a 60K SF warehouse in Opa-Locka this year to start delivering groceries directly to customers’ homes. Kroger said in its September earnings report that its delivery sales grew by 34% from the previous year.

“Kroger does not have any grocery stores here but they are renting near people’s homes,” Hirschl said. “That trend is really interesting to see if they can really penetrate the market here.”

Butters Construction & Development Director of Acquisitions Adam Vaisman said on a panel that, in addition to e-commerce and food and beverage companies, manufacturing is an increasing presence in the market. He said his firm signed a 200K SF lease with a manufacturing firm in Broward County and was getting ready to break ground.

“You will definitely see more of the manufacturing jobs, especially given our labor pool here in South Florida,” Vaisman said. “We are definitely starting to see that and I think that trend is starting to pick up if you continue to have global instability the way we do.”

But while manufacturers and cold storage providers largely need specialized space, e-commerce users are taking any space they can get in a market with soaring rents and sub-2% vacancy.

“Location is the most important always, so for e-commerce users, if they can’t find a new building and it’s a market they need to be in, they will make it work with a Class-B space or a Class-C space,” said Seagis Property Group Vice President of Florida Acquisitions and Leasing Bradlee Lord. “Public transportation will only get increasingly worse as the population grows. With Covid in 2020, the roads were still relatively busy. Location matters as congestion gets worse.”

 

Source: Bisnow

 

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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Equus Capital Partners dropped $239.2 million for warehouse complexes across Broward County, surpassing 2021’s largest industrial deal in South Florida.

The properties include 16 warehouses, spanning 23 acres in total. The majority of the warehouses are located in Pompano Beach along SW 5th and 6th Court as well as five miles away along NW 30th Place. Only three are in Fort Lauderdale.

Equus’ purchase approximates to $240 a square foot, according to property records.

The deal appears to be tied to Equus’ $900 million purchase of a 5.4 million-square-foot industrial portfolio across the Sun Belt and East Coast from warehouse giant Prologis earlier this week.

Equus nabbed a combined $483 million in financing from Morgan Stanley, according to property records. But it’s unclear whether the loans are tied to the Broward County purchase only or the portfolio acquisition since the actual mortgage documents are not publicly available.

Representatives for Prologis and Equus did not immediately respond to a request for comment.

The sale is yet another sign of South Florida’s sizzling industrial market thanks to strong leasing demand. Net absorption rose to 10.3 million square feet in 2021, more than doubling the square feet absorbed the year prior, according to data compiled by Newmark. In the last quarter, the vacancy rate dropped by 0.4 percentage points to 3.4 percent, while asking rents grew by $0.39 to $10.14 a foot.

The complex ended up in Prologis’ hands also through a portfolio deal. In 2020, the San Francisco-based company paid $13 billion for Liberty Property Trust, the previous owner of the properties, which were completed in 1991.

The Broward County sale is not only the biggest South Florida industrial sale of 2022 so far in gross terms, but also tops 2021’s highest sale by $56 million, according to The Real Deal’s tally. In last year’s top industrial deal, CenterPoint bought a Hialeah park for $184 million.

 

Source: Commercial Observer

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South Florida’s industrial market fundamentals, particularly for bulk warehouse space, blew through the third quarter of 2021 on strong leasing demand and new construction

The region’s healthy consumer market and growing population helped push investor and occupier confidence in the industrial market, which is likely to continue through 2022.

The backlog at West Coast ports is causing weeks of delays for goods that need  to travel to East Coast markets, making warehouse/distribution space in South Florida an attractive and faster alternative from a distribution standpoint. Bottlenecks in the supply chain are realigning how many firms view real estate needs locally with a shift in philosophy for inventory management.

Previously, companies focused on lean supply chains where materials and goods arrive “just in time.” In a market like South Florida, that meant limited amounts of warehouse space were needed.  Now, companies are turning to an inventory strategy that follows a “just in case” model, where more goods are stored closer to customers to minimize fluctuations in demand. South Florida, with three deep-water ports, has the capacity to address the immediate logistics needs for companies with changing inventory strategies.

In the last year, 18,200 new industrial and warehouse-related jobs were created in Miami-Dade, Broward and Palm Beach counties. They were added because of big-box expansion by e-commerce firms, together with a push into last-mile facilities. Hiring also occurred with traditional retailers, plus new-to-market entrants, which increasingly viewed the tri-county as a strategic location to serve the immediate needs of customers.

New inventory and aggressive development captured some of the new employment. In the first nine months of 2021, 5.4 million square feet of new industrial space was delivered in the region. As the industrial inventory and deliveries grew, so did the occupiers’ space requirements for square footage, but new construction could not keep up.

As of the end of the third quarter, 6.6 million square feet of industrial space was under construction, with three projects representing 1.8 million square feet of new inventory. Still, overall industrial vacancy in South Florida fell to 4.4 percent in the third quarter. Both Miami-Dade and Palm Beach County were even tighter at 3.3 percent, with Broward County coming in at 5.9 percent as available space throughout the region decreased year-over-year.

While not a record-setting year yet, new leasing activity year-to-date of 11.6 million square feet was only 18 percent less than the full amount for all deals done in 2019. Net absorption, or the amount of space absorbed by tenants, was 7.8 million square feet in 2021. That represents a 250 percent increase in the amount of space absorbed when compared to 2020.

yc37i south florida industrial absorption The South Florida Answer to West Coast Logistic Bottlenecks

In Miami-Dade, leasing reached more than 6.8 million square feet year-to-date, an increase of 15.5 percent compared to the same period one year ago. For that same period, Broward County recorded more than 3.6 million square feet, a 36.1 percent rise from 2020. Palm Beach County had 1.0 million square feet in new leasing activity so far in 2021.

Limited availability on heightened demand allowed landlords to push asking rates to all-time highs. Overall average asking rents for all South Florida were at $9.87 per square feet, triple net, the highest amount recorded. Rents in Miami-Dade were at $9.17 per square foot, a 7.1 percent jump from last year. And Broward County also reached an all-time high of $10.27 per square foot in the third quarter. Palm Beach County topped out at $11.07 per square foot with the asking rate rising steadily over the last three quarters as construction picked up.

AfGHE south florida industrial rents e1637699131823 The South Florida Answer to West Coast Logistic Bottlenecks

Confidence in South Florida’s economy and potential for growth will only be enhanced by the lifting of U.S. restrictions on foreign travel. The influx of travelers and investors from overseas, starting over the holidays, will contribute to additional optimism in industrial market fundamentals in the region. The longer that challenges remain at West Coast ports to efficiently move goods into the United States means that South Florida becomes the better, more reliable strategic alternative for companies. The region’s positive fundamentals post pandemic,including solid population growth and rising incomes, make South Florida an attractive market for investment.

 

Source: Commercial Observer

 

Graphs and Charts Report

The recovery of South Florida’s office and industrial markets continued through the first half of 2021, with dynamics unique to each sector.

In the office market, inventory in the tri-counties recorded increases in vacant space, but that dynamic added needed options to new-to-market tenants from urban areas to the north. Each new company relocation from cities like New York validates that South Florida’s dynamic employment pool can provide firms with the human capital needed to grow and expand their businesses.

In the industrial sector, the pandemic helped fuel an explosion of demand led by e-commerce and logistics companies who needed to be closer to end customers. With three out of the nation’s four largest deep-water ports located in South Florida, the region took advantage of the upswing in consumer spending and trade as the economy bounced back sharply in the last half of 2020.

Office Market

Office leasing remained depressed compared to pre-COVID levels. Approximately 3.2 million square feet in deals were signed in the first six months of 2021, compared with more than 5.7 million square feet leased in the first quarter in 2020. Throughout the pandemic, the region saw heightened demand from new-to-market tenants, primarily from the Northeast. More than 60 percent of leasing volume occurred in Class A assets, reflecting a focus on quality over value. Suburban submarkets accounted for more than 75 percent of deals signed, which was similar to pre-pandemic splits. Interest remained high for space in the central business districts (CBDs), which spoke to many tenants’ desire to remain in urban cores.

Overall asking rents for office in South Florida were $40.38 per square foot, full service, on incremental increases in all three counties. In Miami-Dade, overall asking rents rose 7.4 percent year over year to $43.02 per square foot, an all-time high. Broward’s overall asking rents rose 8.4 percent year over year to $36.52 per square foot. Palm Beach County had a 5.3 percent bump in rents in the last 12 months and ended the second quarter at $39.64 per square foot, mostly driven by rent escalations of 6.5 percent in Class A buildings. New inventory delivered over the last 18 months in Fort Lauderdale and West Palm Beach CBDs helped push asking rents higher for the overall market.

Overall vacancy rates for the region was 17 percent at the midyear, with the rate in Miami-Dade the highest at 17.6 percent, a 420 basis point jump in the last year. Broward County had a similar increase to 16.9 percent, while Palm Beach closed the quarter at 16.1 percent, up only 240 basis points year over year. Vacant space proliferated predominantly in Class A assets, as well as from new construction deliveries. This was acute in Palm Beach County, which saw several high-profile office project deliveries. Unlike several gateway cities, vacant office sublease space has not been a major contributor to increases in the rate, only 1.3 percent of overall inventory and well-below levels recorded after the last recession.

Industrial Market

New leasing activity year to date totaled 7.6 million square feet in the tri-counties, up significantly from the first half of 2020, when initial lockdowns and restrictions took hold across the country. In fact, leasing activity in the first half of the year surpassed 2019 levels by 21 percent. Miami-Dade accounted for more than half of all leases signed, with 4.4 million square feet leased, an increase of 17.2 percent compared to the same period one year ago. Broward County recorded 2.5 million square feet of new leasing activity year to date, with the second quarter reaching nearly 1.4 million square feet, a 19.9 percent increase compared to one year ago. Palm Beach County, on the other hand, clocked just 621,000 square feet in the first half of the year, a 19.6 percent decrease from the same period last year, which had the highest amount of space leased for the first six months on record.

Overall asking rents in the region were $9.78 per square foot, triple net, at the end of the second quarter. Asking rents in Miami-Dade jumped 7.7 percent year over year to $9.28 per square foot, the first time ever that asking rents averaged above $9.00 per square foot. Broward County rents improved by 1.4 percent to $10.05 per square foot on steady increases for available warehouse/distribution space. Market rents in Palm Beach County decreased year over year by 1.1 percent to $10.55 per square foot, but were up 1.1 percent quarter over quarter. New product in 2021 with higher-than-average asking rents, as well as limited available space options, allowed landlords to raise rents with confidence in the first six months.

Overall vacancy ended the second quarter of 2021 at 4.5 percent, slightly higher by 200 basis points than the level from 12 months prior. Miami-Dade had the largest increases in occupancy, with the vacancy rate falling to 3.4 percent, a decrease of 130 basis points year over year. Broward and Palm Beach counties saw increases in vacancy, rising by 40 and 90 basis points, respectively. The main driver for the decrease in vacancy was the 5 million square feet of positive absorption in the first half of the year. In addition, there were 3.4 million square feet in construction deliveries, with another 6.9 million square feet under construction.

 

Source: Commercial Observer

amazon warehouse

South Florida’s industrial market performed well in the fourth quarter and in 2020, as Amazon leased about 3 million square feet throughout the year, according to a recently released report.

The region’s average asking rent rose slightly to $8.88 in the year’s final quarter, up 1.6 percent year-over-year, according to the report from Newmark. The fourth quarter vacancy rate hit a low 4.9 percent, thanks to pre-leasing activity. About 6 million square feet of industrial space is currently under construction in the tri-county area, with more than half of it already leased.

Here is a breakdown for each of the counties:

Miami-Dade County

Miami-Dade’s vacancy rate stayed consistent at 4.5 percent for the fourth quarter. Average asking rent was $8.33, up 1 percent quarter-over-quarter, and up about 4 percent year-over-year.

The county saw 266,000 square feet of space delivered during the quarter. Miami-Dade represented more than half the region’s net absorption, with 2.7 square feet absorbed during 2020. Fifteen buildings totaling more than 3.1 million square feet are under construction, with 56 percent of that already leased. That means that it will not have much of an impact on the county’s vacancy rate this year, according to Newmark.

The top lease deals in the county included Keuhne & Nagel leasing 209,610 square feet at 3401 Northwest 72nd Avenue in Miami and IFS Neutral Maritime leasing 93,320 square feet of space at 1350 Northwest 121st Avenue in Miami.

Top industrial sales in the county included the $16.2 million sale of Doral warehouse by a family that owns an international logistics company.

Broward County

Broward’s vacancy rate continued to rise, reaching 5.6 percent at the end of the fourth quarter, the highest in the region. That’s an increase, quarter-over-quarter and year-over-year, of about 2 percent and 6 percent, respectively. But the vacancy rate remained below the 6 percent vacancy rate reported at the end of 2015.

The county saw 373,000 square feet of new space delivered during the quarter. About two-thirds of the 1.6 million square feet under construction is available for lease.

The average asking rent in the fourth quarter was $9.39, down 0.3 percent, year-over-year, and down 0.7 percent, quarter-over-quarter. Increased availability from second-tier space helped rents decrease, according to Newmark.

Amazon signed three of the top leases in the quarter in Broward for about 1 million square feet. Overall, Amazon is responsible for most of the largest leases signed during the year.

Elion Partners had two of the top purchases of the quarter, paying $31.5 million for a Dania Beach building and $12 million for Bennett Auto Supply in Pompano Beach.

Palm Beach County

The county’s vacancy rate was 5.4 percent in the fourth quarter, a new record high since at least the fourth quarter of 2015. Newmark credited this to the delivery of five buildings totaling over 768,000 square feet.

The average asking rent was $9.84, up 1 percent, quarter-over-quarter, and up 0.4 percent, year-over-year.

About 1.3 million square feet is under construction in the county, 1 million of it for an Amazon distribution center. The county had 77,000 square feet of industrial space absorbed during the fourth quarter.

The largest leases signed during the quarter include two in West Palm Beach: Tire Hub leasing 40,500 square feet of space at 305 Haverhill Road and Jamlyn Supply leasing 38,880 square feet of space at 6051 Southern Boulevard.

Top deals during the quarter included an Atlanta-based industrial investment group buying a newly built warehouse in the Palm Beach Park of Commerce for $27.2 million.

 

Source: The Real Deal

KVA Congress bought a Boynton Beach industrial building for $6.65 million, signaling growing interest in industrial properties in South Florida.

The Jupiter-based company bought the 47,626-square-foot property at 3600 South Congress Avenue for $139 per square foot, according to a press release from Cushman & Wakefield. Bridgeview, Illinois-based R.T. Milord Co. sold the property.

KVA Congress is managed by Peter Alevizos and Nancy Alevizos of Jupiter. Cushman & Wakefield represented the seller in the sale.

The building was developed in 1987 on a 3.3-acre site. The property was 100 percent occupied at the time of sale, according to the release.

Boynton Beach, located between Boca Raton and West Palm Beach, has seen a number of new developments in recent years. Among them, Gulf Stream Views, a 14-unit luxury townhome development, just launched sales this month.

In South Florida, overall investment in industrial properties is growing. Over the past five years, average prices per square foot for warehouse buildings in South Florida have increased by 65 percent, according to Colliers International South Florida’s third quarter 2018 report.

 

Source: The Real Deal

The industrial market is still hot across Miami-Dade and Broward counties.

Competition for industrial space is fierce in Miami-Dade and it’s driving demand from buyers and tenants who are eyeing smaller warehouse properties. That, in turn, is leading to higher lease rates, according to a recently released report by CBRE.

And in Broward County, a dip in vacancy rates is helping lure more outside investors and tenants amid a sizable amount of new industrial deliveries.

MIAMI-DADE

Vacancy rates in Miami-Dade held steady at 3.6 percent in the second quarter, up slightly from 3.5 percent the same period of the previous year.

Most of the leasing activity occurred in Airport/Doral (557,124 square feet), followed by Central Dade (218,984 square feet), and Miami Lakes (94,900 square feet), according to the report.

Rents are also rising. Miami-Dade’s industrial market had an average asking rate of $9.23 per square foot in the second quarter, up 3.9 percent compared to the same period of 2017, according to CBRE. More than 90 leases were signed totaling 1.9 million square feet, with an average lease size of 20,000 square feet, the report shows.

Overall sales for Miami-Dade’s industrial market during the second quarter amounted to $362 million with 34 transactions for a total of 2.5 million square feet, up from $78 million for 15 sales totaling 553,000 square feet in the first quarter. The average sale price per square foot in the second quarter was $145, and the average deal size was 73,500 square feet.

Hialeah continues to be a top industrial submarket in Miami-Dade. The North Hialeah submarket accounted to 50 percent of the industrial transactions in the second quarter of 2018. Among recent deals was Duke Realty’s $180 million purchase of Flagler Global Logistics’ 8 million-square-foot industrial park.

Nine buildings were delivered in the second quarter, totaling 1.1 million square feet of new industrial space. Foundry Commercial’s Carrie Meek International Business Park is among one of the largest industrial projects under construction in the region, totaling 855,000 square feet and set to be completed by the fourth quarter of 2018.

Despite numerous larger transactions, spaces in the 10,000-square-foot to 25,000-square-foot range are the most desired, and is expected to push rental rates for those buildings up near those sought for newer construction, according to the report.

BROWARD

Broward’s industrial market is showing no signs of slowing down. Vacancy rates dipped in the second quarter to 3.9 percent from 5.3 percent, on a year-over-year basis, the report shows.

Leasing activity was mixed within the region. Northeast Broward had the highest level of net absorption during the second quarter, at 168,672 square feet, but southeast Broward saw a negative absorption rate of 334,533 square feet. The report said the level of negative net absorption is due to the addition of at least three new buildings in the Pompano Center of Commerce as well as the 131,000-square-foot East Davie Commerce Center.

Broward’s industrial market had an average asking rate of $8.29 per square foot in the second quarter, up 3 percent compared to the same period of 2017, according to CBRE.

Overall sales for Broward’s industrial market reached nearly $200 million in the second quarter. Notable sales include Fortress Investment Group’s $66.4 million acquisition of a SuperValu distribution center in Pompano Beach, as part of a larger $483 million national portfolio deal. Another is Exeter Property Group’s portfolio sale of nine warehouses amounting to about $43 million.

Supply is also increasing in the county. One of the first buildings of the South Florida Distribution Center in Pembroke Pines is on the verge of being completed, offering 225,000 square feet, according to the report. Seneca Commerce Center I, spanning 222,000 square feet at Pembroke Park, and Coral Springs Commerce Center III, with 215,500 square feet, are on pace to be completed by the third quarter of 2018 and the beginning of next year, respectively.

Low vacancy rates and rising rents are expected to keep driving demand in Broward, the report says.

 

Source: The Real Deal

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.