Tag Archive for: vacancy rental rates

South Florida Industrial Asking Rents Climb In The Third Quarter

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South Florida industrial landlords are still in feast mode.

In the third quarter, Miami-Dade, Broward and Palm Beach counties’ median asking rents rose 14 percent, 16 percent and 18 percent, respectively, compared to the same period of last year, according to a recent JLL report.

Rising rents in South Florida’s industrial market are a continuing trend. Available warehouse space was at a premium in the third quarter, because vacancy rates in the three counties hovered below 4 percent, JLL found. New projects will add roughly 12 million square feet of industrial space by the end of the year, according to the report, but construction is slowing as a result of economic volatility.

“Current development delivery timelines have been delayed, as market sentiment has shifted to a more conservative approach,” the report states. “Insurance premiums have impacted every level of real estate, making investors and tenants alike more mindful of costs associated with underwriting, development, sales and leasing.”

Miami-Dade County

In the third quarter, the median asking rent in Miami-Dade County jumped to $16.80 a square foot compared to $14.35 a square foot during the same period of last year, the report shows. Landlords have the advantage, as the vacancy rate hit 1.6 percent during the third quarter, sustaining a year-long trend. During the same period in 2022, Miami-Dade’s vacancy rate was 1.8 percent.

The county’s industrial market had a net absorption of 4.1 million square feet in the third quarter, compared to 3.4 million square feet absorbed during the same period of last year. New projects representing 8 million square feet of industrial space were under construction in the third quarter, the report shows.

Among new projects is the proposed Sycamore Logistics Center in Medley. In August, Blackstone, and its subsidiary Link Logistics, broke ground on the two-warehouse complex after landing a $51 million construction loan from Boston-based AEW Capital Management.

Frito Lay signed the biggest lease in the third quarter for 130,320 square feet at Bridge Point Doral, a 175-acre warehouse campus developed by Chicago-based Bridge Industrial, according to JLL.

Broward County

The asking median rent increased to $15.43 per square foot in the third quarter, compared to $12.89 per square foot during the same period of last year, the report shows. Broward landlords also benefited from a low vacancy rate that has remained steady, year-over-year. The vacancy rate was 3.4 percent in the third quarter, compared to 3.3 percent during the same period of last year, the report states.

In the third quarter, net absorption dipped to 172,000 square feet, compared to 2 million square feet absorbed during the same period of last year. Developers are currently building 1.5 million square feet of new industrial space in Broward, the report shows.

Link Logistics was also active in Broward during the third quarter, paying $162 million for a seven-building campus in Deerfield Beach in July. The purchase represented a “notable sale” during the third quarter for Broward’s industrial market, the report states. New York-based Sterling Investors also targeted Broward, acquiring a fully leased warehouse in Pompano Beach for $24.3 million.

Palm Beach County

During the third quarter, the median asking rent increased to $14.48 a square foot, compared to $11.84 a square foot during the same period of last year, the report shows. The 18 percent price jump was the biggest of all three counties. The vacancy rate slightly rose to 3.8 percent in the third quarter, compared to 3.1 percent during the same period of last year.

Net absorption was 412,000 square feet in the third quarter, compared to 580,000 square feet absorbed during the same period of last year. Yet, the development pipeline will add 2 million square feet of new industrial space by the end of the year, the report states.

New buildings to land tenants include 7th Avenue Logistics, a 76,000-square-foot warehouse at 1939 Seventh Avenue in Lake Worth developed by Coconut Creek-based Butters Group. Foundation Building Materials signed a lease for 50,000 square feet at 7th Avenue Logistics, the report states.

 

Source: The Real Deal

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

CRE’s Shockingly Strong Third Quarter

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CRE shattered performance records in the third quarter, driven by household wealth and record demand.

“Some of the results are shocking,” Marcus & Millichap’s John Chang says. “I anticipated strong commercial real estate momentum in the third quarter as the lockdowns had pretty much ended, new households were being formed, spending had increased and companies were shifting their positioning toward stronger growth⁠—but I was still surprised. At the start of Q3, many companies were taking a wait-and-see approach, and leasing was soft.”

But despite that, about 26 million square feet of space was leased in Q3, on par with the quarterly pace of demand from 2018 and 2019. That brought vacancy down 10 basis points to 16.1%.

“Expectations for retail were positive going into Q3, but I don’t think they were very optimistic,” Chang says.

But the sector outperformed, filling 28 million square feet of space in the quarter and posting the best quarterly absorption numbers since 2017. Total occupied retail square footage is now officially back above pre-COVID levels, and vacancy fell by 20 basis points. Average rents also rose 2% year-over-year.

“I wouldn’t say the retail real estate sector is crushing it, but compared to most people’s perception, retail is outperforming expectations and also surprised to the upside,” Chang says.

As for apartments, 273,700 units were filled in the quarter, a record absorption number for the sector. Developers are on pace to deliver a record 400,000 units this year, and the national vacancy rate hit 2.8% for the quarter. Rents are also up 11.2% year-over-year.

“I don’t think anyone was expecting an all-time low vacancy rate and double-digit rent growth,” Chang says.

And in the industrial sector, rent growth was up 3% quarter-over-quarter and 8% year-over-year, in alignment with most forecasts. The surprise? Absorption: 157 million square feet were absorbed in the quarter, bringing the annual total to 364 million square feet so far.  That shatters 2016 highs.

“The third quarter delivered better than expected results with some record-breaking space demand numbers,” Chang says. This will likely add more fuel to investor optimism, especially in the office and retail sectors where expectations have been more modest.”

Chang has said he expects the momentum continue into the end of 2021. Supply and demand trends remain favorable, and active investors continue to price strong growth into their underwriting, particularly for industrial, self-storage and apartment properties.

 

Source: GlobeSt.