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In Prologis’ recent third quarter earnings call, CEO Hamid Moghadam was blunt in his assessment of the industrial sector’s supply-demand equilibrium:

“With vacancies at unprecedented lows, space in our markets is effectively sold out.”

It is, of course, little secret that industrial rents are at a premium and tenants are jockeying for what space they can find. But new details in Prologis’ Industrial Business Indicator report show just how much of an uphill climb supply will have before it meets current and future demand.

Prologis reports that construction starts have risen to an all time high of 120 million square feet, with speculative construction representing roughly 88% of all starts in the quarter. But pre-leasing has also reached its own record of 70%. That, coupled with construction delays, which are spreading out deliveries, means the risk of oversupply is low.

“We do not anticipate significant supply relief in most key locations; new supply is concentrated in low-barrier secondary and tertiary markets and the outlying submarkets of inland markets,” Prologis Research said.

Indeed, it concludes that demand is set to outpace new supply through the near term. The reasons include the ongoing rise of e-commerce penetration and companies’ move to build resilience into their supply chains. In addition, retail sales are robust, and trillions of dollars in pent-up savings and record-high consumer net worth should support future spending growth.

Prologis Research forecasts net absorption of 375 million square feet and deliveries of 285 million square feet for the full year.

“Looking ahead, we expect that market conditions will remain exceptionally competitive for customers looking to expand, making it essential to plan early and move quickly.”

 

Source: GlobeSt.

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

The city of Fort Lauderdale is soliciting bids, starting at just over $13 million, for a 24-acre industrial property in Dania Beach that could be developed into offices or warehouses.


4050-South-State-Road-7, Dania Beach site

Colliers International is overseeing the planned sale of the city-owned industrial property at 4030 State Road 7, just south of I-595. It’s one of Colliers’ first assignments from the city of Fort Lauderdale under its new contract to help manage the city’s real estate and dispose of surplus properties.

Fort Lauderdale requires potential buyers to submit sealed bids for the property in Dania Beach to the procurement division of the city’s finance department by Nov. 3. Sealed bids should include a cashier’s check or certified check to the city in an amount equal to 10 percent of the offered purchase price. Colliers would collect a commission at closing equal to 4 percent of the sale price.

Potential buyers must submit a minimum bid of $13.226 million, the appraised value of the property. The appraisal was completed Aug. 14 by Adrian Gonzalez, Jr., of Adrian Gonzalez & Associates P.A. in Hollywood. Terms of the sale would include payment of all closing costs by the buyer. No purchase money mortgage would be held by the city.

In a memo this week to city commissioners, City Manager Lee Feldman said Fort Lauderdale acquired the property in Dania Beach through eminent domain in February 1984. The property currently is used for motor vehicle training by the Fort Lauderdale Police Department, among other uses.

The 24-acre property, zoned I-G (industrial general) by the city of Dania Beach, has sewer and water service from Broward County. An active landfill along the north side of the property accepts only ash residue from the Wheelabrator South Broward trash-incineration facility located south of the property.

“There is, to the best of our knowledge, no contamination of the site,” said Steve Wasserman of Colliers International in South Florida. “The likely future uses of the property are office and warehouse development.”

Fort Lauderdale city commissioners declared the 24-acre site a surplus property and approved the city’s contract with Colliers at their meeting Tuesday, Chaz Adams, spokesperson for the city of Fort Lauderdale, said in an email.

“We expect Colliers to offer recommendations regarding the highest and best use for the properties that comprise our real estate portfolio,” Adams wrote in an email Thursday. “These recommendations may include the sale and disposition of city-owned surplus property. By returning property to the tax roll, the city can reduce operating costs, maximize resources, and generate additional revenue.”

 

Source: The Real Deal