Posts

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

Doubts of growing your retail brick-and-mortar clientele have you reaching for antacid from the bubble wrap parcel on your porch?

Don’t post a “closed” sign on your commercial real estate journey. Instead, consider pivoting to 32-foot clear heights and secured trailer parking.

E-commerce keeps growing. In 2017, U.S. online retail sales increased 16% year-over-year, up four out of five years running, and yielded $453.5 billion in total sales, according to CBRE.  Of the 50 largest industrial leases finalized last year, approximately 43% involved e-commerce companies.

For some, specializing in industrial brokerage may be the way forward. Experts see the logistics real estate market as early stage.UBS forecasts the pace of change in e-commerce is expected to accelerate market-share transfer, from in-store retail sales to online, driven by quicker-than-expected adoption of mobile from consumers.

Speaking to the crowd at I.CON ’18 in June in Jersey City, the Senior Managing Director with Crow Holdings Industrial Clark Machemer put it, “Today’s warehouse industry is the logistics business.”

Now may be time to synchronize your industrial sales and leasing future, as demand is up for real estate along the rapid throughput supply chain. CBRE calculated that for an incremental $1 billion growth in e-commerce sales, an additional 1.25 million square feet of distribution space is needed to service the growth. NAIOP, the Commercial Real Estate Development Association, cited Forrester’s forecast where U.S. e-commerce sales will rise 9.3% annually over the next 5 years to top $523 billion.

Media interest in e-commerce has added foot-candle on the interrelationship of goods fulfillment factors and real estate. Of course, there’s the Amazon HQ2 bonanza. Over in home improvement, Home Depot is gearing up to spend $1.2 billion across five years on 170 distribution facilities to access “90% of the U.S. population in one day or less.”

In this unfolding era of omni-channel retailing, industrial pros know expanding the supply of new construction and repurposing obsolete facilities is about satisfying the space race. Site selection for first mile, middle mile and last mile facilities won’t just affect industrial parks. Inner cities are in play. It’s about population. Many e-commerce companies and third-party logistics providers want a perch near densely-packed rooftops of consumers.

Earning Their Business

With e-commerce projected as a growth driver over the next five years for both the U.S. economy and development of facilities, what imperatives should e-commerce clients expect from their industrial real estate brokers?

“E-commerce clients expect a level of sophistication from the industrial brokerage business that didn’t exist 10 years ago,” says William Waxman, executive vice president at CBRE.

Waxman is an authority on corporate, industrial and supply chain real estate. In 2017, he was awarded NAIOP New Jersey’s Industrial Deal of the Year for Blue Apron’s 495,000-square-foot lease.

“My e-commerce clients expect me to have a comprehensive understanding of what they’re doing,” Waxman says. “Not just an understanding of their business, but an understanding of their values. And to respect their values, and to make sure the developments, the facilities are respectful of their values, as well.”

Waxman, who also was a speaker at I.CON ’18, is well regarded for maintaining relationships.

“E-commerce clients especially want to know they have a trusted advisor in their industrial broker. They want to know everything will get done at a very high level. From a tertiary environment to a primary environment, the quality of the work will be the same no matter where the properties are located,” said Waxman.

Representing In A Disruptive Age

Whether you’re already growing your book of business or shifting careers, specializing in logistics real estate on property types that support e-commerce may be your next thing.

“It’s the kind of industry you just need to be passionate about,” Waxman says. “When your clients have a pain point, you must have a solution for them.”

Waxman observes clients in e-commerce desire collaboration, and hire a multitude of service providers on deals, so they expect connections from the broker.

“You’ve got to know the right experts, as a service of building-out their project teams,” Waxman advises. “My e-commerce and tech clients want me to recognize through cost-benefit analysis whether they would benefit from a particular economic incentives package, or benefit from an in-depth labor analysis. Don’t be transactional brokers. Be a resource. You’re working for their best interest. Whether you’re onsite at a trucking company, or in a Fortune 200 board room, show how you’ll save them money. It goes to their bottom line.”

Even though Waxman leads CBRE‘s world renowned Port and Integrated Logistics Practice, he doesn’t forget to pound pavement.

“Old-fashioned shoe leather – there’s nothing wrong with that,” say Waxman.

 

Source: Forbes