South Florida’s industrial real estate market is booming. Ecommerce growth and demand for rental space by the growing population are some major factors driving this growth.
In the third quarter of 2021, industrial rents continued to rise in Miami-Dade and Broward counties, fueled by an increase in leasing. Despite a drop in demand in Palm Beach County, asking rents rose steadily across the region’s industrial submarkets.
Regardless, open space is still available in most parts of South Florida. There are tens of millions square feet that are ready for development or expansion by adding and relocating buildings.
If you’re thinking about buying or selling industrial property in South Florida, knowing what current patterns are like is crucial so that you can make an informed decision.
This market report provides an overview of the state of the industrial real estate market in South Florida.
An Overview of South Florida Industrial Real Estate Market
Since the kick-off of the devastating pandemic, buyers have been coming to Miami and surrounding locations. Microsoft, JetBlue Airways, Goldman Sachs have all recently relocated their headquarters due in part or entirely. This is because they want more space with fewer people around during crucial times when decisions need attention most urgently
The city is attracting a growing number of Silicon Valley entrepreneurs and experts as well, owing to Mayor Francis Suarez’s emphasis on the region. As a result of these habits, affluent company owners have migrated to Miami, which has seen considerable economic growth.
In Miami-Dade and Broward Counties, there was three times as much net absorption. The net absorption in Palm Beach County went down to a deficit. Regardless of this, industrial submarkets in South Florida saw average asking rents climb.
Industrial companies are doing well too, which means that industrial investors want to buy more buildings too.
In Q3 2021, large institutional investors such as Oxford Properties Group, Highbrook Investors, Longpoint Realty, and CenterPoint Properties have been buying up industrial sites in South Florida.
As part of its $2 billion purchase of KKR’s industrial portfolio in the United States, Oxford acquired two warehouses in Boynton Beach for $15.5 million. Brookfield Property Partners paid $33 million for a cluster of properties near Doral and $18 million for a Doral industrial park in a joint venture with Foundry Commercial, an Orlando-based firm.
South Florida Neighborhood Industrial Real Estate Market
Broward’s real estate market is extremely hot, with many industries like education, medical/healthcare, and professional services converging here. Companies like IBM, Apple, Citrix Systems Inc., Electronic Arts Call of Duty have all converged in Broward County.
Young tech companies are doing well in this region. The average age of companies in the area is five years old.
Smaller companies have also found advantages to choosing Broward, mainly pertaining to the low cost of living. It is also home to an active co-working culture.
- Broward County’s vacancy rate dropped by more than half over the year, to 5.6 percent in the third quarter, compared to 6.8 percent last quarter and 6.6 percent in the third quarter of 2020.
- The amount of building space in Broward County rose by 1.5 million square feet in the third quarter, compared to 579,945 square feet in the same period last year.
- The asking rental rate for warehouses rose to $9.68 per square foot, up from $9.19 in the preceding quarter.
- The cost of manufacturing space has increased from $8.58 per square foot in the third quarter of 2020 to $11.18 per square foot in the fourth quarter of 2021.
- From the second to the third quarter, flexible space increased by 39 cents to $13.53 per square foot. However, in the third quarter of last year, the pricing was still less than $13.58 per square foot.
Miami Dade’s real estate market has seen tremendous growth due in part to this being Florida’s gateway to Latin America and its key role as a tourist destination for international travelers. Sports teams, entertainment complexes, and retail centers alike are piggybacking on each other’s success. This real estate market shows no signs of slowing down anytime soon.
- The industrial market in Miami expanded by 20bps quarter over quarter in Q2 2020, with a total vacancy of 3.8%.
- With 7.6 million sq. ft. of planned projects for 2020, 2021, and 2022, there are roughly 3.0 million sq. ft. of industrial space under construction today.
- In twelve transactions, $117 million in volume was generated and the average sale price per square foot was $150.
- Landlords prefer concessions over major rental rate decreases, as seen by the decline in the average industrial asking rate to 9.81/sq. ft.
Miramar is currently experiencing a high demand for new homes. This city’s real estate market is flourishing as well, with communities ranging from first-time homebuyers to those looking to move into the area.
In an attempt to increase its inflow of skilled workers and draw in technology companies, Miramar has been trying to revamp the downtown area into a more attractive and thriving space. This is evident by the city’s efforts to expand the transportation system and offer tax incentives to attract new businesses.
The standard of living in Miramar continues improving as well, as befits its status as becoming one of South Florida’s leading business destinations. The city has several science parks and multiple higher education institutions as well.
- The average Miramar office price per square foot in 2020 was $29.76. In comparison to the previous year, the price per square foot of office space increased by 0.60 percent. Across all asset classes, the local office market had an average vacancy rate of 7.16 percent.
- In 2020, the market saw 48,604 square feet of new office space delivered. The Miramar office inventory at the end of 2020 contained 1 building with a square footage of 25,000 square feet or more, totaling 48,604 square feet of office space.
- Before the end of the year, development activity in 2021 is expected to add 157,151 square feet of office space to the market.
South Dade is the industrial real estate market that has seen the most growth when it comes to buyers, with many companies coming into this area due to its central location.
There are currently over 1,000 businesses in South Dade. That means that if you’re looking for a place to work or sell your products, this is a good place.
The average monthly lease in South Dade is $12.61 per square foot. There is no shortage of space available either, as there are over 10 million square feet of space available. This amount will only increase as the region saw a 7% growth rate from 2015-2020. As a result, there are opportunities for multiple companies to lease or buy space.
- Decreased Sales Tax (0.50%) and Use Tax (0.25%) on Capital Expenses from 2019 to 2020
- South Dade has seen a 194% increase in average sale prices per square foot on sold space, with transactions generating $81 million in Q2 2020 compared to the first quarter of the year.
- The largest transaction was $8 million generated by selling 901,827 sq. ft. of industrial space, which is more than 7 football fields in size.
- 1,000 businesses are currently operating within South Dade, with 10 million sq. ft. of warehouse and distribution space becoming available for lease or purchase. This figure will increase to 12 million sq. ft., with an additional 3 million sq. ft. of manufacturing space up for grabs as well.
The Perk of South Florida Industrial Real Estate Market
Tax Incentives to Attract Businesses
According to the National Association of Realtors, The Qualified Target Industry Tax Refund Program (QTI) was established by the Florida government to encourage businesses to expand in South Florida.
This program offers $3,000 for each new job that is created in Florida. Within an Enterprise Zone or Rural County, this rises to $6,000 per job. A $1,000 per job bonus is paid to firms that pay more than 150 percent of the regional average wage. If a company pays more than 200% of the region’s average wage, it is eligible for a $2,000 per-job bonus. To receive 20% of the incentive, projects must have the support of their community.
Similarly, the Qualified Defense Contractors Tax Refund Program (QDC) is another program to retain and develop Florida’s high-tech employment base. The program gives firms in the state a competitive advantage as defense contractors consolidate defense contracts, get new deals, or convert to commercial production.
Tax reimbursements of up to $5,000 per job generated or saved in Florida are available to pre-approved initiatives. Projects must have community support, as the community provides financing for 20% of the incentive.
Industrial real estate is a valuable commodity in South Florida. With a booming population of over 6 million people, there are many businesses looking for industrial properties to grow. This makes the market competitive for any company looking to make an investment.
With beautiful beaches, a warm climate, and tax incentives for new businesses, there are many opportunities waiting.
If you’re interested in learning more about South Dade’s commercial real estate market, contact us today. Our team has decades of experience finding space for businesses. Thus, we help both big and small companies find the perfect space for them. This often includes locations with great incentives on pricing and location.