Rise Realty Blog Page #4 (Broward)

Wednesday June 3, 2020

South Florida Commercial Real Estate Industrial Market UpdateWednesday Motivation:"Enthusiasm is the electricity of life. How do you get it? You act enthusiastic until you make it a habit." Gordon Parks

Industrial real estate has been the most corona virus insulated sector across Miami’s commercial real estate market.  Warehouse employees are typically not confined in small places so operations have not been as limited as much as containment as in traditional office workplaces.  There has been a recent shift of industrial product development way from Miami Airport West, Miami’s largest submarket for North Miami Beach and Medley where there is more developable land.  Tenant’s desire to be close to the Port of Miami and MIA international airport have driven up prices making the Miami Airport West market inaccessible for many tenants.  Miami International Airport accounts for 70% of Miami’s trade activity with the Port Miami accounting for the rest.  As traffic congestion increases, industrial users are more concerned with travel time from the Port of Miami and to local customers.  This will result in a movement eastward and drive redevelopment of older industrial properties in these areas.  The rise of e-commerce industry has driven Miami’s industrial demand.   Annual population growth, albeit 1% over the past year also is a contributing factor in Miami’s future industrial demand prospects.  Demand outlook remains uncertain until the full impact of the coronavirus is known.  Miami has enjoyed steady rental rate increase and low vacancy levels since 2011. 

A weakening economy should lead to an increase in vacancy in the medium time frame with plenty of opportunities for tenants who can weather the storm.  A decline in new construction is on the horizon as rental rates do not support the increased costs for land and construction.  Industrial land is being rezoned for mixed use residential development.  The decrease in industrial land has resulted in increasing prices for land suitable for development.  Business owners/manufacturers are interested in purchasing their own facilities to protect their investment in the cost of installation of machinery and equipment.  Expect product that had been previously harder to find to become available for purchase to individual investors.  Now is the time for business owners to take advantage of distressed tenants who occupy industrial real estate in Miami.