Pent up demand for Class A industrial space in South Florida drove up the total dollar volume of sales by 12 percent in 2017 compared to the previous year, according to a First Quarter 2018 report by the Commercial Industrial Association of South Florida.
Last year, nearly 5.3 million square feet of industrial warehouse space changed hands totaling $418.7 million. The square footage was 21 percent more than the amount that sold in 2016, even though 21 fewer buildings sold in 2017 than the previous year, according to the association’s figures.
That means bigger warehouses with more amenities built in the last five years are taking the lion’s share of investor interest, said Tom Dixon, founder of Dixon Commercial Real Estate, the firm that produced the report for CIASF. He shared the findings during the association’s annual industrial market luncheon on Thursday.
“There is more Class A space in areas that in the past have not been there,” Dixon said. “You can now get it in the Airport West area, Hialeah, Hialeah Gardens, Medley and Opa-Locka. The competition from developers in these areas is really high.”
Dixon said landlords of new Class A space are taking advantage by getting tenants to sign leases that require them to pay real estate taxes, insurance and maintenance as a percentage of their rents. Yet, available space fills up quickly, Dixon noted.
According to the report, vacancy rates are expected to continue to fall in the coming year. For instance, Hialeah started off 2018 with a 2 percent vacancy rate compared to 2.5 percent last year. The vacancy rate in Miami-Dade’s north industrial submarket went from 7.2 percent at the start of 2017 to 4 percent at the beginning of 2018.
Sebastian Juncadella, an advisor with Fairchild Partners, said developers will add approximately 1.5 million square feet of industrial space in 2018. “Investors and developers realize the window of opportunity is shrinking even though there is a lot of product coming into the market,” he said. “Opportunities to grab properties are becoming harder and harder.”