Miami’s industrial market, which includes all of Miami-Dade County, is the nation’s top performer for annual rent growth, according to a JLL report.
Year-over-year, the Miami industrial market experienced a 53 percent jump in rent, more than Los Angeles, which had the second highest rent hike at 45 percent, and New York/New Jersey, which had the fourth highest rent growth at 26 percent, the report shows.
Industrial markets close to ports like Miami, New York and Los Angeles remain attractive for investors looking to secure long-term income growth, despite recent interest rate hikes, JLL found.
Brian Smith with JLL said tenant demand continues to outpace supply in the Miami market.
“If you take Class A [industrial buildings] in Miami-Dade, the numbers are even tighter, and the rental growth increase is probably larger,” Smith said. “We don’t have enough [warehouse] product to service all the goods that are coming through here.”
In the first quarter, Miami International Airport’s freight volume increased 8 percent, year-over-year, according to a Miami-Dade Aviation Department press release.
“Tenants need modern spaces with high ceilings and a lot of doors to load in and out,” Smith said. “That sector is underbuilt and underserved.”
Since JLL released its 2022 first quarter report, asking rents rose 16 percent to an average of $13.50 a square foot in the Miami industrial market, Smith said.
“Delivering enough space to satisfy demand for the next 24 months is the biggest challenge that we see,” he said. “We have a market where 75 percent of new buildings are pre-leased. We’ve never seen that before. That speaks to the demand.”
In an email, Dalton Easton with Miami Lakes-based industrial developer The Easton Group said the firm has experienced healthy rent growth at its properties over the past two years.
“Miami is truly a land-constrained market, which is limiting future supply of industrial product,” Easton said. “The exorbitant amount of tenant demand from e-commerce users, third-party logistics companies and new-to-market national companies will continue to drive rent growth. We expect this to continue through the end of 2022.”
Douglas Mandel with Marcus & Millichap said the Miami industrial market was already experiencing a squeeze on supply before the pandemic.
“With surging population growth, a lack of land and limited construction, it’s exacerbating rents,” Mandel said.
South Florida has had a flurry of industrial trades in recent weeks, most notably the $291 million sale of Calder’s former horse racing track and surrounding property in Miami Gardens. Blackstone’s subsidiary Link Logistics bought the site, with plans to redevelop it into an industrial complex and movie studios.
In Hialeah, EverWest Real Estate Investors this month paid $43.2 million for a newly built warehouse. In the same city, Ares Management picked up two warehouses that are still under construction for $62 million.