Looking to capitalize on demand from small warehouse tenants, a Miami-based firm specializing in self-storage facilities is expanding into industrial buildings with its recent $37.5 million purchase in Medley.
An affiliate of Basis Industrial, formerly known as Miami City Self-Storage, bought Megacenter Palmetto, an 180,000-square-foot mixed-use site at 8600 Northwest South River Drive, Basis Industrial COO and Partner Anthony Scavo said. The building is divided into an 85,000-square-foot indoor go-kart track, 24,000 square feet of self storage, 15,000 square feet of office suites and small bay warehouse spaces, Scavo said.
The seller, an entity managed by Patricio Ureta of Coral Gables, paid $7 million for the property in 2016, records show. The building was completed in 1970. Through other affiliates, Ureta also sold a warehouse-flex building in Hallandale Beach for $20 million and a warehouse and distribution facility in Miramar for $13.3 million over the past six months.
Megacenter Palmetto is anchored by K1 Speed, an indoor go-kart track operator, and has eight other tenants occupying the smaller bays between 4,000 to 8,000 square feet, Scavo said. Basis Industrial plans to add a $15 million, 125,000-square-foot self-storage facility on a parking lot on the property, Scavo said.
Basis Industrial plans on catering to tenants seeking between 700 square feet to more than 4,000 square feet, Scavo said. Sites the company acquires will be branded under the name Bay Spaces. Megacenter Palmetto is being renamed Bay Spaces Medley, Scavo said.
“While the bigger funds and bigger players are looking for big deals with less tenants, we are looking for sites that can accommodate more small tenants,” Scavo said. “Our idea is that this is an undervalued sector of the industrial market.”
The deal comes at a time South Florida’s industrial market continues to surge despite rising inflation and interest rates and talk of a looming recession. In the most recent quarter, warehouse asking rents in Miami-Dade rose by nearly a dollar to $11.50 per square foot compared to $10.68 during the second quarter in 2021, according to a Colliers report. The vacancy rate dropped to 2.3 percent compared to 3.5 percent year-over-year.
In Medley, the vacancy rate was 3.7 percent and the average asking rent was $9.14 a square-foot, the report shows.
“By the end of the year, we expect to have 2 million square feet of industrial space under management in south and central Florida,” he said. “We are closing on 150,000 square feet in Orlando next month and 200,000 square feet in Melbourne the following month.”
Basis Industrial, led by managing directors and lead partners Steve Garchik, Jay Massirman, CEO Daniel Weinstein and Scavo, is also closing a deal this week for a 33,000-square-foot warehouse in Orlando. Garchik and Massirman co-founded the firm 25 years ago as Miami City Self-Storage.