Industrial Market Report, Q2 2022
Miami-Dade County, FL
Miami-Dade County boasted record-breaking sales in the industrial sector during 2021, with emerging market trends continuing throughout 2022. The metro area experienced significant growth in rising population and a higher demand for warehouse space. Tenants who are new to the market are looking to flock to the area while owners are capitalizing on improving market conditions with higher rent costs. Year-over-year rent growth for Q2, 2022 is 20.2%, far above the national average, outperforming the five-year annual average of 8.1%. Although Miami holds a strong position within the market, construction costs have increased and pushed rental rates to an all-time high. Despite price spikes, it has not deterred demand for land supply or leasing volume, and e-commerce activity continues to increase with massive growth in port markets, as well as third-party logistic tenants.
Vacancy & Rent Fundamentals
The Miami industrial vacancy rate has trended lower over the past few quarters and has posted 7.8 million square feet of positive net absorption over the same period. As a result, the vacancy rate is down to a decade low of 2.5%. Leasing volume in Miami has increased significantly since the onset of the coronavirus pandemic.
The sector averaged roughly 3.8 million square feet of quarterly leasing volume since mid-2020, compared to an average of about 2.8 million square feet per quarter from 2015 to 2019. Leasing activity may slow in Miami over the next few quarters, but not for a lack of demand. Industrial space in Miami-Dade is scarce, and land constraints limit the prospect of large-scale construction.
In Q2 2022, average asking rents are now $16.90 square feet, far above the national average of $10.50 square feet. With an already low vacancy rate, a manageable supply pipeline, and a consistently strong demand for industrial space in Miami, property owners should remain in an advantageous position to push rents over the next few quarters.
Sales Volume
Following the onset of COVID-19, the market has not waivered in industrial transaction activity. Deal volume has remained strong over the first months of 2022 and despite relatively high acquisition costs, investors are still paying top dollar for industrial assets. Average pricing in the Miami market is well above the national average and ranks as one of the most expensive sectors on the East Coast. The largest industrial portfolios in Miami are:
-Prologis (14 million square feet)
-Blackstone (9 million square feet)
Construction
New construction developments have remained a strong driver for the Miami industrial market and approximately 11 million square feet have been added to the sector since 2019. However, due to the high need for demand, it has outweighed supply over that same timeframe, with 15.3 million square feet of direct absorption.
