Industrial Market Overview

Fort Lauderdale, FL

Despite the economic climate, Fort Lauderdale is anticipating booming rent growth of 17.3 percent year over year, with that number growing over the next five years. As a state, Florida has seen high in-migration patterns because of the pandemic and retiring baby boomers. The increase in population is anticipated to have a positive effect on consumer spending habits as well as demand for distribution space in the retail sector. In Fort Lauderdale specifically, submarkets along 1-95, including Pompano Beach and Southeast Broward, have gained a large share of the area’s industrial leases in recent years. Overall, the metro’s industrial vacancy rate is relatively low at 3.5 percent, which can be attributed to land constraints and difficulty to receive permits. Nevertheless, there is currently 1.4 million square feet of industrial space under construction, which only amounts to one percent of the existing industrial inventory.

Leasing

The Fort Lauderdale industrial market is expected to remain tight throughout the upcoming quarters. The market’s current 12-month net absorption of 4.1 million square feet is well-above the metro’s five-year average of 1.9 million square feet. This can be attributed to the metro only having approximately 910,000 square feet of deliveries in the past year, leading to the market’s vacancy rate falling to 3.5 percent. Fort Lauderdale’s economy relies heavily on manufacturers and distributors due to its prominent location with access to Port Everglades and the Florida East Coast Railway. There are currently less than 10 blocks of space larger than 100,000 square feet available across Fort Lauderdale, forcing large scale industrial projects to opt for new locations. The lack of larger spaces makes it harder to find long-term tenants. However, industrial spaces larger than 20,000 square feet span about 70 blocks. Smaller and mid-sized properties are the key to Fort Lauderdale’s industrial market, attracting a high quantity of tenants.

Rent

Fort Lauderdale’s year-over-year rent growth of 17.3 percent is outpacing the national average of 12 percent. With little industrial supply in the near-term pipeline and very strong metro market conditions, industrial owners in Fort Lauderdale are able to continuously raise rents. Flex assets have improved with 12-month rent growth of 8.7 percent. Average asking rents in Fort Lauderdale are about $16.90 per square foot, well above the national average of $10.60 per square foot.

Construction

Fort Lauderdale faces land constraints that prevent industrial construction from running ahead of tenant demand, a common theme seen throughout South Florida. There are currently 18 properties under construction, accounting for 1.4 million square feet, making up 1.1 percent of the market’s inventory. Larger properties spanning over 50,000 square feet have higher net rents, averaging $11.80 per square foot. Broward County, one Florida’s top producing counties, has approximately 2.3 million square feet of industrial space in the pipeline. Fort Lauderdale’s largest project in planning is on a 133-acre parcel, purchased by Amazon for $84.5 million. The property is going to be an 84-foot-tall fulfillment center spanning 824,000 square feet. Additionally, Fort Lauderdale’s largest project currently under construction is Black Group’s East Pompano Industrial Center, which consists of four buildings totaling 810,000 square feet.

Sales

Despite rising interest rates, Fort Lauderdale’s industrial properties have totaled $2 billion in sales over the past 12 months, which is well above the $984 million annual average of the last five years. The average cap rate for the market is 5.9 percent, with the average price per square foot at $207. Investment dollars are primarily in sale-leaseback properties and acquisitions for redevelopment. Recently, The Glove Store sold its 2015-built 54,000 square foot distribution center to Boston-based Cabot properties for $17.8 million or $331 per square foot. This notable sale is an outlier, while most properties built within the past five years close between $215 and $240 per square foot. In May, Alliance Partners HSF purchased a 28,000 square-foot warehouse along with an adjacent .8-acres of vacant land for $8.2 million. The Philadelphia-based company plans to redevelop the space into a 70,000-square-foot distribution center.