Florida Industrial Market Report
Tampa
Market Overview
Tampa’s economy is one of the strongest in Florida, notably due to the prominent job and population growth the market has recently witnessed. Tampa’s industrial market is the second largest in Florida, encompassing 212 million square feet of industrial space. Strong tenant demand, particularly from retailers, e-commerce, and logistics companies, has driven historic levels of absorption and rent growth in Tampa. Market asking rents have reached historical levels, increasing over the past year, with projections to rise further. Moreover, Tampa’s significant investment sales activity highlights its continued attractiveness for businesses and investors.
Highlights
- Rent growth is forecasted to continue outpacing the national average, reaching around 11% by the end of 2023.
- The 12-month sales volume stands at $1.2B, surpassing the historical average of $500M.
- Pasco County currently holds 4 of the 5 largest active developments in the Tampa region.
- The Tampa market currently has around 4M SF in the construction pipeline.
Rents | Vacancy | Construction
The industrial rental market in Tampa has experienced significant growth in recent years, with rents increasing by 13.4% year-over year as of Q2 2023. The demand surge since early 2020 has also raised asking rates by approximately 40%. Although there has been a steady acceleration in demand for industrial space in Tampa over the past 12 months, supply has continued to outpace demand, leading to a slight increase in vacancy rates. However, vacancy rates remain low at 3.9% and are anticipated to stay tight in the 4.0% to 5.0% range. Tampa’s industrial construction has boomed due to strong demand and low vacancies, with 3.9 million square feet of industrial space currently under construction. Tampa’s small-bay market is highly active, with vacancies averaging below 2.0%.
Sales
Tampa, FL, By the Numbers in the Last 12 Months
- Vacancy Change: o.3%
- Net Absorption SF: 5.6M
- Deliveries SF: 6.5M
- Rent Growth: 13.4%
- Sales Volume: $1.2B
Investment sales activity has been robust in Tampa, with over 480 industrial properties trading for about $1.2 billion in transaction volume over the past year. Notably, around 45 industrial buildings larger than 20,000 square feet traded for more than $100 per square foot. Prominent tenants like Tesla, Houston Wire & Cable, Breakthru Beverages, and International Paper committed to substantial square footage in 2023. This is primarily due to the market’s strategic location along the I-4 Corridor and access to Port Tampa Bay, international airports, and major roadways that are attractive to distribution centers.
Jacksonville
Market Overview
The industrial market in Jacksonville is experiencing strong and steady growth, driven by a combination of robust demand and strategic advantages. The market has seen significant development activity, with new industrial space being added at a brisk pace. Despite an increase in vacancy, there remains a healthy level of leasing interest, indicating a strong demand for industrial properties. Jacksonville’s position as a growing port market, coupled with its favorable geographical location, provides access to multiple distribution points throughout the Florida peninsula and the eastern seaboard. The market’s tight conditions have led to strong rent growth, outpacing the national average. Additionally, investor interest in the industrial sector has been notable, reflecting confidence in the market’s potential. Overall, the Jacksonville industrial market demonstrates resilience and promising prospects for continued growth.
Highlights
- Jacksonville’s rent growth is faster than the national average, with a 13.7% year-over-year increase.
- The West Side is the dominant submarket in Jacksonville, comprising nearly 25% of the total market’s inventory and hosting almost half of the ongoing new development.
- Total industrial vacancy has increased in the past year to 4.8%.
- Development activity remains vigorous, with roughly 4.6M SF of new industrial space under construction.
Rents | Vacancy | Construction
Rent growth in the Jacksonville industrial market has been strong, with a year-over-year increase of 13.7%, surpassing the national average and outpacing several competing Sunbelt markets. Strong demand from renters is driving the upward trajectory in rents, but increased supply in the market is also creating more competition, which may limit further increases in lease rates. The average asking industrial rent in Jacksonville is currently $9.60 per square foot, below the national average of $11.60 per square foot. Additionally, the current industrial vacancy rate in Jacksonville is 4.8%, increasing by 1.7% over the past year. There is currently over seven million square feet of vacant industrial space in Jacksonville, a 50% increase compared to the previous year. The development of industrial space in Jacksonville is progressing rapidly, with 4.6 million square feet currently under construction and roughly two million square feet expected to be delivered by the end of Q2 2023.
Sales
Jacksonville, FL, By the Numbers in the Last 12 Months
- Vacancy Change: 1.7%
- Net Absorption SF: 3.1M
- Deliveries SF: 6.1M
- Rent Growth: 13.7%
- Sales Volume: $664M
Jacksonville’s industrial sector has witnessed brisk investor interest, with 180 properties traded in 2022, totaling approximately $900 million in transaction volume. Notably, demand for warehouse and logistics space is increasing, and Jacksonville’s position as a growing port market near a major regional hub helps protect it from the challenges facing the national industrial sector. Over the past year, there have been more than 20 lease deals signed in Jacksonville for spaces of 100,000 square feet or greater, including deals with Primark and Dollar General. The average market price for industrial properties has reached a record high of $100 per square foot, while market cap rates are considerably low at 6.6%.
Fort Lauderdale
Market Overview
The industrial real estate market in Fort Lauderdale has experienced notable trends in recent quarters. Vacancy rates have remained relatively low, especially compared to similar-sized industrial markets in Florida. The tight vacancy rate, combined with a slower economic environment, has impacted lease volume. Additionally, the limited availability of developable land has constrained construction activity. The tight market conditions have also resulted in significant annual rent gains of over 17% in Q1 2023, positioning Fort Lauderdale as one of the strongest-performing industrial markets in the country.
Highlights
- The 12-month rent growth remains high at 15.8%, exceeding the historical average of 4.8%.
- 62,770 SF has been delivered, and 1,307,553 SF are under construction in Fort Lauderdale.
- Total industrial vacancy has increased in the past year to 3.7%.
- Fort Lauderdale has consistently maintained lower vacancy rates compared to the rest of the U.S., except for the year 2020.
Rents | Vacancy | Construction
Fort Lauderdale’s industrial rent growth remains among the highest in the nation, along with Orlando and Miami.
Fort Lauderdale’s industrial market has experienced robust tenant demand, resulting in record-high rents of over $19 per square foot, which are among the highest in Florida. The market has witnessed a significant rent increase of more than 49% since 2019, surpassing the national average gain of over 31%. This growth has been primarily driven by logistics assets. Annual net absorption declined, totaling 1.4 million square feet in Q1 2023, compared to the peak of 4.6 million square feet leased during the same period in 2022. This has led to a decline in vacancies to a low of 3.7% in Q2 2023, down from over 6.0% in Q2 2021. Despite supply and demand imbalances affecting vacancies in many U.S. markets, Fort Lauderdale’s vacancies are expected to remain below the national average of 4.7% due to limited available industrial space. Construction activity in the area has also slowed down in recent years, with roughly 1.2 million square feet of construction underway as of Q1 2023 and only 970,000 square feet expected to be delivered in 2023, showing a significant decline from the peak observed in H1 2020 when around 3.4 million square feet were under construction.
Sales
Fort Lauderdale, FL, By the Numbers in the Last 12 Months
- Vacancy Change: 0.4%
- Net Absorption SF: 717K
- Deliveries SF: 1.3M
- Rent Growth: 15.8%
- Sales Volume: 1.5B
The sales activity in Fort Lauderdale’s industrial real estate market has shown signs of deceleration in 2023, recording a volume of about $165 million in Q1 2023, marking the lowest figure since Q1 2021. The 12-month sales volume as of June 2023 is $1.5 billion. The largest transaction in 2023 has been the sale of a 61,000-square-foot warehouse in Sunrise for over $14 million. Given the rapid appreciation in prices, a slowing economy, and higher interest rates, it is anticipated that transaction activity will be more subdued throughout 2023.
