INDUSTRIAL DEVELOPMENT IN
MARKET TRENDS
MIAMI BOOMING WITH RENTS AT
Q4 2017 INDUSTRIAL REPORT
RECORD HIGHS
EXECUTIVE SUMMARY The Miami Industrial market continues to experience strong development volume with sinking vacancies and stagnating rental rates. In the last quarter, rental rates hovering around $9.75 per SF. At the same time, vacancies decreased by 12 basis-points, while absorption rates were increasing to 449.713 SF. Construction in the industrial segment is currently 5.08 million SF, with 2.05 million SF being delivered in the next quarter. The area with the highest activity is Medley with over 2 million SF under construction.
OUTLOOK Miami’s industrial market is driven by strong economic growth and has developed to an international hub for goods and services entering and leaving the United States. New class A industrial space is scarce within Miami and is thought after by tenants as investors. Developers have responded by significantly increasing industrial development activity over the past year. In the next quarter about 2.05 million SF are being delivered. Temporarily this will yield into a slight uptick in vacancy and rental rates.
VACANCY
NET ABSORPTION SF
CONSTRUCTION SF
COMPLETIONS SF
Q4 2017
Q3 2017
FORECAST
4.00%
i
h
449,713
h
h
5,084,198
h
i
267,769
i
h
9.76
g
h
GROSS LEASE RATE
RELATIVE TO PRIOR PERIOD | SOURCE: COSTAR PROPERTY®
ECONOMIC OVERVIEW 1 YR CHANGE
Q4 2017
CHANGE
UNEMPLOYMENT RATE
4.6%
- 16.4%
POPULATION GROWTH
2,770,020
+ 1.41%
MEDIAN HOUSEHOLD INCOME
47,346
+ 2.36%
LABOR FORCE
1,181,950
+ 1.31%
CHANGE AS PER YEAR-TO-DATE | SOURCE: US DEPARTMENT OF LABOR STATISTICS
MARKET ACTIVITY About 449,713 SF of industrial space were absorbed in the past quarter and 267,769 SF of new supply added to the market. Miami’s vacancy dropped slightly to 4.00% from the previous period with asking rents stagnating around to $9.75 per SF. The booming e-commerce sector is merging industrial and retail landscapes and creating a need for regional distribution centers. Providing on-demand delivery has caused the industrial market to become the greatest beneficiary of challenges in the retail sector. In combination with a growing population and increasing local demand, industrial rents and new construction are propelling in Miami-Dade. The Port Miami is crucial to the local consumption and in many cases the Miami area is the destination for cargo shipped through the ports. Recently the Port Miami completed its expansion and dredging project and now has the capacity to accommodate Super-Post-Panamax ships and some of the largest cargo ships travelling from the East. With the advances in transportation through Port Miami, fresher agricultural produce will be processed and stored locally. This will lead to an increase in demand for storage space and coolers. Some areas, which have traditionally been industrial areas such as the Central East and Bird Rd Market are undergoing a major shift to more retail/entertainment oriented activities. This transformation results in a significant increase in sale prices and rental rates. As this occurs, industrial activity is forced to move to less expensive locations.
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ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | INDUSTRIAL | Q4 2017