MARKET VIEW | INDUSTRIAL | SOUTH FLORIDA MIAMI-DADE | BROWARD | PALM BEACH
Q2 2018
ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | APARTMENT | Q1 2018
BOOMING DEMAND FOR MIAMI’S
MARKET TRENDS
INDUSTRIAL PRODUCT, WHILE
Q2 2018 INDUSTRIAL REPORT
SUPPLY IS AT RECORD HEIGHTS
EXECUTIVE SUMMARY Demand for industrial space has generally grown stronger over the cycle, supported by improvements in the housing market, strong employment growth, and demand for logistics space related to ecommerce. There is also heavy international trade activity generated by Miami International Airport and PortMiami, but Miami’s geographic location prohibits it from being a major National Distribution hub. It is also geography that makes new industrial building cost-prohibitive. Sandwiched between the Everglades and the Atlantic Ocean, land costs in the metro are high, which are passed on to tenants in the form of higher rent. In fact, Miami has the second highest asking rents in the Eastern U.S., just behind NYC. But sub 4% vacancy in 2016 and a surge in pricing got developers off the sidelines. As a result, the metro has witnessed one of the strongest supply pipelines in over a decade, slowing rent growth over the last several quarters. But rent gains still remain around 5%, well over its historical rate.
Q2 2018
12 MONTH CHANGE
FORECAST
4.14%
h
i
NET ABSORPTION SF
1,470,070
h
i
CONSTRUCTION SF
4,320,603
h
i
COMPLETIONS SF
1,434,182
h
i
GROSS LEASE RATE
10.30
h
h
CAP RATE
5.89%
i
h
130
h
h
h
h
VACANCY
$/SF
$ SALES VOLUME
414.58M
RELATIVE TO PRIOR PERIOD | SOURCE: COSTAR PROPERTY®
ECONOMIC OVERVIEW 1 YR CHANGE
Q2 2018
CHANGE
UNEMPLOYMENT RATE
4.5%
- 13.4%
POPULATION GROWTH
2,774,110
+ 1.20%
MEDIAN HOUSEHOLD INCOME
48,476
+ 3.88%
LABOR FORCE
1,188,800
+ 1.39%
CHANGE AS PER YEAR-TO-DATE | SOURCE: US DEPARTMENT OF LABOR STATISTICS
OUTLOOK Miami is well positioned to maintain healthy industrial fundamentals given the market’s global connections, improving in-migration, and the Panama Canal expansion. In fact, local economic trends such as the housing market recovery and employment growth bode well for locally and regionally focused logistics markets like Miami.
ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | INDUSTRIAL | Q2 2018 2
MARKET ACTIVITY
COMPLETIONS, ABSORPTION AND VACANCY TRENDS COMPLETIONS
Despite its limited available land, Miami has been very active in terms of construction. The metro delivered over 3.5 million SF of logistics space in the last 12 months, and with over four million SF expected in 2018, Miami is hosting some of its heaviest construction in more than a decade. Most activity has been in projects in the outlying areas of northwest Dade County. The submarkets of Medley and Miami Airport West typically host more industrial construction than elsewhere due to their proximity to the airport and interstate system. The North Miami Beach Submarket has recently jumped to the top ranks for construction thanks to Amazon, which just broke ground on an 836,000 SF fulfillment center next to the Opa-Locka Executive Airport. This mega warehouse will deliver in the Carrie Meek International Business Park and will employ over 1,000 full-time workers, in addition to a fleet of robotic machines that sort and transport packages. While other distribution centers for Amazon already exist in South Florida, this will be the largest in the region.
ABSORBTION
VACANCY
SOURCE: COSTAR PROPERTY®
2,000,000
4.30% 4.20%
1,500,000
4.10% 1,000,000
4.00%
500,000
3.90% 3.80%
-
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
(500,000)
3.70% 3.60%
(1,000,000)
3.50%
AVERAGE ASKING RENTS TRENDS FLEX
WAREHOUSE
OVERALL
SOURCE: COSTAR PROPERTY®
20.00 18.00 16.00 14.00 12.00 10.00
Pricing and volume increases in Miami’s logistics market reveal rising investor interest over the past few years, highlighted by single-asset purchases by Prologis, Centerpoint Properties, and Terra Group, among others. Trade volume and pricing surged in 2016, marking high points for the cycle. Miami ranks among the nation’s leaders in total volume, with 12-month sales at nearly $1 billion. Miami and Fort Lauderdale both command high prices, with sales averaging over $110/SF, but Miami’s sales volume is twice that of Fort Lauderdale. Cap rates for logistics space have averaged well over 6% for the last three years.
8.00 6.00 4.00 2.00 -
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
PRICE TRENDS CAP RATE
$/SF
$ VOLUME
SOURCE: REAL CAPITAL ANALYTICS
686 M
170
8.00% 7.00%
150
A new cargo-only airport called Airglades International Airport is in the proposal stages about 80 miles north of Miami in Central Florida. It would receive mostly perishable goods from Latin and South America and feature state-of-the-art warehouses and distribution facilities designed specifically for perishable goods. It is hoped that it will relieve some truck traffic as well as some commercial traffic coming into Miami International Airport.
6.00% 130 329 M
110 90
215 M
5.00% 4.00%
303 M
3.00%
232 M 161 M
120 M
70 50
242 M
218 M
345 M
415 M
377 M
2.00% 1.00%
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
0.00%
3 ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | INDUSTRIAL | Q2 2018
INDUSTRIAL STATISTICS SUBMARKET
TYPE
INVENTORY
VAC. (%)
SF
YTD NET ABS. YTD DELIV. SF
UNDER CONSTR.
SF
SF
EFF. RENTS/SF
YTD VOLUME $
CAP RATE %
$/SF
Central Miami
Total
3,285,057
3.27%
9,184
9,876
9,500
9.88
7.78 M
-
177.00
Warehouse 3,232,720
3.29%
7,884
9,876
9,500
9.64
7.78 M
-
177.00
Flex
52,337
1.91%
1,300
-
-
19.95
-
-
-
East Miami
Total
4,276,792
6.97%
(8,730)
-
30,000
17.59
24.09 M
7.80
321.39
Warehouse 3,797,072
5.16%
8,920
-
-
16.92
24.09 M
7.80
321.39
Flex
479,720
21.36%
(17,650)
-
30,000
19.32
-
-
-
Hialeah
Total
30,930,525
3.18%
223,721
183,933
77,860
8.12
100.44 M
6.53
89.25
Warehouse 30,601,347
3.21%
223,721
183,933
77,860
8.11
100.44 M
6.53
89.25
Flex
329,178
0.30%
-
-
-
18.00
-
-
-
Medley
Total
35,413,232
6.07%
320,998
159,180
543,924
9.39
45.40 M
7.17
132.70
Warehouse 34,520,163
6.21%
313,154
159,180
543,924
9.36
45.40 M
7.17
132.70
Flex
893,069
0.69%
7,844
-
-
14.98
-
-
-
Miami Airport East
Total
21,851,183
4.55%
91,176
168,693
-
10.12
-
-
-
Warehouse 20,507,811
3.95%
71,020
168,693
-
9.69
-
-
-
Flex
1,343,372
13.69%
20,156
-
-
16.57
-
-
-
Miami Airport North
Total
12,649,213
2.27%
(100,316)
-
200,000
9.88
-
-
-
Warehouse 11,349,609
2.31%
(75,708)
-
200,000
9.79
-
-
-
Flex
1,299,604
1.89%
(24,608)
-
-
20.81
-
-
-
Miami Airport West
Total
45,329,255
3.91%
(176,309)
209,645
656,054
11.08
-
-
-
Warehouse 39,655,673
4.08%
(166,497)
209,645
656,054
10.55
-
-
-
Flex
5,673,582
2.76%
(9,812)
-
-
19.11
-
-
-
Miami Lakes
Total
12,144,062
0.73%
249,191
-
99,130
8.56
18.20 M
5.50
111.04
Warehouse 10,675,499
0.66%
159,717
-
99,130
8.27
18.20 M
5.50
111.04
Flex
1,468,563
1.22%
89,474
-
-
10.43
-
-
-
North Miami Beach
Total
37,154,847
4.93%
(398,924)
31,548
2,226,116
8.65
198.45 M
6.42
104.96
Warehouse 35,479,039
4.84%
(408,169)
31,548
2,226,116
8.46
198.45 M
6.42
104.96
Flex
1,675,808
6.91%
9,245
-
-
12.81
-
-
-
Outlying-Miami Dade
Total
1,287,750
0.00%
1,062,427
1,062,427
460,050
7.07
180.85 M
-
173.12
Warehouse 1,287,750
0.00%
1,062,427
1,062,427
460,050
7.07
180.85 M
-
173.12
Flex
-
-
-
-
-
-
-
-
South Central Miami
Total
13,131,037
7.11%
(48,441)
-
-
22.99
88.76 M
5.64
198.51
Warehouse 12,475,882
7.40%
(47,581)
-
-
21.64
88.76 M
5.64
198.51
Flex
655,155
1.60%
(860)
-
-
33.74
-
-
-
South Dixie Hwy
Total
8,922,834
3.13%
(73,729)
-
-
11.50
12.03 M
7.25
130.59
Warehouse 8,092,100
3.35%
(74,685)
-
-
11.41
12.03 M
7.25
130.59
Flex
830,734
1.04%
956
-
-
12.98
-
-
-
Southwest Dade
Total
10,231,912
1.73%
(89,620)
-
17,969
12.20
14.04 M
-
121.69
Warehouse 8,430,321
1.43%
(53,137)
-
17,969
12.21
13.11 M
-
123.02
Flex
1,801,591
3.17%
(36,483)
-
-
12.16
0.92 M
-
114.36
West Miami/Coral Ter
Total
4,666,660
1.66%
(3,466)
-
-
15.07
8.19 M
-
338.86
Warehouse 4,304,485
1.13%
(1,057)
-
-
14.89
8.19 M
-
338.86
Flex
362,175
8.02%
(2,409)
-
-
15.75
-
-
-
Total
241,274,359
4.14%
1,057,162
1,825,302
4,320,603
10.30
698.22 M
6.42
146.00
Warehouse
224,409,471
4.13%
1,020,009
1,825,302
4,290,603
9.94
697.29 M
6.42
146.05
Flex
16,864,888
4.24%
37,153
-
30,000
17.04
0.92 M
-
114.36
0.00%
Source: CoStar Property® ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | INDUSTRIAL | Q2 2018
SIGNIFICANT LEASE TRANSACTIONS PROPERTY ADDRESS
TENANT NAME
SIZE
LEASE TYPE
LEASE RATE
SUBMARKET
Gratigny Central Ind Park
Foreign Parts Distributor
152,800
Direct
$6.75 IG
North Miami Beach
Countyline Corporate Park
N/A
144,811
Direct
$7.04 NNN
Outlying Miami-Dade
12805 NW 42nd Ave
N/A
80,000
Sublease
$2.00 FS
North Miami Beach
13260 NW 45th Ave
N/A
75,204
Direct
$6.95 IG
North Miami Beach
8503 NW 80th St
Neutralogistics
68,787
Direct
$9.55 FS
Medley
SIGNIFICANT SALES TRANSACTIONS PROPERTY
BUYER
SIZE
SALES PRICE$
$/SF
SUBMARKET
Countyline Corporate Park Bld 3
Duke Realty Corporation
536,050
97,560,000
182
Outlying Miami-Dade
Countyline Corporate Park Bld 2
Duke Realty Corporation
325,739
48,870,000
150
Outlying Miami-Dade
“Countyline Corporate Park Bld 1
Duke Realty Corporation
197,449
33,570,000
170
Outlying Miami-Dade
3500 NW 24th St - LSG Sky Chefs
ASB Capital Management
301,983
24,300,000
80
Hialeah
8050 NW 90th St
Dayan Family Trust
145,172
15,589,482
107
South Central Miami
MAJOR DEVELOPMENT PIPELINE PROPERTY ADDRESS
COMPLETION
SIZE
DEVELOPER
Carrie Meek International Business Park
Q4 2018
836,292
Clarion Partners
North Miami Beach
Bridge Point Commerce Center - Bldg. B
Q1 2019
534,816
Bridge Development Partners
North Miami Beach
Bridge Point Commerce Center - Bldg. C
Q1 2019
286,875
Bridge Development Partners
North Miami Beach
Bridge Point Commerce Center - Bldg. A
Q1 2019
286,875
Bridge Development Partners
North Miami Beach
Carrie Meek International Business Park - Bldg 2
Q4 2018
281,258
Office of the Mayor
North Miami Beach
ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | APARTMENT | Q4 2017
SUBMARKET
BROWARD’S INDUSTRIAL MARKET
MARKET TRENDS
EXPERIENCES FIRST SIGNS OF
Q2 2018 INDUSTRIAL REPORT
SATURATION
EXECUTIVE SUMMARY Broward County continues to play an important role in regional logistics. The presence of Port Everglades, and its proximity to the Fort Lauderdale–Hollywood International Airport as well as its convenient rail access, makes Fort Lauderdale an attractive and flexible metro for logistics operations. It is Florida’s top seaport for containerized cargo, exceeding one million TEUs in 2016. Strong employment growth of nearly 4% helped to contribute to recent demand for logistics space throughout 2017 and into early 2018, as evidenced by only a slight slowdown in absorption from the post-recession high in 2016. Rent growth has remained strong across most industrial property subtypes, with specialized industrial an exception. Overall metro rent growth continues to outpace Miami’s by nearly 400 basis points. Investment volume had a banner year in 2017, with an all-time high over $700 million.
12 MONTH CHANGE
FORECAST
4.18%
h
h
-31,151
i
h
1,721,618
h
i
404,026
i
h
9.82
i
h
7.51%
h
i
102
i
h
244.90M
h
g
Q2 2018 VACANCY
NET ABSORPTION SF
CONSTRUCTION SF
COMPLETIONS SF
GROSS LEASE RATE
CAP RATE
$/SF
$ SALES VOLUME
RELATIVE TO PRIOR PERIOD | SOURCE: COSTAR PROPERTY®
ECONOMIC OVERVIEW 1 YR CHANGE
Q2 2018
CHANGE
UNEMPLOYMENT RATE
3.5%
- 7.9%
POPULATION GROWTH
1,968,270
+ 1.67%
MEDIAN HOUSEHOLD INCOME
57,890
+ 3.91%
LABOR FORCE
848,880
+ 1.26%
CHANGE AS PER YEAR-TO-DATE | SOURCE: US DEPARTMENT OF LABOR STATISTICS
OUTLOOK Strong employment growth and robust port activity help to drive strong fundamentals for the industrial market in Fort Lauderdale. Demand has been very strong in the metro, and vacancies have compressed to 3-4%. Some developers are setting their sights on Broward because they find land expensive and limited in MiamiDade. Those fundamentals will continue to drive construction in Broward. Land constraints however limiting development activities and remain a challenge for developers. Rent gains lost some momentum in 2017, but Fort Lauderdale is still neck and neck with Orlando among metros with the highest rent growth in Florida.
ONE COMMERCIAL REAL ESTATE | BROWARD | INDUSTRIAL | Q2 2018
MARKET ACTIVITY
COMPLETIONS, ABSORPTION AND VACANCY TRENDS COMPLETIONS
New industrial product is coming to SW Broward County, where 469,609 SF is under construction, followed by SE Broward where 324,321 SF are under development. Broward’s southern portion is attractive to developers due to the availability relative affordable developable land and the posibility to serve both Broward and Dade.
ABSORBTION
VACANCY
SOURCE: COSTAR PROPERTY®
1,200,000
4.50% 4.00%
1,000,000
3.50% 800,000
3.00%
600,000
2.50%
400,000
2.00% 1.50%
200,000
The largest project under development is distribution park named South Florida Distribution Center, which is tailored for tenants who want to serve the both east and west coast of Southern Florida. The plans include to develop 750,000 square feet of Class A office/warehouse space across three buildings. The first phase of the project: the development of a speculative 223,008-square-foot Class A building is anticipated for Q2 2018. Transaction activity in Broward remained robust as more than $656 milion in industrial assets changed hands year-to-date. Over the last quarter sales droped to $78 million, while overall cap rates declined to 5.88%, which can be seen as sign for the lack of quality for sale inventory.
1.00% -
Q1 2017
(200,000)
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
0.50% 0.00%
AVERAGE ASKING RENTS TRENDS FLEX
WAREHOUSE
OVERALL
SOURCE: COSTAR PROPERTY®
16.00 14.00 12.00 10.00 8.00 6.00 4.00
Acquisition yields for stabilized properties were in the 5.5% range for Class A assets, and between 5.5% and 8.5% for Class B and C properties. Investment demand will likely remain strong throughout 2018, focusing on well located modern properties along major thoroughtfares with credit tenants.
2.00 -
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
PRICE TRENDS CAP RATE
$/SF
$ VOLUME
SOURCE: REAL CAPITAL ANALYTICS
130
10.00%
245 M
120
225 M
110
90
7.00%
179 M
100
6.00%
128 M
143 M
135 M
135 M
5.00%
117 M 99 M
80
4.00%
94 M
3.00%
72 M
70
2.00%
60 50
9.00% 8.00%
208 M
1.00% Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q1 2018
Q2 2018
0.00%
ONE COMMERCIAL REAL ESTATE | BROWARD | INDUSTRIAL | Q1 2018
INDUSTRIAL STATISTICS SUBMARKET
TYPE
INVENTORY
VAC. (%)
SF
YTD NET ABS. YTD DELIV. SF
SF
UNDER CONSTR.
EFF. RENTS/SF
YTD VOLUME $
CAP RATE %
$/SF
SF
Central Broward
Total
20,578,424
2.28%
134,335
-
54,791
11.01
121.56 M
6.63
115.71
Warehouse
17,994,004
2.19%
108,190
-
-
10.50
121.56 M
6.63
115.71
Flex
2,584,420
2.88%
26,145
-
54,791
14.05
-
-
-
Coral Springs
Total
7,023,983
8.26%
117,785
366,536
291,726
8.16
41.70 M
-
119.73
Warehouse
5,912,483
8.78%
152,261
366,536
291,726
7.75
40.89 M
-
115.83
Flex
1,111,500
5.51%
(34,476)
-
-
12.95
0.81 M
-
143.17
Northeast Broward
Total
12,892,964
1.66%
139,232
37,050
275,155
9.99
44.48 M
5.50
117.29
Warehouse
11,435,669
1.34%
101,272
37,050
275,155
9.16
44.48 M
5.50
117.29
Flex
1,457,295
4.15%
37,960
-
-
13.96
-
-
-
Outlying Broward
Total
42,248
0.00%
2,734
-
-
15.95
-
-
-
Warehouse
5,861
0.00%
-
-
-
-
-
-
-
Flex
36,387
0.00%
2,734
-
-
15.95
-
-
-
Pompano Beach
Total
30,976,830
2.96%
107,034
318,064
190,478
9.54
181.84 M
6.52
117.32
Warehouse
27,606,455
2.81%
153,642
318,064
68,500
9.23
181.84 M
6.52
117.32
Flex
3,370,375
4.12%
(46,608)
-
121,978
10.81
-
-
-
Southeast Broward
Total
30,845,764
3.01%
(407,738)
-
345,221
10.34
79.43 M
7.90
138.37
Warehouse
26,450,392
3.15%
(423,181)
-
345,221
9.85
79.43 M
7.90
138.37
Flex
4,395,372
2.14%
15,443
-
-
15.32
-
-
-
Southwest Broward
Total
18,513,774
10.42%
(125,276)
451,555
544,247
9.63
91.63 M
7.98
124.22
Warehouse
14,711,041
10.80%
(178,146)
451,555
544,247
8.58
91.07 M
7.98
121.77
Flex
3,802,733
8.94%
52,870
-
-
14.12
0.56 M
-
168.18
West Sunrise
Total
10,513,881
4.32%
102,852
12,800
20,000
10.12
58.18 M
-
129.32
Warehouse
7,724,812
4.60%
79,008
12,800
20,000
9.43
58.18 M
-
129.32
Flex
2,789,069
3.56%
23,844
-
-
12.39
-
-
-
Total
131,387,868
4.18%
70,958
1,186,005
1,721,618
9.82
618.80 M
6.93
122.02
Warehouse
111,840,717
4.13%
(6,954)
1,186,005
1,544,849
9.21
617.44 M
6.92
121.40
Flex
19,547,151
4.44%
77,912
-
176,769
13.18
1.36 M
-
153.37
Source: CoStar Property® ONE COMMERCIAL REAL ESTATE | BROWARD | INDUSTRIAL | Q2 2018
SIGNIFICANT LEASE TRANSACTIONS PROPERTY ADDRESS
BUYER NAME
SIZE
SALES PRICE $
$/SF
SUBMARKET
2650 SW 145th Ave
N/A
81,727
Direct
$9.25 NNN
Miramar
Miramar Centre Business Park
AMD Supply
63,860
Sublease
$6.95
Miramar
Miramar Mega Centre Park
N/A
35,283
Direct
$11.50 IG
Miramar
2200 W Sunrise Blvd
Mygrant Glass Company
43,119
Direct
$9.10 NNN
Fort Lauderdale
Sawgrass Center
Air around the Clock
43,066
Direct
$7.50 NNN
Sunrise
SIGNIFICANT SALES TRANSACTIONS PROPERTY
BUYER NAME
SIZE
Supervalu
Elion Partners
721,948
Weston Park of Commerce
University of Miami
226,392
Weston Business Park
Cabot Properties, Inc.
Bldg A Atlas Pen Corp
PRICE
$/SF
SUBMARKET
66,410,000
92
Pompano Beach
30,350,000
134
Southwest Broward
54,484
7,700,000
141
Southwest Broward
Elion Partners
51,480
6,789,928
132
West Sunrise
Aquatic Endeavors Holding LLC
87,000
6,750,000
78
Southeast Broward
MAJOR DEVELOPMENT PIPELINE PROPERTY ADDRESS
COMPLETION
SIZE
DEVELOPER
SUBMARKET
South Florida Distribution Center Bldg. A
Q3 2018
224,572
Core5/Helms
SW Broward
Seneca Commerce Center
Q3 2018
222,145
DCT
SE Broward
Coral Springs Commerce Center I Bldg. D
Q1 2019
215,486
Exeter Property Group
Coral Springs
Davie Business Center - Bldg. C
Q3 2019
205,440
IDI Logistics
Davie
Coral Springs Commerce Center II Bldg. 4
Q3 2018
194,441
Exeter Property Group
Coral Springs
ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | APARTMENT | Q4 2017
PALM BEACH COUNTIES AVAILABLE
MARKET TRENDS
INDUSTRIAL INVENTORY CONTINUES
Q2 2018 INDUSTRIAL REPORT
TO TIGHTEN, WHILE DEVELOPMENT ACTIVITY IS STILL LOW
EXECUTIVE SUMMARY The Palm Beach County industrial market continues to tighten and the vacancy rate remaines near all-time lows, the result of years of solid absorption and just modest construction. The metro’s vacancy has always tracked below the national average, but the spread is now as wide as ever, thanks to net absorption that has exceeded one million SF in four of the past five years. This has kicked rent growth into high gear. It exceeded 5% for most of 2017 and is holding relatively flat there. Palm Beach County has also become a more popular metro for investment in the past few years, with sales volume exceeding $300 million for the first time ever in 2017.
Q2 2018
12 MONTH CHANGE
FORECAST
VACANCY
2.74%
i
h
NET ABSORPTION SF
76,016
i
g
258,342
i
h
-
i
h
GROSS LEASE RATE
10.33
h
h
CAP RATE
6.80%
i
g
94
i
g
62.69M
i
h
CONSTRUCTION SF
COMPLETIONS SF
$/SF
$ SALES VOLUME
RELATIVE TO PRIOR PERIOD | SOURCE: COSTAR PROPERTY®
ECONOMIC OVERVIEW 1 YR CHANGE
Q2 2018
CHANGE
UNEMPLOYMENT RATE
3.80%
- 19.15%
POPULATION GROWTH
1,504,590
+ 2.35%
MEDIAN HOUSEHOLD INCOME
61,151
+ 4.25%
LABOR FORCE
622,200
+ 0.70%
CHANGE AS PER YEAR-TO-DATE | SOURCE: US DEPARTMENT OF LABOR STATISTICS
OUTLOOK Available inventory continues to remain tight in Palm County as Vacancy levels are at record lows. The lack of new supply and moderate absorbtion rates continue to drive rental growth at around 5% (YOY). Even though rental rates and vacancy rates are favorable, the construction pipeline for Palm Beach County remain low and is expected to increase just moderately over the next few years.
ONE COMMERCIAL REAL ESTATE | PALM BEACH | INDUSTRIAL | Q2 2018 10
MARKET ACTIVITY The vacancy rate in Palm Beach has always tracked below the national average, falling to near all-time lows in 2017, thanks to modest construction and net absorption that exceeded one million SF in four of the past five years. The majority of absorption in the last year was in the Southern Boulevard and Palm Beach Airport submarkets. Most industrial space is off of I-95, and the largest nodes containing clusters of warehouses over 75,000 SF are near Palm Beach Gardens and just north of Boca Raton. The largest industrial leases in Palm Beach include tenants such as Walgreens, Millwork Sales, Tire Kingdom, American Tire Distribution Holdings, Floor and Décor, Padron Flooring, and Oxygen Development. Sking rents are increasing in the metro and have recently passed prerecession levels after growing by over 5%. Palm Beach has the highest industrial rents in Florida after Fort Lauderdale and Miami, at around $11/SF. The most expensive properties are near Boca Raton and in the northern portion of the metro in Jupiter and Palm Beach Gardens. The largest gains over the last 12 months also occurred near Boca Raton, as well as near the urban core in the Austin Park Submarket.
COMPLETIONS, ABSORPTION AND VACANCY TRENDS COMPLETIONS
ABSORBTION
VACANCY
SOURCE: COSTAR PROPERTY®
500,000
4.50% 4.00%
400,000
3.50%
300,000
3.00% 2.50%
200,000
2.00%
100,000
1.50% 1.00%
-
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
(100,000)
0.50% 0.00%
AVERAGE ASKING RENTS TRENDS FLEX
WAREHOUSE
OVERALL
SOURCE: COSTAR PROPERTY®
16.00 14.00 12.00 10.00 8.00 6.00
After barely any development in the post-recession years, construction picked up again in Palm Beach in 2015. While deliveries for this cycle peaked in 2016, the overall level cannot yet compare with prerecession completions. And new supply is expected to increase just moderately over the next few years. Investors have taken an active interest in industrial space in Palm Beach, and sales volume has increased quickly in this cycle. With over $300 million in transactions, the metro passed its prerecession peak volume in 2017. Around 70% of sales are to private buyers or in private equity purchases, and about 20% are user-driven purchases. The remaining 10% of trades were to institutional or REIT buyers.
4.00 2.00 -
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
PRICE TRENDS CAP RATE
$/SF
$ VOLUME
SOURCE: REAL CAPITAL ANALYTICS
130
103 M
9.00%
104 M
102 M
97 M
120
8.00% 7.00%
110
74 M 100
67 M
6.00%
65 M
60 M
90
44 M
63 M
49 M
4.00%
80
37 M
3.00%
70
2.00%
60 50
5.00%
1.00%
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
0.00%
11 ONE COMMERCIAL REAL ESTATE | PALM BEACH | INDUSTRIAL | Q2 2018
INDUSTRIAL STATISTICS SUBMARKET
TYPE
INVENTORY
VAC. (%)
SF
45th Street Total Warehouse Flex Austin Park/Hill/53rd Total Warehouse Flex Boca Raton East Total Warehouse Flex Boca Raton West Total Warehouse Flex Boynton Beach Total Warehouse Flex Central Palm Bch Area Total Warehouse Flex Delray Beach Total Warehouse Flex DtwnPB to Tri-RailSta Total Warehouse Flex Electronics Way Total Warehouse Flex Jupiter Total Warehouse Flex Lake Park East Total Warehouse Flex Lake Park West Total Warehouse Flex Lake Worth East Total Warehouse Flex Lake Worth West Total Warehouse Flex Lewis Terminals Total Warehouse Flex Palm Bch Cty Outlying Total Warehouse Flex Palm Beach Airport Total Warehouse Flex Palm Beach Gardens Total Warehouse Flex Port Area Total Warehouse Flex Southern Blvd. Total Warehouse Flex West of Turnpike Total Warehouse Flex Westroads Area Total Warehouse Flex Total Warehouse Flex
1,594,808 1,127,049 467,759 2,695,398 2,561,038 134,360 3,305,128 2,041,214 1,263,914 193,707 149,707 44,000 5,274,795 4,447,986 826,809 5,586,543 5,008,267 578,276 2,971,302 2,487,510 483,792 2,142,609 1,907,131 235,478 1,638,176 1,453,988 184,188 3,023,224 2,031,973 991,251 273,534 273,534 - 1,819,743 1,470,592 349,151 2,497,147 2,054,808 442,339 3,215,760 2,543,108 672,652 3,245,254 3,162,789 82,465 3,654,531 3,495,690 158,841 4,314,212 3,776,775 537,437 673,172 359,919 313,253 367,627 348,727 18,900 1,564,601 1,498,655 65,946 4,757,338 3,429,272 1,328,066 2,280,484 2,094,743 185,741 57,089,093 47,724,475 9,364,618
YTD NET ABS. YTD DELIV. SF
2.82% 1.24% 6.62% 4.10% 4.14% 3.40% 2.29% 1.09% 4.23% 0.00% 0.00% 0.00% 2.45% 2.74% 0.88% 1.38% 1.42% 0.99% 1.26% 1.22% 1.44% 5.30% 4.81% 9.26% 0.60% 0.67% 0.00% 1.32% 1.53% 0.88% 4.85% 4.85% 0.00% 0.96% 1.15% 0.14% 0.49% 0.54% 0.23% 8.05% 10.18% 0.00% 0.57% 0.48% 4.00% 3.20% 3.35% 0.00% 3.31% 2.33% 10.19% 1.42% 0.38% 2.62% 0.00% 0.00% 0.00% 16.40% 17.12% 0.00% 1.49% 1.49% 1.50% 0.32% 0.35% 0.00% 2.74% 2.80% 2.43%
(4,954) (2,028) (2,926) (102,753) (102,438) (315) (32,599) 33 (32,632) - - - 358 (6,563) 6,921 (15,425) (19,200) 3,775 10,598 13,658 (3,060) (13,790) (13,194) (596) 3,500 3,500 - (6,915) (6,206) (709) (2,500) (2,500) - (2,871) (5,271) 2,400 18,334 10,334 8,000 (30,781) (32,181) 1,400 72,201 75,501 (3,300) (33,510) (41,610) 8,100 93,540 103,241 (9,701) 54,768 60,818 (6,050) - - - 40,051 40,051 - (15,563) (13,156) (2,407) (7,376) (7,376) - 24,313 55,413 (31,100)
SF
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,400 3,400 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,400 3,400 -
UNDER CONSTR.
EFF. RENTS/SF
YTD VOLUME $
17.43 11.15 19.52 8.77 8.69 10.29 14.12 13.93 14.19 - - - 8.58 8.31 14.08 8.77 8.76 9.58 15.07 15.11 14.00 11.73 11.11 13.26 9.40 9.40 - 14.45 14.26 15.49 8.50 8.50 - 12.25 12.34 11.88 12.69 12.67 12.83 8.91 8.74 11.93 8.69 8.69 9.25 9.41 9.41 - 9.88 9.64 11.72 14.76 12.57 15.54 - - - 8.42 8.42 - 13.06 13.35 12.80 10.21 9.90 10.50 10.33 9.68 13.82
2.79 M 2.79 M - 6.48 M 6.48 M - 3.88 M 3.88 M - 2.95 M 2.95 M - 4.20 M 4.20 M - 16.85 M 16.85 M - 15.79 M 15.79 M - 1.95 M 1.95 M - 1.30 M 1.30 M - 18.14 M 18.14 M - - - - 7.56 M 7.56 M - 6.13 M 6.13 M - 41.45 M 41.45 M - 11.93 M 11.93 M - 2.40 M 2.40 M - 11.87 M 11.87 M - - - - 8.00 M 8.00 M - 9.61 M 9.61 M - 11.06 M 11.06 M - 10.52 M 10.52 M - 194.84 M 194.84 M 0.00 M
CAP RATE %
$/SF
SF
- - - - - - - - - - - - 56,160 56,160 - 10,500 10,500 - 27,860 27,860 - - - - - - - - - - - - - - - - - - - - - - - - - 7,241 7,241 - 146,253 146,253 - - - - - - - - - - 10,328 - 10,328 - - - 258,342 248,014 10,328
Source: CoStar Property® ONE COMMERCIAL REAL ESTATE | PALM BEACH | INDUSTRIAL | Q2 2018
- - - - - - - - - - - - 8.81 8.81 - 6.00 6.00 - - - - - - - - - - - - - - - - 6.87 6.87 - - - - 7.75 7.75 - - - - - - - - - - - - - - - - - - - - - - 6.25 6.25 - 7.16 7.16 -
128.36 128.36 108.33 108.33 153.71 153.71 310.82 310.82 181.64 181.64 99.17 99.17 122.30 122.30 448.79 448.79 45.34 45.34 215.05 215.05 95.36 95.36 91.26 91.26 175.94 175.94 78.31 78.31 91.66 91.66 105.87 105.87 307.69 307.69 1,085.60 1,085.60 195.02 195.02 125.78 125.78 200.81 200.81 -
SIGNIFICANT LEASE TRANSACTIONS PROPERTY ADDRESS
BUYER NAME
SIZE
SALES PRICE $
$/SF
SUBMARKET
Blue Heron Distribution Center II
Daley & Wanzer
15,000
Direct
$7.95 NNN
Central Palm Beach
South Congress Ind Center
N/A
14,087
Direct
$13.95 MG
Park at Broken Sound
Turnpike Business Center
N/A
13,352
Direct
$9.75 NNN
Southern Blvd
Skees Road Industrial Park
Southeastern Traffic
11,400
Direct
$10.00 MG
West of Turnpike
Wellington Business Center
N/A
10,328
Direct
$17.00 IG
West of Turnpike
SIGNIFICANT SALES TRANSACTIONS PROPERTY
BUYER NAME
SIZE
SALES PRICE $
$/SF
SUBMARKET
The Park at Broken Sound
Safe Harbor Marinas
2201 4th Ave N
Hinterland Group
56,222
7,234,852
129
Park at Broken Sound Ind
72,000
5,350,000
74
South Congress Ind Center
Lake Worth West Ind
Shellco Construction
42,094
4,250,000
101
Park at Broken Sound Ind
785 S Congress Ave
Mindful Capital Group
26,260
3,500,000
133
Delray Beach Ind
Pennock Industrial Park
Brightwork Real Estate, Inc.
21,815
3,500,000
160
Jupiter Ind
MAJOR DEVELOPMENT PIPELINE PROPERTY ADDRESS
COMPLETION
SIZE
DEVELOPER
SUBMARKET
Turnpike Crossing
Q3 2018
146,253
Duke Realty
Palm Beach Airport
1230 Sw 35th Ave
Q4 2018
56,160
Exeter Property Group
Boynton Beach
355 N Congress
Q4 2018
17,860
N/A
Delray Beach
1851 W 1th St
Q3 2018
10,500
N/A
Central Palm Beach
Wellington Business Central
Q3 2018
10,328
N/A
West of Turnpike
ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | APARTMENT | Q4 2017
STEVEN NOSTRAND President & COO ONE Commercial Real Estate
PALM BEACH
snostrand@onecommercialre.com
JULIAN SCHEEFF Director of Intelligence ONE Commercial Real Estate jscheeff@onecommercialre.com
ALEX MAKKI Marketing Coordinator ONE Commercial Real Estate amakki@onecommercialre.com
BROWARD MIAMI-DADE
ONE Commercial Real Estate 1000 Brickell Avenue, Suite 500 Miami, FL 33131 305.704.9787
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.