- Miami’s industrial market hit a record in Q3 with over 6 MSF of new inventory, but new construction has slowed, with 3.3 MSF currently in the pipeline.
- Rising material costs, elevated interest rates, and economic uncertainty have led developers to pause further activity, awaiting clearer economic and interest rate signals.
- Neighboring markets, West Palm Beach and Fort Lauderdale, showed positive absorption and steady rent growth, while vacancy rates inched up across all three regions.
As reported by GlobeSt, Miami’s industrial market reached a new milestone in Q3, with over 6 MSF of new inventory delivered, according to Avison Young, setting a record for the region.
However, rising costs, high interest rates, and economic uncertainty have led to a slowdown in new construction, with just 3.3 MSF in the development pipeline. Absorption in Miami turned negative at -155.12 KSF, following two consecutive quarters of positive growth.
By The Numbers
Avison Young’s report also analyzed West Palm Beach and Fort Lauderdale. These areas did not experience the same supply surplus as Miami. West Palm Beach saw a positive absorption of 301 KSF, while Fort Lauderdale absorbed 24 KSF of new inventory.
Asking rents continued to climb across all three markets. Miami stabilized at $17.10 PSF NNN, while Fort Lauderdale saw steady growth to $16.72 PSF NNN. West Palm Beach experienced a 12% YoY increase, reaching $15.81 PSF NNN.
However, vacancies rose slightly in each area: Miami’s rate increased by 2.8% YoY to 5.4%, West Palm Beach hit 6.4% (up 0.6%), and Fort Lauderdale climbed to 5.3% (up 0.5%).
Get Smarter about what matters in CRE
Stay ahead of trends in commercial real estate with CRE Daily – the free newsletter delivering everything you need to start your day in just 5-minutes
Notable Deals
The largest recent leases were all in Miami, led by Starboard Holdings’ renewal of a nearly 185 KSF space. This was followed by Miami International Freight Solutions’ nearly 106 KSF lease and a 90 KSF renewal by Schwarz Partners Packaging. The biggest acquisition was Property Reserve’s $55.86M purchase of a Miami logistics park.
Cautious Optimism
Looking ahead, Avison Young expects asking rates to remain stable in Miami and Fort Lauderdale, though there is some caution in Fort Lauderdale.
“As leases expire from pre-COVID pricing, tenants are still experiencing sticker shock at current market rates, leading some to consider consolidating or staying in their existing spaces rather than expanding,” Avison Young noted.
