America's Property Tax Advisor

South Florida's Industrial Market Surges

BY TONY GARCIA, FORT LAUDERDALE, OCTOBER 2021

While most real estate sectors have struggled with COVID-19 pandemic and the emergence of the Delta variant, industrial markets nationwide continue to prosper. South Florida is a prime example.

 

Vacancy rates dipped and net absorption nearly tripled in Miami-Dade and Broward County, according to new research. Colliers’ third quarter report shows asking rents continued to rise in nearly every industrial submarket across South Florida.

 

These trends will lead to higher property tax assessments and a higher tax burden for industrial property owners and tenants.

 

Miami-Dade County

 

In the third quarter, the industrial vacancy rate dropped to 2.9% from 3.4% the previous quarter. In the third quarter of 2020, vacancies were at 4.5%. Net absorption jumped to 1.4 million square feet, from 527,878 square feet in the same period the year before.

 

The average asking rent for warehouse space hit $10.72 per square foot. Manufacturing spaces leased at an average $9.43 per square foot. Flex space now costs $25.36 per square foot, which represents a 33% increase compared to a year ago.

 

“In the Doral submarket, you are certainly paying a premium price, Steve Wasserman of Colliers told The Real Deal. “The closer to Miami International Airport, the higher the price goes.

 

Broward County

 

The vacancy rate also fell significantly in Broward County to 5.6% in the third quarter, compared to 6.8% last quarter and 6.6% in the third quarter of 2020. Net absorption matched the rocket pace in Miami-Dade. In the third quarter, Broward absorbed 1.5 million square feet, compared to a new absorption of 579,945 square feet during the same period last year.

 

The average asking rent for warehouses hit $9.68 per square foot, up from $9.19 during the third quarter of 2020. Manufacturing space cost $11.18 per square foot, up from $8.58 and flex space climbed to $13.53 per square foot.

 

The main driver in the industrial market is the need for more e-commerce and third-party logistics space to keep up with rising digital sales of consumer goods exacerbated by the pandemic. While this trend may have accelerated due to COVID-19, analysts believe it is here to stay.