Miami Industrial Real Estate Market Makes a Comeback
More than 1.2 million square feet of speculative industrial space is in development in Miami-Dade County, after several years of virtually no new industrial construction in the county.
Although still far below the 3 million square feet a year that was typically built before 2007, when construction stopped, the market is on the mend, according to Michael Silver, first vice president at CB Richard Ellis in Miami. Miami-Dade is expected to need several million square feet of new industrial space in the next three years, according to CBRE projections.
Demand is coming from the growing South Florida market.
"Miami will continue growing no matter what, because it remains the gateway to Latin America," says Al Germi, president of Acco Foreign Shipping, Inc., an international freight logistics company based in Miami.
The market may also receive a boost from the completion of the Panama Canal expansion, which will bring Panamax-class container ships to Miami's port, perhaps as early as 2015. But a large percentage of the containers offloaded in Miami will be immediately transferred to trucks or railcars and never see the inside of a Miami warehouse.
"Most of the activity you see now was driven by the economic recovery and the fact that Miami is an outstanding distribution market driven by Latin America," said Mike Ruen, managing director at Atlanta-based DCT Industrial, one of the industrial developers active today in Miami-Dade. "Any benefit from the Panama Canal would be a bonus."
Most of the projects in development are in the Airport West and Medley submarkets near Miami International Airport. The list includes the Miami International Tradeport, a 125-acre industrial project in Medley adjacent to the Florida Turnpike extension.
The project's developer, Liberty Property Trust, broke ground on a 150,000 square foot warehouse this year. The building is scheduled for completion next fall, reports Andy Petry, vice president of, the project's developer. The park will eventually offer between 1.6 and 1.8 million square feet of warehouse/distribution space and the buildout is expected to take about 10 years.
As the market comes back, there has been a change in what is considered the "premier product," Mr. Petry says. In the last cycle, ending in 2007, Class A product typically featured a 24-foot clear height ceilings; today the market is demanding 30 to 36-foot clear height warehouses, Mr. Petry says.
As the market returns, land prices are rising. In 2007, Airport West was selling for $20 to $23 per square foot, depending on size and location; by 2011 the prices had fallen to between $9 and $12 per square foot. Now prices are back to the $15 to $18 per square foot and available land is hard to find, Mr. Silver says.
Rents are rising, as well. Brand new Class A speculative space in Airport West or Medley is being quoted at $9.25 to $9.50 per square foot, industrial gross, according to CBRE. "As the absorption of space continues, rental rates are expected to go above $10 per square foot, which is where they were at the peak of the market in 2007," Mr. Silver says.
As a result, for the first time in years, some companies may have to look outside Miami-Dade for more affordable space.