Demand Remains Strong as Miami Readies for Trade Growth

In July, Miami’s industrial real estate vacancy rate stood at 5.8 percent, nearly four percent below the national average of 9.4 percent, according to the National Association of Realtors (NAR).

Experts agree that Miami’s industrial real estate vacancy rate will continue to shrink as local infrastructure enhancements and improvements near completion, leading many companies that already utilize industrial space to vie for a slice of the 220 million square feet of storage and warehouse space presently available in Miami-Dade County.

The new tunnel, rail and the deep dredge at the port, along with terminal improvements at the airport, have increased demand for millions of additional square feet of industrial space from users and offshore investors from South America, Canada, Europe, and China, both to lease and purchase property. Investors and users realize Miami will experience an increase in trade and commerce once the Panama Canal expansion is finished and they want a stake in it.

Once the expansion projects are complete, a greater number of cargo ships capable of carrying approximately 13,000 20-foot equivalent unit (TEU) containers are expected to dock in Miami. Tractor trailers using the new tunnel and FEC Rail using the rebuilt bridge and intermodal facilities will transport the containers filled with foreign goods to warehouses and distribution centers in the airport west market, where rental rates have climbed to a range between $9.25 and $9.50 per square foot.

Since fourth quarter 2012, there is approximately 1.5 million square feet of industrial space under development, primarily west of Miami International Airport and in the Medley market. Due to demand, sales prices have also increased over the last year and are now approaching, or in some cases exceeding, $100 per square foot.

Cautiously optimistic about expansion and relocation, many of these companies are looking to close on deals before sales prices and rental rates climb higher than they are now.

John Dohm, who served as RCA MIAMI president in 2012, says he considers the rising demand for space a good sign. “With billions of dollars being spent on these infrastructure improvements, a developer can be confident that South Florida is in a tremendous growth mode,” Dohm says. “Public infrastructure sets the foundation that gives private developers and companies confidence to engage in their own expansion.”

In Miami-Dade County, new multi-tenant industrial buildings, which average around 200,000 square feet in size, will need to have stronger foundations that support 30- to 36-foot clear ceilings, super flat — or zero variance — floors, and additional land for larger truck courts to make the loading areas much more efficient to accommodate the growing influx of goods, according to Dohm.

Adequate refrigeration systems for table grapes, blueberries and other perishables that are imported through Miami will also benefit these buildings, along with cross docks, which will allow freight to be loaded onto distribution trucks immediately after they arrive at the storage and warehouse centers from PortMiami.

Cross-dock building — where the product comes in on one side and they ship it out to customers on another side — are more efficient and are increasingly becoming more desirable.

The push to improve and modify Miami’s industrial buildings and warehouses in conjunction with the infrastructure improvements and enhancements that Miami-Dade County’s two economic engines — Port­Miami and Miami International Airport — are experiencing will ensure that the city remains competitive against other major port cities.

“When private developers and companies see rail being laid, roadways being improved, and airports and seaports expanding, they know it’s not talk,” says Dohm. “They know Miami’s a market they can continue to capitalize on.”

— Michael Silver, 2013 president of RCA Miami, and first vice president of CBRE