South Florida Industrial Vacancies Decline in 2010
27 Jan, 2011, Miami
Cushman & Wakefield today released year-end statistics for the South Florida industrial market, showing the vacancy rates for the industrial markets of Miami-Dade, Broward and Palm Beach counties are declining.
"Vacancy rates for all three submarkets continue to decline and remain well below the U.S. industrial average vacancy rate of 10.3 percent," said Shane Soefker, senior managing director and branch manager for Cushman & Wakefield's South Florida offices.
Miami-Dade County's industrial vacancy rate declined to 7.9 percent at year-end 2010, down from 8.3 percent at the end of the previous quarter. Following its 0.4 percentage point quarterly decline, Miami-Dade is now among the Top 5 U.S. industrial markets with the country's lowest vacancy rates.
With vacancy declining, direct net asking rents increased slightly, reaching $5.37 per square foot at year-end, compared to $5.33 per square foot at the end of the third quarter.
Leasing activity remained slightly off from 2009 levels, totaling 5.1 million square feet in 2010, down 5.7 percent from the 5.3 million square feet leased in the previous year.
Despite no gains in leasing activity, absorption improved dramatically in 2010, the first time yearly absorption was positive since 2006. Overall absorption for Miami-Dade totaled positive 2.7 million square feet, compared to negative 3.9 million square feet in 2009.
Limited construction kept the Miami-Dade market in check, with just 165,000 square feet of new industrial space added to the market in 2010, compared to 738,842 square feet completed in 2009. While there are several proposed projects, 2010 ended with no new construction underway.
"Limited new construction and consistent leasing activity levels should keep the Miami-Dade industrial market in the positive absorption territory through 2011," said Mr. Soefker.
The overall vacancy rate for Broward County's industrial market fell to 8.9 percent at the end of 2010, down from 9.1 percent at the end of the third quarter, and the lowest vacancy rate since year-end 2008.
Direct net asking rents increased $0.08 per square foot quarter-over-quarter to $7.10 per square foot, though still down from $7.39 per square foot at this time last year.
Overall leasing activity was up 18.9 percent, with 3.7 million square feet of industrial space leased in 2010, compared to 3.0 million square feet in 2009. It was the most active year in Broward since 2006, when 4.5 million square feet was leased.
Construction slowed in Broward in 2010, with just 120,094 square feet of new industrial space brought to the market, down from the 571,388 square feet added in 2009. At the end of 2010 there were no new projects under construction.
Overall absorption measured positive 723,882 square feet, a significant improvement from the negative 3.3 million square feet of absorption in 2009. It was the first year of positive absorption for Broward's industrial market in three years.
"Fundamentals in the Broward County industrial market have improved considerably," said Mr. Soefker. "Continued improvements in leasing activity signal increased demand and growing optimism on behalf of both owners and occupiers."
Palm Beach experienced the largest decrease in vacancy of South Florida's three industrial submarkets. Overall vacancy declined to 9.0 percent at year-end, down from 9.9 percent at the end of the third quarter.
Direct net asking rental rates remained virtually unchanged, ending the year at $6.89 per square foot, compared to $6.90 per square foot in the previous quarter.
Leasing activity declined 24.1 percent year-over-year, with 986,308 square feet leased in 2010, down from 1.3 million square feet leased in 2009.
Industrial construction remained at a standstill in Palm Beach, with no new properties added to the market in 2010, and no projects currently under construction, though several new buildings have been proposed.
Overall absorption ended the year positive for the first time since 2007, totaling positive 734,821 square feet, a major improvement from the negative 1.6 million square feet in absorption in 2009.
"With virtually no new construction and consistent leasing activity, Palm Beach registered one of the largest quarterly vacancy declines in the U.S.," said Mr. Soefker.