South Florida industrial market sees slight uptick in vacancies

The South Florida industrial market, the region’s leading commercial sector, is showing signs of weakening as vacancy rates across the region increased in the third quarter, a recent Colliers report shows.

In Miami-Dade County, landlords lowered average asking rents for the second quarter in a row, following record highs in early 2024 and late 2023.

However, institutional investors appear unfazed by signs of stabilization in the industrial market, with several deals occurring in the third quarter. For example, San Francisco-based Prologis acquired the former headquarters of a Verizon subsidiary near Doral for $54.5 million. The company plans to convert the one-story building into a logistics complex. In another deal, Bryn Mawr, Pa.-based Alliance HP made its first foray into the South Florida industrial market by paying $24 million for a warehouse in Hialeah.

Miami-Dade County

Average asking rents fell to $16.42 per square foot in Miami-Dade County in the third quarter, compared with $17.16 per square foot during the same period last year. The report showed that this figure was also down 20 cents from the second quarter of this year.

Miami-Dade’s vacancy rate increased to 4.9 percent in the third quarter, up from 2.6 percent during the same period last year. From July to September, industrial landlords leased 2 million square feet of space in Miami-Dade, according to Colliers.

In addition to the Prologis and Alliance HP deals, Irvine, Calif.-based Panattoni Development acquired the former Miami Herald headquarters in Doral for $29.9 million. The firm plans to redevelop the 9-acre site into a special purpose industrial project.

Also in the third quarter, Coral Gables-headquartered Codina Partners and San Antonio, Texas-headquartered Affinius Capital sold a warehouse at Beacon Logistics Park in Hialeah. The real estate arm of The Church of Jesus Christ of Latter-day Saints paid $55.8 million for the 232,629-square-foot facility.

Broward County

Landlords in Broward County remain in control, raising average asking rents to $17.14 per square foot, up from $15.89 per square foot during the same period last year, the report said. The increase marks the fourth straight quarter of rent growth for Broward.

In Broward, the vacancy rate increased slightly to 4.9 percent in the third quarter, up from 4.7 percent during the same period last year. Industrial property owners in the county leased 1.5 million square feet from July through September, according to the report.

Notable transactions in the third quarter included Dallas-based Dalfen Industrial’s acquisition of a portfolio of three properties in Fort Lauderdale for $26.4 million, as well as the purchase of a 154,234-square-foot warehouse, also in Fort Lauderdale, by New York-based Brookfield Asset Management for $24.4 million. , the report says.

Palm Beach County

Landlords also rule in Palm Beach County, raising average rents to $15.43 per square foot in the third quarter, up from $14.36 per square foot during the same period last year, Colliers found.

However, the vacancy rate rose to 6.8 percent in the third quarter, up from 4.9 percent in the same period last year, the report said. The increase in vacancy results from the addition of 1.9 million new square feet of industrial space in the third quarter. The report says only 41 percent of the new space is leased.

Notable transactions in the third quarter included Brookfield’s purchase of three buildings in West Palm Beach from New York-based DRA Advisors for $36.2 million. In another deal, Delray Beach-based residential developer Kolter Group bought five industrial buildings in the firm’s hometown for $21.8 million. Colter plans to redevelop the 12.3-acre site but has not disclosed details about the project.