Q4 2022 Miami Airport Industrial Report

Submarket Overview

With 25.9 million square feet, amounting to 20.8% of the total metro inventory, the Miami Airport submarket is the largest of the seven competitive Miami submarkets identified by Reis’s researchers. In the ten- year period beginning with Q2 2012, new additions to the submarket totaled 3.3 million square feet, amounting to an annualized inventory growth rate of 1.4%; over the same period, the metro growth rate has been 1.8%.

Asking and Effective Rent

Asking rents advanced by 1.7% during the first quarter of 2022 to an average of $9.18, a level surpassed only by the South Central submarket’s $10.30. The submarket’s run of five consecutive quarterly gains, which began in Q1 2021, has increased asking rents by a cumulative total of 7.0%. The Miami Airport submarket’s current asking rent levels and growth rates compare favorably to the metro’s averages of $8.28 and 1.6%. Effective rents, which exclude the value of concessions offered to prospective tenants, climbed by 1.5% during the first quarter to an average of $8.81.

Competitive Inventory, Employment, Absorption

Total employment in the Miami metropolitan area grew by 17,800 jobs during the first quarter, while industrial employment grew
by 2,700. Since the beginning of Q2 2012, the average growth rate for industrial-using employment in Miami has been 0.9% per year, representing the average annual addition of 1,200 jobs. Over the same time period, the metro posted an average annual absorption rate of 2.5 million square feet. Although metropolitan absorption totaled 282,000 square feet during the first quarter, the Miami Airport submarket did not contribute to this demand; in fact, tenant outmigration returned a net total of 78,000 square feet to the available stock. Over the last four quarters, submarket absorption totaled 494,000 square feet, 31.5% greater than the average annual absorption rate of 375,700 square feet recorded since the beginning of Q2 2012. The submarket’s average vacancy rate drifted upward by 40 basis points during the first quarter to 5.2%, which is 1.0 percentage point lower than the longterm average, but 2.0 percentage points higher than the current metro average.

Outlook

Reis is tracking construction activity that is expected to deliver 154,000 square feet to the submarket by the end of the year, and net total absorption will be positive 191,000 square feet. In response, the vacancy rate will drift downward by 0.2 percentage points to 5.0%. During 2023 and 2024, developers are expected to deliver a total of 332,000 square feet of warehouse/distribution space to the submarket amounting to 13.7% of the new construction introduced to Miami. Industrial employment growth at the metro level during 2023 and 2024 is expected to average 0.8% annually, enough to facilitate an absorption rate averaging 1.1 million square feet per year. The Miami Airport submarket will capture 28.5% of this absorption. This absorption rate exceeds the new supply scheduled for delivery by enough to push the vacancy rate downward to 3.8% by year end 2024. Between now and year-end 2022 asking rents are expected to climb 3.3% to a level of $9.48, while effective rents will rise by 3.4% to $9.11. On an annualized basis, asking and effective rents are anticipated to increase at a rate of 3.8% through year end 2024, reaching average rates of $10.21 and $9.81 per square foot, respectively.