Q4 2022 Miami Metro Industrial Report
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Metro Analysis
Executive Briefing on Market (Flex R&D) Conditions
The average Asking Rent was $12.22 in the Miami metro
- Rent in the Miami metro was up 1.4% from year- end 2021.
- Rent is expected to finish 2022 at $12.52 in the Miami metro.
The average Vacancy Rate was 2.3% in the Miami metro
- The Miami metro had the lowest vacancy in the nation.
- Vacancy in the Miami metro declined by 50 basis points.
- The Miami metro had the lowest vacancy level since Q3 2009.
Market Overview
A summary of key real estate supply and demand metrics shows that during the first quarter the Miami Flex/ R&D market recorded positive net absorption, advancing effective rents, and downward movement in the market’s vacancy rate. It is useful to scrutinize each of these critical barometers in more detail and from both a historical and forecast perspective.
Asking and Effective Rent
During the first quarter of 2022, asking rents in Florida’s second most populous city increased by 1.4% to an average of $12.22. The market’s streak of five consecutive quarterly gains, which began in Q1 2021, has increased asking rents by a cumulative total of 4.9%. Since the beginning of Q2 2012, the metro as a whole has recorded an annual average increase of 1.6%. Effective rents, which take into account concessions offered to new lessees, rose more quickly, up by 1.7% during the first quarter. During the past four quarters, positive movement in asking rent was recorded in all seven of the metro’s submarkets.
Competitive Inventory, Employment, Absorption
Total employment in the Miami metropolitan area increased by 17,800 jobs during the first quarter, amounting to a growth rate of 1.5%, while industrial employment expanded by 2,700. Since the beginning of Q2 2012, the average growth rate for industrializing employment in Miami has been 0.9% per year, representing the average annual addition of 1,200 jobs. The metro experienced absorption of 96,000 square feet during the first quarter. Over the last four quarters, market absorption totaled 227,000 square feet, nearly double the average annual absorption rate of 123,700 square feet recorded since the beginning of Q2 2012. In a long-term context, the first quarter vacancy rate is 2.7 percentage points lower than the 5.0% average recorded since the beginning of Q2 2012.
Outlook
Reis is tracking Flex/R&D construction activity that will deliver 78,000 square feet to the metro by the end of the year, and net total absorption will be positive 71,000 square feet. Relative to the market inventory, this amount of absorption is not enough to move the average vacancy rate, which is projected to stay at 2.3%. During 2023 and 2024, construction activity under surveillance is expected to deliver a total of 175,000 square feet. Industrial employment growth at the metro level during 2023 and 2024 is anticipated to average 0.8% annually, enough to facilitate an absorption rate averaging 26,000 square feet per year. Because this amount does not exceed the forecasted new construction, the market vacancy rate will rise by 60 basis points to finish 2024 at 2.9%. Between now and year- end 2022 asking rents are expected to rise 2.5% to a level of $12.52, while effective rents will advance by 2.5% to $11.77. On an annualized basis through 2023 and 2024, asking and effective rents are expected to climb by 3.4% and 3.7%, respectively, to finish 2024 at $13.39 and $12.66.
Executive Briefing on Market (Distribution) Conditions
The average Asking Rent was $8.28 in the Miami metro
- Rent in the Miami metro was up 1.6% from year- end 2021.
- Miami metro had its fastest rent rate of increase since Q3 2009.
- Rent Has risen for seven consecutive quarters in the Miami metro.
The average Vacancy Rate was 3.2% in the Miami metro
- The Miami metro had the seventh lowest vacancy in the nation and the sixth lowest in the South Atlantic.
- Vacancy in the Miami metro drifted downward by 10 basis points.
- The Miami metro had the lowest vacancy level since Q3 2009.
Market Overview
The Miami warehouse/distribution market is comprised of 124.4 million square feet in seven geographic concentrations ranging in size from the 25.9 million square foot Miami Airport submarket to the Miami Lakes submarket, which accounts for 11.1 million square feet. In the ten-year period beginning with Q2 2012, the Miami Lakes submarket has experienced the greatest introduction of new inventory, 6.6 million square feet, amounting to 32.4% of all new competitive stock added to the market.
Asking and Effective Rent
During the first quarter of 2022, asking rents in Florida’s second most populous city increased by 1.6% to an average of $8.28. The market has now experienced seven consecutive quarterly gains in asking rent, for a cumulative total of 7.0%. Since the beginning of Q2 2012, the metro as a whole has recorded an annual average increase of 2.5%. Effective rents, which exclude the value of concessions offered to prospective tenants, increased by 1.5% during the first quarter to an average of $7.96. During the past four quarters, positive movement in asking rent was recorded in all seven of the metro’s submarkets.
Competitive Inventory, Employment, Absorption
Total employment in the Miami metropolitan area increased by 17,800 jobs during the first quarter, representing a growth rate of 1.5%, 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. Leasing activity generated 282,000 square feet of absorption during the first quarter. Over the last four quarters, market absorption totaled 7.0 million square feet, nearly triple the average annual absorption rate of 2.5 million square feet recorded since the beginning of Q2 2012. From an historical perspective, the first quarter vacancy rate is 4.1 percentage points lower than the 7.3% average recorded since the beginning of Q2 2012.
Outlook
Between now and year’s end, 3.1 million square feet of competitive warehouse/distribution stock will be introduced to the metro, and Reis estimates that net total absorption will be positive 3.1 million square feet. Relative to the market inventory, this amount of absorption is not enough to move the average vacancy rate, which is projected to stay at 3.2%. Recent market conditions appear to have attracted development activity. Construction activity is expected to continue during each of the following two years, during which a total of 2.4 million square feet is projected to be introduced to the market. Industrial employment growth at the metro level during 2023 and 2024 is anticipated to average 0.8% annually, enough to facilitate an absorption rate averaging 1.1 million square feet per year. Because this amount does not exceed the forecasted new construction, the market vacancy rate will increase by 10 basis points to finish 2024 at 3.3%. Between now and year-end 2022 asking rents are expected to climb 3.1% to a level of $8.54, while effective rents will advance by 3.4% to $8.23. On an annualized basis through 2023 and 2024, asking and effective rents are anticipated to rise by 4.3% and 4.4%, respectively, to finish 2024 at $9.29 and $8.97.
Other Q3 2022 Industrial Reports
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Q4 2022 Miami Airport Industrial Report
Q4 2022 South Dade Industrial Report