# Q4 2022 South Dade Industrial Report

**Market:**Miami

**Submarket:**South Dade

Industrial reports powered by Moody’s Analytics CRE and CCIM Technologies

## Submarket Analysis

### Executive Briefing on Submarket (Flex R&D) Conditions

#### The average Asking Rent was $10.18 in the South Dade submarket

- Rent in the South Dade submarket was up 1.8% from year-end 2021.
- South Dade submarket had its fastest rent rate of increase since Q3 2010.
- Rent is expected to finish 2022 at $10.45 in the South Dade submarket.

#### The average Vacancy Rate was 1.8% in the South Dade submarket

- No vacancy change since year-end 2021 in the South Dade submarket.
- The South Dade submarket was among the 20 lowest vacancies nationally.
- Vacancy is expected to finish 2022 at 1.9% in the South Dade submarket.

**Submarket Overview**

The South Dade submarket, one of seven distinct geographic concentrations within Miami, contains 1.5 million market rate rental square feet, or 7.9% of the metro’s total inventory of Flex/R&D space. In the ten-year period beginning with Q2 2012, new additions to the submarket totaled 35,000 square feet, amounting to an annualized inventory growth rate of 0.2%; over the same period, the metro inventory has remained unchanged.

**Asking and Effective Rent**

During the first quarter of 2022, asking rents rose by 1.8% to an average of $10.18, higher than three of the metro’s seven submarkets. In fact, in each of the past four quarters, asking rents have advanced by a cumulative total of 5.1%. The South Dade submarket’s current asking rent levels are lower than the metro’s average of $12.22, while asking rent growth in the first quarter compares favorably to the metro average of 1.4%. Effective rents, which exclude the value of concessions offered to prospective tenants, increased by 1.9% during the first quarter to an average of $9.42.

**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 experienced an average annual absorption rate of 123,700 square feet. During the first quarter, metropolitan absorption totaled 96,000 square feet, of which the South Dade submarket captured 1.0%, or 1,000 square feet. Over the last four quarters, submarket absorption totaled 11,000 square feet, 19.1% lower than the average annual absorption rate of 13,600 square feet recorded since the beginning of Q2 2012. The submarket’s average vacancy rate held steady at 1.8% during the first quarter, which is 2.3 percentage points lower than the long-term average, and 0.5 percentage points lower than the current metro average.

**Outlook**

Reis’s new construction analysts report that 10,000 square feet of new multi-tenant Flex/R&D inventory will be introduced to the submarket by the end of the year, and net total absorption will be positive 8,000 square feet. As a result, the vacancy rate will drift upward by 0.1 percentage points to 1.9%. During 2023 and 2024, developers are expected to deliver a total of 20,000 square feet of Flex/ R&D space to the submarket amounting to 11.4% 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 26,000 square feet per year. The South Dade submarket will benefit disproportionately from this growth rate, posting absorption averaging 8,000 square feet per year, 30.8% of the projected metro total. Because this amount does not exceed the forecasted new construction, the submarket vacancy rate will increase by 30 basis points to finish 2024 at 2.2%. Between now and year-end 2022 asking rents are expected to climb 2.7% to a level of $10.45, while effective rents will increase by 2.5% to $9.66. On an annualized basis through 2023 and 2024, asking and effective rents are anticipated to advance by 4.4% and 4.5%, respectively, to finish 2024 at $11.38 and $10.55.

### Executive Briefing on Submarket (Distribution) Conditions

## The average Asking Rent was $9.02 in the South Dade submarket

- Rent in the South Dade submarket was up 1.8% from year-end 2021.
- Rent is expected to finish 2022 at $9.27 in the South Dade submarket.

## The average Vacancy Rate was 0.6% in the South Dade submarket

- The South Dade submarket had the lowest vacancy in the South Atlantic region, third lowest in the nation.
- No vacancy change since year-end 2021 in the South Dade submarket.
- The South Dade submarket had the lowest vacancy level since Q3 2009.

**Submarket Overview**

The South Dade submarket, one of seven distinct geographic concentrations within Miami, contains 11.9 million market rate rental square feet, or 9.5% of the metro’s total inventory of warehouse/distribution space. In the ten-year period beginning with Q2 2012, new additions to the submarket totaled 1.1 million square feet, amounting to an annualized inventory growth rate of 0.9%; over the same period, the metro growth rate has been 1.8%.

**Asking and Effective Rent**

During the first quarter of 2022, asking rents increased by 1.8% to an average of $9.02, higher than four of the metro’s seven submarkets. Since the same reporting period last year, asking rents have climbed by 4.9%, up from $8.60. The South Dade 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, advanced by 1.9% during the first quarter to an average of $8.67.

**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 recorded an average annual absorption rate of 2.5 million square feet. During the first quarter, the metro experienced absorption of 282,000 square feet, but absorption was flat in the South Dade submarket. The first quarter’s unchanged occupancy total in the submarket follows two consecutive quarters of positive absorption, amounting to 389,000 square feet. Over the last four quarters, submarket absorption totaled 416,000 square feet, nearly triple the average annual absorption rate of 155,300 square feet recorded since the beginning of Q2 2012. The submarket’s average vacancy rate held steady at 0.6% during the first quarter, which is 3.6 percentage points lower than the long-term average, and 2.6 percentage points lower than the current metro average.

**Outlook**

Reis’s new construction analysts report that 121,000 square feet of new multi-tenant warehouse/ distribution inventory will be introduced to the submarket by the end of the year, and net total absorption will be positive 99,000 square feet. In response, the vacancy rate will drift upward by 0.2 percentage points to 0.8%. During 2023 and 2024, developers are expected to deliver a total of 263,000 square feet of warehouse/distribution space to the submarket amounting to 10.9% 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 South Dade submarket will claim a small fraction of this demand, posting absorption averaging 49,000 square feet per year, 4.5% of the projected metro total. Because this amount does not exceed the forecasted new construction, the submarket vacancy rate will increase by 140 basis points to finish 2024 at 2.2%. Between now and year-end 2022 asking rents are expected to rise 2.8% to a level of $9.27, while effective rents will advance by 2.5% to $8.89. On an annualized basis through 2023 and 2024, asking and effective rents are projected to increase by 4.0% and 3.9%, respectively, to finish 2024 at $10.03 and $9.60.

**Other Q3 2022 Industrial Reports**

Q4 2022 Miami Metro Industrial Report

Q4 2022 Hialeah/E. Miami Shores Industrial Report

Q4 2022 Miami Airport Industrial Report