Q2 2023 Hialeah/E. Miami Shores Industrial Report
The average Asking Rent was $8.43/sqft in the Hialeah/East Miami Shores submarket
- Rent in the Hialeah/East Miami Shores submarket was up 0.8% from February.
- Hialeah/East Miami Shores submarket had its fastest rent rate of increase in five months.
The average Vacancy Rate was 1.2% in the Hialeah/East Miami Shores submarket
- Vacancy in the Hialeah/East Miami Shores submarket drifted downward by 10 basis points.
- Vacancy is expected to finish 2023 at 1.2% in the Hialeah/East Miami Shores submarket.
The Hialeah/East Miami Shores submarket, one of seven distinct geographic concentrations within Miami, contains 25.6 million market rate rental square feet, or 19.7% of the metro’s total inventory of warehouse/distribution space. In the ten-year period beginning with 02 2013, new additions to the submarket totaled 4.2 million square feet, amounting to an annualized inventory growth rate of 1.8%; over the same period, the metro growth rate has been 2.1%.
Asking and Effective Rent
Asking rents increased every month during the first quarter, with March’s increase of 0.8% bringing the cumulative quarterly total up to 1.4%. The submarket has now experienced twenty-two consecutive monthly gains in asking rent, for a cumulative total of 30.5%. The Hialeah/East Miami Shores submarket’s March asking rent levels are lower than the metro’s average of $10.02, while asking rent growth in March compares favorably to the metro average of 0.7%. Effective rents, which exclude the value of concessions offered to prospective tenants, increased by 0.9% during March to an average of $8.17.
Competitive Inventory. Employment. Absorption
Total employment in the Miami metropolitan area increased by 14,600 jobs during the first quarter, while industrial employment expanded by 1,700. Since the beginning of 02 2013, the average growth rate for industrial-using employment in Miami has been 1.2% per year, representing the average annual addition of 1,500 jobs. Over the same time period, the metro posted an average annual absorption rate of 3.0 million square feet. During March, metropolitan absorption totaled negative 283,000 square feet. In the Hialeah/East Miami Shores submarket, however, new renters took a net total of 13,000 square feet off of the market, the highest level of absorption among Miami’s seven submarkets. March’s positive absorption in the submarket follows 25,000 square feet of negative absorption observed in February. Over the last 12 months, sub market absorption totaled 857,000 square feet, 36.7% greater than the average annual absorption rate of 627,100 square feet recorded since the beginning of 02 2013. The submarket’s average vacancy rate drifted downward by 10 basis points during March to 1.2%, which is 7.1 percentage points lower than the long-term average, and 1.2 percentage points lower than the current metro average.
Reis’s new construction analysts report that no more competitive warehouse/distribution stock will be introduced to the submarket this year, and net total absorption will be positive 5,000 square feet. Relative to the submarket inventory, this amount of absorption is not enough to move the average vacancy rate, which is projected to remain at 1.2%. During 2024 and 2025, developers are expected to deliver a total of 565,000 square feet of warehouse/distribution space to the submarket amounting to 16.8% of the new construction introduced to Miami. Industrial job growth during 2024 and 2025 is expected to average 0.7% annually. The Hialeah/East Miami Shores submarket will claim a portion of this demand, posting absorption averaging 261,000 square feet per year, 17.3% of the projected metro total. Because this amount does not exceed the forecasted new construction, the submarket vacancy rate will rise by 10 basis points to finish 2025 at 1.3%. Between now and year-end 2023 asking rents are expected to advance 10.8% to a level of $9.34. On an annualized basis, asking and effective rents are anticipated to climb at a rate of 8.4% through year end 2025, reaching average rates of $10.98 and $10.63 per square foot, respectively.