Q2 2023 Miami Airport Industrial Report

Submarket Overview

With 26.1 million square feet, amounting to 20.1% of the total metro inventory, the Miami Airport submarket is the second largest of the seven competitive Miami submarkets identified by Reis’s researchers, smaller only than Hialeah Gardens/Medley. In the ten-year period beginning with 02 2013, new additions to the submarket totaled 2.8 million square feet, amounting to an annualized inventory growth rate of 1.1%; over the same period, the metro growth rate has been 2.1%.

Asking and Effective Rent

Asking rents climbed every month during the first quarter, with March’s increase of 0.7% bringing the cumulative quarterly total up to 1.6%. The submarket has now experienced twenty-two consecutive monthly gains in asking rent, for a cumulative total of 28.1%. The Miami Airport submarket’s March asking rent levels are higher than the metro’s average of $10.02, while asking rent growth in March is equal to the metro average of 0.7%. Effective rents, which exclude the value of concessions offered to prospective tenants, also increased by 0.7% during March. The identical rates of change indicate that landlords have succeeded in raising rents while maintaining a stable relationship between asking and effective rent values.

Competitive Inventory. Employment. Absorption

Total employment in the Miami metropolitan area grew 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 experienced an average annual absorption rate of 3.0 million square feet. During March, metropolitan absorption totaled negative 283,000 square feet; in the Miami Airport submarket, 8,000 square feet were returned to the market. This is the second consecutive month during which this submarket recorded negative absorption, amounting to 210,000 square feet since February 2023. Over the last 12 months, submarket absorption totaled 675,000 square feet, nearly double the average annual absorption rate of 373,800 square feet recorded since the beginning of 02 2013. The submarket’s average vacancy rate drifted upward by 10 basis points during March to 3.1%, which is 2.6 percentage points lower than the long-term average, but 0.7 percentage points higher than the current metro average.

Outlook

Between now and year’s end, no more competitive warehouse/distribution stock will be introduced to the submarket, and Reis estimates that net total absorption will be positive 92,000 square feet. Consequently, the vacancy rate will drift downward by 0.4 percentage points to 2.7%. During 2024 and 2025, developers are expected to deliver a total of 115,000 square feet of warehouse/distribution space to the submarket amounting to 3.4% of the new construction introduced to Miami. Industrial job growth during 2024 and 2025 is projected to average 0.7% annually. The Miami Airport submarket will claim a portion of this demand, posting absorption averaging 75,000 square feet per year, 5.0% of the projected metro total. The submarket vacancy rate will finish both years at 2.6%. Between now and year-end 2023 asking rents are expected to increase 9.0% to a level of $12.07. On an annualized basis through 2024 and 2025, asking and effective rents are expected to advance by 5.6% and 5.7%, respectively, to finish 2025 at $13.46 and $13.06.