Q2 2023 Miami Metro Industrial Report
Industrial reports powered by Moody’s Analytics CRE and CCIM Technologies
Metro Analysis
Executive Briefing on Market (Flex R&D) Conditions
The average Asking Rent was $14.64/sqft in the Miami metro
- Rent in the Miami metro was up 2.3% from Q3 2022.
Rent Has risen for eight consecutive quarters in the Miami metro.
The average Vacancy Rate was 1.3% in the Miami metro
- Vacancy in the Miami metro has been in decline for six consecutive quarters.
- The Miami metro had the lowest vacancy level since Q3 2009.
Market Overview
A summary of key real estate supply and demand metrics reveals that during the fourth quarter the Miami Flex/ R&D market recorded positive net absorption, increasing effective rents, and downward movement in the market’s vacancy rate. It is meaningful to look at each of these critical measures of market equilibrium in more detail and from both a historical and forecast perspective.
Asking and Effective Rent
During the fourth quarter of 2022, asking rents in Florida’s second most populous city rose by 2.3% to an average of $14.64. The market has now experienced eight consecutive quarterly gains in asking rent, for a cumulative total of 25.7%. Since the beginning of Q1 2013, the metro as a whole has recorded an annual average increase of 3.4%. Effective rents, which take into account concessions offered to new lessees, rose more quickly, up by 2.7% during the fourth quarter. The faster pace of effective rent growth suggests that that landlords are enjoying more pricing power at the negotiating table. 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 grew by 10,300 jobs during the fourth quarter, representing a growth rate of 0.8%, while industrial employment grew by 1,200. Since the beginning of Q1 2013, the average growth rate for industrial-using employment in Miami has been 1.6% per year, representing the average annual addition of 2,100 jobs. The metro experienced absorption of 111,000 square feet during the fourth quarter. Over the last four quarters, market absorption totaled 298,000 square feet, more than double the average annual absorption rate of 128,600 square feet recorded since the beginning of Q1 2013. In a long-term context, the fourth quarter vacancy rate is 3.3 percentage points lower than the 4.6% average recorded since the beginning of Q1 2013.
Outlook
Between now and year-end 2024, no additional competitive stock is projected to be introduced to the metro inventory. Industrial job growth over the same period is expected to average 0.9% annually. The market vacancy rate will finish 2023 at 1.6% and will increase 0.3 percentage points to 1.9% by year end 2024. On an annualized basis, asking and effective rents are projected to climb at a rate of 7.5% through year end 2024, reaching average rates of $18.74 and $17.68 per square foot, respectively.
Executive Briefing on Market (Distribution) Conditions
The average Asking Rent was $9.87 in the Miami metro
- Rent in the Miami metro was up 2.6% from Q3 2022.
- Rent Has risen for ten consecutive quarters in the Miami metro.
The average Vacancy Rate was 1.8% in the Miami metro
- Vacancy in the Miami metro drifted downward by 10 basis points.
- The Miami metro had the lowest vacancy level since Q3 2009.
Market Overview
A comprehensive assessment of the Miami warehouse/ distribution market indicates that the largest concentrations of speculative warehouse/ distribution space are located in the Hialeah Gardens/ Medley submarket, representing 26.1 million square feet and 20.3% of the metropolitan inventory, followed by Miami Airport, with a 20.2% share, and Hialeah/ East Miami Shores (19.7%). Since the beginning of Q1 2013, the fastest growing area has been the Miami Lakes submarket, adding 8.6 million square feet over that period, or 35.4% of total metropolitan warehouse/distribution completions.
Asking and Effective Rent
Asking rents in Florida’s second most populous city advanced by 2.6% during the fourth quarter of 2022 to an average of $9.87. This advance extends the market’s streak of gains to ten quarters, during which asking rents have risen by a total of 27.5%. Since the beginning of Q1 2013, the metro as a whole has recorded an annual average increase of 4.2%. Effective rents, which exclude the value of concessions offered to prospective tenants, rose by 2.7% during the fourth quarter to an average of $9.56. 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 grew by 10,300 jobs during the fourth quarter, amounting to a growth rate of 0.8%, while industrial employment expanded by 1,200. Since the beginning of Q1 2013, the average growth rate for industrialusing employment in Miami has been 1.6% per year, representing the average annual addition of 2,100 jobs. The metro experienced absorption of 1.2 million square feet during the fourth quarter. Over the last four quarters, market absorption totaled 4.2 million square feet, 39.3% greater than the average annual absorption rate of 3.0 million square feet recorded since the beginning of Q1 2013. From an historical perspective, the fourth quarter vacancy rate is 5.0 percentage points lower than the 6.8% average recorded since the beginning of Q1 2013.
Outlook
Between now and year-end 2024, developers are anticipated to deliver a total of 2.7 million square feet. Industrial job growth over the same period is projected to average 0.9% annually. Because this amount does not exceed the forecasted new construction, the market vacancy rate will rise by 40 basis points to finish 2024 at 2.1 %. On an annualized basis, asking and effective rents are projected to increase at a rate of 6.9% through year end 2024, reaching average rates of $12.61 and $12.21 per square foot, respectively.