Q2 2023 South Dade Industrial Report
The average Asking Rent was $8.43/sqft in the South Dade submarket
- Rent in the South Dade submarket was up 0.6% from February.
- Rent has risen in every month since July 2021 in the South Dade submarket.
The average Vacancy Rate was 1.2% in the South Dade submarket
- No vacancy change since February in the South Dade submarket.
- Vacancy is expected to finish 2023 at 2.3% in the South Dade submarket.
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 02 2013, 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
Asking rents rose every month during the first quarter, with March’s increase of 0.6% bringing the cumulative quarterly total up to 2.2%. The submarket has now experienced twenty consecutive monthly gains in asking rent, for a cumulative total of 27.2%. The South Dade submarket’s March asking rent levels are lower than the metro’s average of $14.88, while asking rent growth in March is equal to the metro average of 0.6%. Effective rents, which exclude the value of concessions offered to prospective tenants, advanced by 0.5% during March to an average of $11.46.
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 posted an average annual absorption rate of 117,400 square feet. During March, the metro experienced absorption of 9,000 square feet, but absorption was flat in the South Dade submarket. Over the last 12 months, submarket absorption totaled negative 11,000 square feet; by comparison, the average annual absorption rate recorded since the beginning of 02 2013 is 11,500 square feet. The submarket’s average vacancy rate held steady at 2.5% during March, which is 1.1 percentage points lower than the long-term average, but 0.9 percentage points higher than the current metro average.
Reis’s new construction specialists report that no more competitive Flex/R&D stock will be introduced to the sub market this year, and net total absorption will be positive 3,000 square feet. As a result, the vacancy rate will drift downward by 0.2 percentage points to 2.3%. During 2024 and 2025, developers are expected to deliver a total of 26,000 square feet of Flex/R&D space to the submarket amounting to 100.0% of the new construction introduced to Miami. Industrial job growth during 2024 and 2025 is expected to average 0.7% annually. The South Dade submarket will benefit disproportionately from this growth rate, posting absorption averaging 16,000 square feet per year, 80.0% of the projected metro total. The submarket vacancy rate will finish 2024 at 1.5% and will increase 0.4 percentage points to 1.9% by year end 2025. Between now and year-end 2023 asking rents are expected to increase 7.7% to a level of $13.39. On an annualized basis through 2024 and 2025, asking and effective rents are expected to advance by 9.0% and 9.3%, respectively, to finish 2025 at $15.92 and $14.77.