Q3 2023 Hialeah/E. Miami Shores Industrial Report
The average Asking Rent was $8.64/sqft in the Hialeah/East Miami Shores submarket
- Rent in the Hialeah/East Miami Shores submarket was up 0.7% from May.
- Rent has risen in every month since May 2021 in the Hialeah/ East Miami Shores submarket.
The average Vacancy Rate was 1.1% in the Hialeah/East Miami Shores submarket
- Vacancy in the Hialeah/East Miami Shores submarket drifted downward by 20 basis points.
- The Hialeah/East Miami Shores submarket had the lowest vacancy level since November 2009.
The Hialeah/East Miami Shores submarket, one of seven distinct geographic concentrations within Miami, contains 25.7 million market rate rental square feet, or 19.6% of the metro’s total inventory of warehouse/distribution space. In the ten-year period beginning with Q3 2013, new additions to the submarket totaled 4.3 million square feet, amounting to an annualized inventory growth rate of 1.9%; over the same period, the metro growth rate has been 2.2%.
Asking and Effective Rent
Asking rents increased every month during the second quarter, with June’s increase of 0.7% bringing the cumulative quarterly total up to 2.4%. The submarket has now experienced twenty-five consecutive monthly gains in asking rent, for a cumulative total of 33.7%. The Hialeah/East Miami Shores submarket’s June asking rent levels are lower than the metro’s average of $10.19, while asking rent growth in June compares favorably to the metro average of 0.6%. Effective rents, which exclude the value of concessions offered to prospective tenants, increased by 0.8% during June to an average of $8.39.
Competitive Inventory, Employment, Absorption
Total employment in the Miami metropolitan area increased by 8,700 jobs during the second quarter, while industrial employment expanded by 1,600. Since the beginning of Q3 2013, the average growth rate for industrial using employment in Miami has been 1.2% per year, representing the average annual addition of 1,600 jobs. Over the same time period, the metro experienced an average annual absorption rate of 3.1 million square feet. During June, metropolitan absorption totaled 73,000 square feet, of which the Hialeah/East Miami Shores submarket captured the lion’s share, 54,000 square feet. Over the last 12 months, submarket absorption totaled 511,000 square feet, 19.0% lower than the average annual absorption rate of 630,900 square feet recorded since the beginning of Q3 2013. The submarket’s average vacancy rate drifted downward by 20 basis points during June to 1.1%, which is 7.0 percentage points lower than the long-term average, and 1.3 percentage points lower than the current metro average.
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 3,000 square feet. Relative to the submarket inventory, this amount of absorption is not enough to move the average vacancy rate, which is expected to stay at 1.1%. During 2024 and 2025, developers are expected to deliver a total of 526,000 square feet of warehouse/distribution space to the submarket amounting to 16.3% of the new construction introduced to Miami. Industrial employment growth at the metro level during 2024 and 2025 is projected to average 0.6% annually, enough to facilitate an absorption rate averaging 1.5 million square feet per year. The Hialeah/East Miami Shores submarket will claim a portion of this demand, posting absorption averaging 243,000 square feet per year, 16.4% 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 1.2%. Between now and year-end 2023 asking rents are expected to climb 5.6% to a level of $9.12, while effective rents will rise by 5.6% to $8.86. On an annualized basis through 2024 and 2025, asking and effective rents are anticipated to advance by 8.4% and 8.3%, respectively, to finish 2025 at $10.71 and $10.39.