Q3 2023 Miami Metro Industrial Report
Executive Briefing on Market (Flex R&D) Conditions
The average Asking Rent was $10.19/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 2.4% in the Miami metro
- Rent in the Miami metro was up 0.6% from May.
- Rent has risen in every month since November 2020 in the Miami metro.
A comprehensive overview of the Miami warehouse/distribution market reveals that the dominant concentrations of speculative warehouse/distribution space are located in the Hialeah Gardens/Medley submarket, amounting to 26.7 million square feet and 20.3% of the metropolitan inventory, followed by Miami Airport, with a 19.8% share, and Hialeah/East Miami Shores (19.6%). Since the beginning of Q3 2013, the fastest growing area has been the Miami Lakes submarket, adding 10.1 million square feet over that period, or 39.1% of total metropolitan warehouse/distribution completions.
Asking and Effective Rent
Asking rents climbed every month during the second quarter, with June’s increase of 0.6% bringing the cumulative quarterly total up to 1.9%. The market has now experienced thirty-one consecutive monthly gains in asking rent, for a cumulative total of 31.0%. Since the beginning of Q3 2013, the metro as a whole has recorded an annual average increase of 4.5%. Effective rents, which exclude the value of concessions offered to prospective tenants, also advanced by 0.6% during June. The identical rates of change suggest that landlords have succeeded in raising rents while maintaining a stable relationship between asking and effective rent values. During the past 12 months, 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 8,700 jobs during the second quarter, representing a growth rate of 0.7%, while industrial employment grew 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. Leasing activity generated 73,000 square feet of absorption during June. Over the last 12 months, market absorption totaled 3.5 million square feet, 13.9% greater than the average annual absorption rate of 3.1 million square feet recorded since the beginning of Q3 2013. In a long-term context, June vacancy rate is 4.2 percentage points lower than the 6.6% average recorded since the beginning of Q3 2013.
Reis’s new construction analysts report that no more competitive warehouse/distribution stock will be introduced to the metro this year, and net total absorption will be positive 132,000 square feet. As a result, the vacancy rate will drift downward by 0.1 percentage points to 2.3%. During 2024 and 2025, construction activity under surveillance is expected to deliver a total of 3.2 million square feet. Industrial employment growth at the metro level during 2024 and 2025 is anticipated to average 0.6% annually, enough to facilitate an absorption rate averaging 1.5 million square feet per year. Because this amount does not exceed the forecasted new construction, the market vacancy rate will increase by 10 basis points to finish 2025 at 2.4%. Between now and year-end 2023 asking rents are expected to increase 5.0% to a level of $10.70, while effective rents will rise by 5.1% to $10.34. On an annualized basis, asking and effective rents are projected to advance at a rate of 6.4% through year end 2025, reaching average rates of $12.12 and $11.70 per square foot, respectively.