Q3 2023 South Dade Industrial Report
The average Asking Rent was $10.79/sqft in the South Dade submarket
- Rent in the South Dade submarket was up 0.6% from May.
- Rent has risen in every month since August 2021 in the South Dade submarket.
The average Vacancy Rate was 0.3% in the South Dade submarket
- The South Dade submarket had the tenth lowest vacancy in the nation and the fifth lowest in the South Atlantic.
- No vacancy change since May in the South Dade submarket.
With 11.9 million square feet, amounting to 9.0% of the total metro inventory, the South Dade submarket is the smallest of the seven competitive Miami submarkets identified by Reis’s researchers. In the ten-year period beginning with Q3 2013, new additions to the submarket totaled 1.1 million square feet, amounting to an annualized inventory growth rate of 0.9%; 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 0.6% bringing the cumulative quarterly total up to 1.7%. The submarket has now experienced twenty-two consecutive monthly gains in asking rent, for a cumulative total of 24.5%. The South Dade submarket’s June asking rent levels are higher than the metro’s average of $10.19, while asking rent growth in June is equal to the metro average of 0.6%. Effective rents, which exclude the value of concessions offered to prospective tenants, also rose by 0.6% during June. The equal rates of change indicate that landlords have managed to command higher rents without sweetening the relative value of concessions packages used to attract new tenants.
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, the metro experienced absorption of 73,000 square feet, but absorption was fat in the South Dade submarket. Over the last 12 months, submarket absorption totaled 7,000 square feet, a fraction of the average annual absorption rate of 157,100 square feet recorded since the beginning of Q3 2013. The submarket’s average vacancy rate held steady at 0.3% during June, which is 3.3 percentage points lower than the long-term average, and 2.1 percentage points lower than the current metro average.
No more speculative warehouse/distribution inventory will be introduced for the rest of the calendar year, and Reis estimates that net total absorption will be positive 3,000 square feet. In response, the vacancy rate will hold steady to finish the year at 0.3%. During 2024 and 2025, developers are expected to deliver a total of 36,000 square feet of warehouse/distribution space to the submarket amounting to 1.1% of the new construction introduced to Miami. Industrial employment growth at the metro level during 2024 and 2025 is expected to average 0.6% annually, enough to facilitate an absorption rate averaging 1.5 million square feet per year. The South Dade submarket will claim an insignificant 1.2% of this demand. The submarket vacancy rate will finish both years at 0.3%. Between now and year-end 2023 asking rents are expected to advance 3.6% to a level of $11.18, while effective rents will climb by 3.6% to $10.80. On an annualized basis, asking and effective rents are projected to rise at a rate of 5.4% through year end 2025, reaching average rates of $12.42 and $12.00 per square foot, respectively.