Florida Industrial Building Boom Leads to Higher Vacancies, Rents
The sector is experiencing higher rents are rising as new buildings command premium rates
By Jeff Ostrowski January 21, 2025 7:05 am
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During the pandemic, a supercharged market for industrial space spurred developers to build millions of square feet of warehouses in South Florida.
Now that the new space is hitting the market, South Florida’s industrial sector is experiencing a combination of higher vacancies and higher rents, Cushman & Wakefield (CWK) reports in its fourth-quarter market survey. Rents are rising as new buildings command premium rental rates.
“The vacancy increase is all construction activity,” Eric Messer, senior research manager for Florida at Cushman & Wakefield, told Commercial Observer. “Once that space gets absorbed, vacancy rates are going to fall. The market is well positioned for recovery.”
In Miami-Dade County, vacancies rose to 5.6 percent at the end of 2024. The market saw 2 million square feet of new leasing activity during the fourth quarter.
However, for the year, just 6.8 million square feet of leases were signed, the lowest annual total since 2015.
Notable fourth-quarter deals included DP World taking 108,000 square feet and Jet Fresh occupying 42,200 square feet, both at Air Logistics Center-Building 3 in Doral, Fla.
Rents across Miami-Dade climbed 3.2 percent for the year, reaching $16.53 per square foot. Rents for older industrial properties have flattened or declined, while new developments can push for higher rents, Cushman & Wakefield said.
In Broward County, the industrial vacancy rate rose to 3.3 percent at the end of 2024, up from 2.8 percent a year earlier. However, it’s still the tightest market in the state, Cushman & Wakefield reported, largely because of a lack of new industrial construction.
Reflecting a tight market, the overall average asking rate in Broward County rose to $16.29 per square foot at the end of 2024, up 7 percent for the year.
In just one example of Broward County’s building boom, Summit Real Estate Group last year secured $31 million in construction financing for a 280,000-square-foot distribution project in Pembroke Pines.
The Hollywood-Hallandale submarket recorded the largest jump in vacancy, climbing 110 basis points to 3.6 percent, as new speculative development hit the market.
In Palm Beach County, meanwhile, the vacancy rate surged to 6.7 percent at the close of 2024, an increase of 190 basis points from a year ago. Warehouse-distribution vacancy rose even more sharply, climbing 2.8 percentage points to finish the year at 8.5 percent.
Somewhat counterintuitively, Palm Beach County’s overall average asking rental rate rose 7.9 percent for the year to $15.73 per square foot.
In the West Palm Beach submarket, asking rates surged 25.5 percent to $15.61, a move driven by a wave of completions of new, pricey space.
Jeff Ostrowski can be reached at jostrowski@commercialobserver.com.
