South Florida industrial market softens, rents rise again in fourth quarter

South Florida’s industrial market slowed down slightly in the final quarter of last year, as vacancies inched up while asking rents rose again.

The tri-county region posted a 4 percent vacancy rate compared to 3.4 percent during the same period of the previous year, according to a recent Newmark report. And leasing activity across Miami-Dade, Broward and Palm Beach dropped to 3.6 million square feet in the fourth quarter, compared to 6.3 million square feet in the preceding quarter.

At the same time, landlords again raised the average asking rent in South Florida’s industrial market. In the fourth quarter of last year, they asked for $13.16 a square foot, compared to $11.97 a square foot in the third quarter and $10.11 a square foot, year-over-year, Newmark found.

Miami-Dade County

The vacancy rate in Miami-Dade jumped to 3.1 percent in the fourth quarter of last year, compared to 2.6 percent during the same period in 2021, the report shows. Tenant demand dropped dramatically to 36,614 square feet in 2022’s final quarter, compared with 1.7 million square feet during the same period of 2021.

The average asking rent rose to $13.37 a square foot in the fourth quarter, compared to $9.96 a square foot during 2021’s fourth quarter.

Investment sales volume fell to $1.5 billion in the final quarter, compared to $3.1 billion in the third quarter of last year. TA Realty’s $240 million purchase of a Medley industrial park in the last quarter of 2022 represented the largest industrial deal in South Florida last year.

Broward County

At 5.2 percent, Broward had South Florida’s highest industrial vacancy rate in the final quarter of last year. During the same period of 2021, Broward’s vacancy rate was 4.7 percent, Newmark found. Tenant demand filled 172,224 square feet of Broward industrial space in the final quarter of last year, compared to 496,000 square feet of positive absorption during the same period of 2021.

Broward’s average asking rent climbed to $13.09 a square foot in the fourth quarter, compared to $11.27 a square foot in the preceding quarter and $10.14 a square foot, year-over-year, the report states.

Broward County’s investment sales reached $1 billion in volume in the fourth quarter of 2022, up significantly from $816,000 in the third quarter. Last quarter’s top deal was Prologis’ $37.7 million acquisition of an industrial facility in Pompano Beach. The sale was part of Prologis’ $23 billion all-stock purchase of Duke Realty.

Palm Beach County

In the last quarter of 2022, Palm Beach County’s vacancy rate creeped up to 5.1 percent, compared to 4.1 percent during the same period of 2021. The county’s industrial market also posted a negative absorption of 101,793 square feet, compared to 132,862 square feet of positive absorption, year-over-year, according to Newmark.

The average asking rent dropped to $12.66 a square foot in the fourth quarter of last year, compared to $13.07 a square foot in the preceding quarter, but higher than $10.87 a square foot in 2021’s fourth quarter.

Last year, investment sales volume in Palm Beach County shot up to $541 million in the fourth quarter, compared to just $803,000 in the prior quarter.

MG3’s $78 million sale/leaseback deal for a Walgreens distribution facility in Jupiter represented the largest trade in Palm Beach County during the fourth quarter of last year, the report states.