Miami Industrial

MarketView

Q3 2014

TOTAL VACANCY
4.6%

ASKING RATE
$8.17 IG

CBRE Global Research and Consulting

NET ABSORPTION
704 K sq. ft.

CONSTRUCTION
452 K sq. ft.

COMPLETIONS
806 K sq. ft.

UNEMPLOYMENT
7.3%

*Arrows indicate change from previous year.

INDUSTRIAL DEVELOPMENT REMAINS STRONG AS TENANT

FLIGHT TO QUALITY CONTINUES
Hot Topics

Over 806,000 sq. ft. of Class A

warehouse/distribution space was
delivered during Q3 2014,
452,000 sq. ft. is currently under
construction, and 3.2 million sq. ft.
is in the development pipeline.

Figure 1: Total Vacancy -vs- Average Direct Asking Lease Rate (IG)
Total Vacancy
Average Direct Asking Lease Rate

4.6%
$8.17
Asking Lease Rate-

-Percent Vacant

12%

$10

10%

$8

8%

Amazon.com signed the largest

new lease of the quarter, a
335,730-sq.-ft. lease in Miami
International Distribution Center.
The PortMiami tunnel opened
during Q3 2014, connecting the
port directly to the interstate,
allowing trucks to access the
highway without encountering
downtown traffic.
In 2013, PortMiami moved nearly 8
million tons of cargo, over half of
which went to and came from Latin
America and the Caribbean.

$6

6%

$4

4%

$2

2%
0%

2009

2010

2011

2012

2013

2014 YTD

$0

Source: CBRE Research, Q3 2014.

Development
Industrial construction continues as
developers attempt to meet the growing
demand for Class A industrial product in
Miami as tenant flight to quality continues.
These new facilities, which offer features
that allow companies to operate more
efficiently such as 30 to 36 clear
heights, wider column widths, deep and
secure truck courts, trailer storage and
high-efficiency T-5 lighting are in such
high demand that many buildings are preleased before construction is completed.
Of the 3.4 million sq. ft. of Class A
industrial space delivered in the past two
years, 43% was leased before construction
was completed. Furthermore, 21% of the
452,000 sq. ft. of Class A industrial space
currently under construction is already preleased.
The largest delivery of Q3 2014 was South
Florida Logistics Center Building 2. Nearly
40% of the 272,000-sq.-ft. building has
been leased to floral company, The Elite

Flower. Also completed in South Florida

Logistics Center during the quarter was the
111,000-sq.-ft. Building 3. Several 10K30K sq. ft. tenants have already signed
leases in the building including Sovereign
Container Line, Siati Express, Asia Shipping
and ConVida Healthcare Systems. Once
completed, the complex will add 1.6
million sq. ft. of industrial product
spanning 200 acres adjacent to Miami
International Airports cargo entrance.
Building 23, the newest addition to Beacon
Lakes, was completed during the quarter in
Airport/Doral. Approximately 31,000 sq.
ft. of the 165,000-sq.-ft. building was
already leased to Demark Customs Broker.
Also in Airport/Doral, construction crews
broke ground on Buildings 1 & 2 at
Transal Logistics Center. The two-building
warehouse/distribution center is expected
to add an additional 217,749 sq. ft. of
Class A space to Airport/Doral in Q1
2015.

2014, CBRE, Inc.

Q3 2014

Figure 2: Market Statistics

Submarket

Building
sq. ft.

Total Vacancy
(%)

Total Availability
(%)

Q3 2014 Net
Absorption

2014 Net
Absorption

Under Construction

Avg Dir Asking Lse

Rate (IG)

Miami Industrial | MarketView

Airport/Doral

56,577,352

7.2

10.6

138,637

238,146

218,000

$9.43

Central Dade

38,236,839

3.9

5.8

8,100

377,582

$6.03

Hialeah

12,547,000

2.1

3.2

40,512

80,243

$7.27

Kendall/Tamiami

12,319,312

0.8

2.0

90,700

113,415

$10.13

Medley

37,926,233

3.9

5.5

341,484

1,127,692

234,386

$7.95

Miami Lakes
North Central Dade

6,326,145

6.9

9.9

44,365

(12,161)

$8.33

35,464,040

4.2

7.3

31,877

110,122

$6.38

North East Dade

2,762,282

1.5

2.0

2,250

29,347

$9.30

South Dade

4,542,127

4.3

5.8

5,630

40,449

$8.91

Total Market

206,701,330

4.6

7.0

703,555

2,104,835

452,386

$8.17

Manufacturing

19,508,933

2.1

3.6

70,870

251,692

$6.78

Warehouse/Distribution
Flex/R&D
Other industrial

169,599,685

5.0

7.3

637,758

1,747,981

452,386

$8.11

10,693,570

5.7

9.0

12,048

94,175

$9.80

6,899,142

1.2

5.9

(17,121)

10,987

$9.15

Source: CBRE Research, Q3 2014.

Building 1 at L&Bs Airport North Logistics Park in Medley was

delivered during the quarter. The 256,000-sq.-ft. warehouse is
the first building to be completed in the planned five-building,
918,000-sq.-ft. warehouse/distribution park. Construction is
expected to begin on the second building in Q4 2014.
In Flagler Station, construction is currently underway on Buildings
35 & 36. The 129,600-sq.-ft. buildings are slated for completion
during Q4 2014. Following the completion of Buildings 35 & 36,
construction will begin on Buildings 37 & 38. Building 38 has
already been pre-leased to logistics firm, Vanguard Logistics.
Leasing Activity
The flight to quality seen in previous quarters continues, but isnt
limited to tenants moving to the new generation of Class A
warehouses. The flow of sophisticated tenants to the new
generation of Class A properties is causing a domino effect on
second generation spaces. There has been a significant flight to
second generation spaces from Class B & C buildings,
particularly with sub-40,000-sq.-ft. spaces, which professionals
are noticing are in short supply.

Online retail giant Amazon.com signed the largest lease of Q3

2014, for 335,730 sq. ft. in Miami International Distribution
Center. The internet retailer will occupy the entire KTR-owned
building, which was completed in 2013. Flower producer and
distributor, The Elite Flower, which currently occupies 64,000 sq.
ft. in International Corporate Park, signed a sizable lease in the
brand-new South Florida Logistics Center Building 2. The
company signed a 52,000 sq. ft. lease, and will also sublease an
additional 56,000 sq. ft. during the peak of floral season. Also in
South Florida Logistics Center, logistics companies, Siati Express
and Asia Shipping signed leases for 24,800 sq. ft. and 18,600
sq. ft., respectively. In Medley, Vanguard Logistics signed a
135,000-sq.-ft. lease in the planned Flagler Station Building 38.

The logistics firm will occupy the entire building, which is

scheduled to break ground during Q4 2014.
While primary submarkets, such as Airport/Doral and Medley,
continued to prosper, so do secondary submarkets. North
Central Dade was home to several sizable transactions during the
quarter. Also in North Central Dade, flooring distributor, Happy
Floors, leased 54,234 sq. ft. In Central Dade, O.C.
Communications signed a five-year lease for 32,667 sq. ft. at
Miami Cargo East, located at 725 SE 9th Court. This is the
second South Florida location, and the first in Miami-Dade
County for O.C. Communications, a full-service contracting firm
specializing in the installation, project management, and
maintenance of communication systems, and a contractor for
Comcast.
While some tenants are moving to new spaces offering better
amenities, others are choosing to stay in place, as is the case for
one of the largest leases signed during Q3 2014. Florida's
largest privately owned distributor of corrugated products &
packaging supplies, Dependable Packaging, signed a 114,000sq.-ft. lease in Prologis Gratigny Industrial Park. The packaging
supplier was previously subleasing the space. Other smaller
tenants are also choosing to remain stable, such as Duty Free
Express, which renewed its 16,141-sq.-ft. lease in Airport Lakes
Industrial Center and Sherwin Williams, which renewed its
12,530-sq.-ft. lease in Americas Gateway Park.
Overall, Miamis industrial market saw healthy activity during Q3
2014. Freight-forwarding, 3PL, aviation, food and perishables
companies continue to be the most active in the market. Miamis
vacancy rate remained stable at 4.6%. However, vacancy is
anticipated to decline as the large tenants that have already
signed leases to expand or enter the market take occupancy.
While vacancy remained steady, the average asking rate declined
slightly, now $8.17 per sq. ft.

2014, CBRE, Inc.

$6.78
$8.11
$9.80

Manufacturing
Warehouse/Dist
Flex/R&D

$10
$8
$6
$4
$2
$0

2009

2010

2011

2012

2013

2014 YTD

Source: CBRE Research, Q3 2014.

2,105 K sq. ft.

-000s of sq. ft.

6,000
4,500
3,000
1,500
0

(1,500)
(3,000)
(4,500)
(6,000)
2009

2010

2011

2012

2013

2014 YTD

Source: CBRE Research, Q3 2014.

Figure 5: Under Construction and Completions

Under Construction
Completions
-000s of sq. ft.

Several large users have new addresses, with numerous sizable

user sales occurring during the quarter. RC Aluminum Industries
purchased a 115,000-sq.-ft. property in North Central Dade for
$5.2 million, or $45 per sq. ft. Safaritopia purchased a
106,000-sq.-ft. building in Miami Lakes for $8.4 million, or $79
per sq. ft. The toy manufacturer moved from its previous 69,825
sq. ft. space in Sunshine State Industrial Park in North Central
Dade. Data Center Operator, EdgeConneX, also purchased a
property during the quarter, buying a brand new 32,000-sq.-ft.
building in Airport/Doral for $135 per sq. ft.
Economic Influence
The undeniable presence of international trade, improving
consumer confidence and a resilient housing market are
important drivers in Miamis economic growth. Home to two of
the United States leading gateways for international cargo
Miami International Airport and PortMiami Miami continues to
be a mecca for international trade. Miami International Airport is
ranked #1 in the United States for international freight, moving
over 1.8 million tons of international freight annually, and
handling over 80% of air shipments to and from Latin America
and the Caribbean.

Figure 4: Net Absorption

2014 YTD

Known as the gateway to Latin America and the Caribbean,

Miami continues to be one of the most desirable investment
markets in the country. PS Business Parks added to its Miami
International Commerce Center portfolio during the quarter, with
the purchase of a 148,618-sq.-ft. building. The REIT purchased
the property from AEW Capital Management for $12.7 million,
or $85 per sq. ft.

Miami Industrial | MarketView

$12

Sales Activity

Q3 2014

Figure 3: Average Dir Asking Lease Rates (IG)

452 K sq. ft.

1,798 K sq. ft.

2,000

PortMiami is ranked one of the busiest ports in the U.S. for

container traffic, moving nearly 8 million tons of cargo, over half
of which went to and came from Latin America and the
Caribbean, during 2013. Port officials expect this to grow once
the $2 billion capital improvement projects currently taking place
at the port are completed, with a goal of doubling the amount of
container cargo by the end of the decade. PortMiamis Deep
Dredge project is moving forward, and once completed in 2015,
PortMiami will be the only port south of The Port of Virginia that is
able to accommodate post-Panamax vessels. The tunnel running
under Biscayne Bay connecting PortMiami directly to the interstate
opened during the quarter, allowing trucks to access the highway
without encountering downtown traffic. These, along with other
improvements including the addition of four new super-sized
gantry cranes and the restoration of on-port rail service, will
ensure that Miami remains one of the leading entry points for
goods flowing from Asia to the Southeastern U.S. and beyond.
Outlook

1,500
1,000
500
3

0
2009

2010

2011

2012

2013

2014 YTD

Source: CBRE Research, Q3 2014.

2014, CBRE, Inc.

Miami continues to be one of the most desirable industrial

markets in the country. Investors and developers are constantly
being pushed to expand within the market, while those not
already in Miami are being pushed to enter. Miamis
attractiveness to users has been proven by the numerous large
tenants that have entered the market in the past several years,
consistent year-over-year absorption growth, and strong preleasing activity of new construction projects. Miamis vacancy
rate, which is already one of the lowest in the country, is expected
to continue to decline. Market professionals are predicting a
bright future for this international gateway and global logistics
hub.

Q3 2014
Miami Industrial | MarketView

CONTACTS

Market Coverage: Includes all competitive industrial buildings 10,000 sq. ft. and greater in size in Miami-Dade county.

For more information about this Local MarketView, please contact:

Miami Research
Kyle Kujala
Research Coordinator
Miami Research
CBRE
777 Brickell Avenue
Suite 900
Miami, FL 33131
t: +1 305 428 6336
e: [email protected]

Ana M. Gonzalez
Research Coordinator
Miami Research
CBRE
777 Brickell Avenue
Suite 900
Miami, FL 33131
t: +1 305 381 6432
e: [email protected]

Ken Krasnow
Managing Director
South Florida
CBRE
777 Brickell Avenue
Suite 900
Miami, FL 33131
t: +1 305 428 6342
e: [email protected]

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