Writer: Felipe Rivas
2 min read July 2021 — Decreasing vacancy rates, an active industrial development landscape and overall robust demand have Broward County poised for a record-breaking year, JLL reportedopens PDF file in its 2Q21 industrial report for the county.
Buoyed by the meteoric rise in e-commerce and warehouse demand, the vacancy rate in the local market stands at 7.9% for 2Q21, thanks in part to the heightened demand for class-A products. “The market remained strong through midyear. Larger than usual move-ins brought the overall net absorption above 1.0 million square feet this quarter, a level not seen since 2017. E-commerce continues to have a significant impact on the market, especially for Class A product,” JLL reported.
Tech improvements also continue to drive the success of companies occupying industrial spaces throughout South Florida. “Industrial has been a big winner in this new setting. Last-mile fulfilment is the main driver behind that success. Technology in terms of inventory and space control is all the rage,” Walter Duke + Partners President Walter Duke told Invest:. “Some warehouses now include more robots than people. We have appraised properties that are owned and operated by large fulfilment companies such as Amazon and we are seeing technology transform that space. Cold storage space is also witnessing significant technological improvements.”
Even with just north of 1.2 million square feet of industrial space under construction expected to deliver by the end of the year, projected demand currently outpaces supply, potentially influencing rent growth in certain regions. More than 2.6 million square feet worth of active tenant requirements are eying Broward County as of 2Q21. Companies in logistics, consumer products and e-commerce are among the tenants actively looking for “large blocks of space,” JLL reports. It is expected that these companies are eyeing spaces ranging anywhere from 20,000 to 500,000 square feet.
While concessions were stable during 2Q21, direct and sublease rents increased 5% quarter-over-quarter. Rents stand at $9.03 per square foot for direct asking rents and $8.30 for sublease asking rents. “There are only a few proposed projects left in the market that are not part of an existing park already, showing signs that prime rental growth may persist for key regions,” JLL wrote.
As 2021 continues, optimism abounds for a record-breaking year despite the constrained supply. “Given the amount of leasing activity we experienced last year it’s more than likely that 2021 will be a record year for net absorption. New supply is not expected to exceed demand in the upcoming quarters due to the lack of proposed projects in the pipeline. However, the remainder of the available pipeline has enough new supply to provide occupiers with additional options for growth,” JLL wrote.
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