Writer: Sara Warden

2 min read SEPTEMBER 2019 — Miami is an attractive place to live and a business hub, but that also means its real estate doesn’t come cheap. In the huge land expanses involved in industrial real estate, assets cost a pretty penny. But the dynamics of the Miami market mean developers are not shying away from putting their hand in their pocket.

A key example of this is the recent sale of the three-building, 74-acre Centergate development at Gratigny in Hialeah for $178 million, Florida’s biggest sale of the year. Real estate giants CBRE closed the sale on behalf of the buyer.

“Centergate is one of the largest industrial offerings to come for sale in South Florida in recent years,” said CBRE Executive Vice President Jose Lobon in a news release. “Given the challenges to aggregate square footage in our market, Centergate presented a unique opportunity to acquire critical mass in one of the most desirable logistics markets in the nation.”

The sale can be broken down to a price of $111.25/ft2, a steal compared to recent deals in the greater Miami area. At the end of last month, institutional investor The Blackstone Group bought the 14-acre Airport Trade Center property west of Miami International Airport for $56 million, or $152/ft2.

Also this month, CBRE closed another multimillion-dollar industrial real estate deal, selling the five-building Miramar industrial portfolio to Stockbridge Capital. This deal equates to an eye-watering $192/ft2.

“It’s hard to buy industrial real estate in South Florida. It’s very competitive. Particularly when you see something of this size, multiple buildings,” Lobon added. “The opportunity to be able to buy in one stroke over 600,000 square feet of Class A, high-quality institutional industrial real estate in South Florida, those opportunities don’t come around that frequently.”

With these values, it’s not hard to see why other industrial real estate investors have made Miami a prime focus in their business plans. NYSE-listed real estate corporation Terreno has made Miami a cornerstone in its six-market strategy. 

“Terreno acquires, owns and operates industrial real estate in six major coastal US markets. Exclusively. Functional, flexible, infill real estate located at the intersection of growing demand and limited, or even shrinking, supply,” the company says on its website.

E-commerce is one of the reasons why industrial real estate close to the city limits is in such high demand in recent years. Miami is the sixth-most densely-populated city in the United States and the metropolitan area is home to over 6 million people. 

A 2017 study by San Francisco technology company Trove Technologies found that Florida is No. 1 for discretionary income in the South Atlantic region. Discretionary income is the amount left over after paying for the essentials such as rent and bills.

A huge captive population combined with sizeable disposable income is not only good news for e-commerce, but also for the US industrial real estate giants that are betting on the greater Miami area.

 

To learn more about our interviewees, visit:

https://www.cbre.com/about

https://www.blackstone.com/

https://stockbridge.com/

https://terreno.com/