Writer: Max Crampton-Thomas
2 min read May 2021 — Greater Fort Lauderdale has grown into one of South Florida logistics and warehousing hubs. Scott Helms, principal of Helms Development, spoke to Invest: Greater Fort Lauderdale on the opportunities of a hot market, challenges he faces with the lack of available land to develop and the business he runs as the market remains strong in spite of COVID-19
How has COVID impacted the industry?
Tha pandemic has put the e-commerce industry five years ahead of where it would have been otherwise. Industrial real estate and specifically warehousing and logistics, have been one of the most highlighted and active industries in South Florida. E-commerce companies seem to be in a race to take existing warehouses as well as new development locations. Amazon has leased numerous facilities in Broward, Miami-Dade and Palm Beach counties. They have also tied up several new sites and are attempting to entitle them. Other companies have leased large blocks of space including Home Depot, UPS, FedEx, City Furniture and Vital Pharmaceuticals. Vacancy rates and absorption levels are very healthy which is driving up land prices in a very land constrained market. Land and building prices are at the highest levels ever. As a result of COVID and the fast pace of e-commerce growth, the industrial development industry has changed dramatically. It’s mostly positive, especially if you have projects going on. It has definitely been a good year for the industry and for all of us in the industry.
Has the industry been primarily focused on redeveloping existing projects or is there a push to make more land available for development?
The last three large sites over 50 acres that I’ve developed were a filled lake, a trailer park and a womens’ prison. You don’t find large industrial sites sitting out in the market. It doesn’t happen. It has to be a site with a different zoning and with the ability to entitle. There are several large projects in the entitlement process, a Sunrise vacant site of 1,000,000 square feet for Amazon and a Pompano site that was formerly part of a harness track for an unnamed tenant. Anything of substantial size has to be repurposed. Due to the scarcity of the industrial sites, land prices continue to increase.
It seems demand remains unaffected. Is that the case?
Demand is very high. Rents continue to grow. Cap rates continue to drop. Therefore, valuations have continued to go up. All the institutions want to be here in South Florida, primarily in Broward and Miami-Dade counties. They’re starting to move into Palm Beach but they’re all coming here to put a flag in the market.
Have rising demand and costs affected your traditional client-base?
Yes, absolutely. I get phone calls from institutions at least once a week. For me, it’s not about finding the capital, it’s about finding the property. If you find the property, you’ll find the capital. They’ll line up for it.
What areas of Broward are you seeing most affected by demand?
For industrial, it’s through the major highways. Infill properties, such as the racetrack I mentioned, are also trending. There are new developments near the Everglades on the west end of the county, such as the womens’ prison that we developed. Any potential site is being looked at whether it is infill or in the western end of the county. Anywhere that can be developed will be, as long as you can make the numbers work.
How is the scarcity of land impacting the number of projects you can work on?
We are spending much more time working on the entitlement of sites. The easy sites are gone. Everything left will have some issues whether it’s environmental or zoning or both.
Are there any trends that you’re excited about?
The biggest trend is that our markets are in such high demand from a user and a capital perspective. Residential, multifamily and industrial are the most active markets in South Florida..
Fort Lauderdale’s reputation as a hub has grown in the last year. Why is that?
We have 6 million people in the tri-county area. If you’re going to be in business, you have to get the goods to them. I have been concentrating on developing industrial buildings but Fort Lauderdale has a lot more going for it. We have an upgraded airport and an upgraded seaport. I was recently involved in two new industrial buildings at Port Everglades. The marine and aviation industries are growing. There are pods of industry in our submarkets such as aviation in Miramar. You see pharmaceutical companies congregating by the Weston-Davie-Sunrise market. You see more home and logistics companies in the Pompano market. The county has a lot to offer.
What are some of the distinguishing features of the South Florida market as opposed to some of the others you work in?
The scarcity, the cost of land and entitlement barriers in South Florida, specifically Broward and Dade, has made this region one of the most expensive locations to develop industrial in the country. We’re approaching California and New Jersey levels now.
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