Industrial Fundamentals Have Improved in All of Florida’s Major Markets Prompting a Spate of Speculative Development
ORLANDO, FL, August 23, 2017 — Cushman & Wakefield Research announced today that is has released Florida’s Industrial Evolution, a report highlighting the strengthening of industrial markets throughout the state of Florida and a return to pre-recession industrial occupancy and rental rates.
The document, authored by Cushman & Wakefield Research Analysts Kathleen Krilanovich and Michelle McMurray, also details positive industrial construction trends in Florida’s major markets — Tampa Bay, Miami, Orlando, Jacksonville, Broward County and Palm Beach County.
“With nearly every major market performing at or better than pre-recession levels, Florida is a prime location for new construction and tenant expansion,” said Krilanovich. “Economic expansion, job growth and an influx of new people into the state contribute to increases in consumer spending and support the underlying demand for industrial space in Florida.”
“For the first time since 2009, spec construction drove the bulk of activity with spec activity outweighing build-to-suits in five out of six major markets,” added McMurray.
Executive Director Christopher Thomson has seen significant growth in the amount of speculative industrial construction in Palm Beach County.
“The current batch of new product has been the only significant new spec product delivered since the Great Recession in Palm Beach County,” said Thomson. “A strong residential building market is helping to fuel the Palm Beach County industrial market.”
Thomson also noted that demand for modern industrial assets is outpacing demand for existing product.
“As the Palm Beach County industrial market continues to mature, it is harder for local owners to compete with the national developers for tenants,” explained Thomson.
Director David Perez has witnessed similar trends in Central Florida, where all of the nearly 1 million square feet of industrial space currently under construction is speculative.
“We are seeing significant development across markets that have historically not seen speculatively built Class A product,” said Perez. “This is contributing to a 360 degree industrial market with more geographically dispersed clusters, a shift that poses an interesting test to the Orlando market and may signal a fundamental evolution of how this market operates.”
According to Perez, demand for new product is also driving the market for industrial land.
“We’re also seeing a significant ascension of land pricing over the past 24 months,” added Perez. “This is particularly evident in the small- and medium-sized parcel trades.”
This bump in land pricing has not deterred investors and developers.
“Until recently, speculative construction remained muted throughout the state of Florida due to lower rental rates and rising land costs,” said Krilanovich. “As demand reaches new heights, developers have shown confidence in breaking ground on a significant number of spec projects, a majority of which are slated for completion in 2017.”
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