By: Ismael Rodriguez
Miami, a city revered for its multicultural, real estate and tourism markets, has become a breeding ground for industrial investments among international and national players. Its industrial real estate sector now shares recognition and success alongside renowned markets such as Los Angeles, New York, Chicago, Atlanta and Northern California.
Last year, the occupancy rate reached 96 percent in Miami-Dade— reaching the highest mark in the area’s history. In fact, more than 7 million square feet of industrial space has been consumed over the past 24 months; whereas, Miami a few years ago would have considered anywhere from 500,000 square feet to a million square feet of industrial space a success.
Most of the success behind the industrial sector is propelled by the region’s fortunate position as a clear-cut pathway to Latin America, as well as its rising population, fast-changing consumer trends, investment activity and startups.
South Florida has gained close to half a million new residents in the past five years, and a forecast by the U.S. Census estimates that number to grow through 2020. The equation then becomes simple— new residents generate a higher consumer demand, which in turn drives the construction and occupancy of more warehouse space.
JLL conducted a recent analysis that dissected Miami and its sectors, coming up with four reasons why investors are drawn to its industrial real estate market. These reasons are: A booming commerce and population keep driving absorption; Flood of institutional capital and favorable cap rates; Miami is a front runner for new construction projects; Leases keep getting bigger.
These fundamentals analyzed by JLL prove to be equally strong among other thriving markets like Seattle, Northern New Jersey and Oakland, California. It also appears that Miami, when compared to these other markets, has vast amounts of room for growth in value and rental rates, which is why it continues to attract the industry’s leading developers, property owners and tenants.
Over the long term, these factors formulate predictions of a positive outcome towards Miami’s local real estate landscape and economy.