Done Deals: Lee & Associates South Florida Q2 Report: Industrial Vacancies Jump Significantly Year-Over-Year

Monday, July 29, 2024

Lee & Associates South Florida Q2 Report: Industrial Vacancies Jump Significantly Year-Over-Year

Greg Milopoulos

MIAMI, FL, July 29, 2024 – South Florida’s industrial market experienced a sharp year-over-year increase in vacancies, according to Lee & Associates South Florida’s Q2 2024 market report.

The local retail, office and multifamily sectors largely held steady during the second quarter of 2024, however, as the region continues to outperform national averages.

The tri-county area of South Florida closed the second quarter of 2024 with a 4.1% industrial vacancy rate, up from 2.4% a year earlier. The average asking rent climbed year-over-year from $16.18 per square foot triple-net (NNN) to $17.29 per square foot.

“Our team continues to see an uptick in acquisitions of industrial assets and their valuations even while leasing momentum appears to be slowing down,” Lee & Associates South Florida Principal Greg Milopoulos said. “With debt and rent costs coming down, purchasing power remains positive as cap rates won’t regress enough to change asset values.”

Stephen DeMeo

Retail vacancies inched up year-over-year from 2.9% to 3.1% in the second quarter. Average asking rents also increased year-over-year, from $36.26 per square foot NNN to $36.92.

“Tenant demand has driven the availability rate to historic lows of 3.1%, well below the five-year average of 4.3%,” Lee & Associates South Florida Principal Stephen DeMeo said. “Miami still has the highest retail rents in Florida at $48 per square foot NNN, followed by Palm Beach at $38 per square foot NNN and Fort Lauderdale at $36 per square foot NNN.

"Space availability is unlikely to improve significantly, and near-term forecast expectations are for historically tight vacancy rates around 3-4%.”

South Florida’s office vacancies declined slightly year-over-year in the second quarter, from 8.3% to 8.1%. The average asking rent jumped from $35.96 per square foot NNN to $37.52 in the same span.

“While older suburban offices face challenges, the influx of high-end space has created a rising tide effect,” Lee & Associates South Florida Principal C. Todd Everett said. “Demand in key areas remains robust, driven by tech and finance sector interest and continued in-migration trends.”

Todd Cohen

South Florida’s multifamily sector recorded a year-over-year rise in vacancies in the second quarter of 2024, from 5.5% to 5.9%. Asking rents increased year-over-year from $2,141/month to $2,173/month.

The sector “continues to outperform most other asset classes and geographical markets despite signs of slowing as we enter Q3 2024,” Lee & Associates Principal Todd Cohen said. “Rental rates and growth remain strong; sales numbers are still setting records and demand for renting stays high as home costs remain untenable for most buyers.”

To view the full sector-by-sector breakdowns, click here: https://www.dropbox.com/scl/fo/89ofzupzim1r62e0gktqa/AL8supw-Cn9y0efhdSFHAl4?rlkey=bjna6cjd1ohhygwafd50ofh78&st=1q14ftw3&dl=0

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