Robust Fort Lauderdale Industrial Sector Expected to Post Solid Results for Investors
Strong ties with Latin American trade partners make Port Everglades in Fort Lauderdale the driving force to the local industrial market, according to Marcus & Millichap’s mid-year market report. Robust trade activity to the south fueled by Miami International Airport, the national leader in international freight, is trickling north as well. These factors contributed to net absorption surging past 2.5 million square feet last year, the highest in South Florida. Developers have been unable to keep up with surging demand, adding a nominal 3 million square feet over the last five years with the greatest concentration of new space in the southern portion of the county.
Rising competition for land with non-industrial sectors has been a factor in new construction, boosting land prices in areas that have the infrastructure and access that Class A industrial users demand. Limited new supply and a vacancy rate that is anticipated to dip below 4 percent by late 2017 continues to support asking rent increases, while rates still remain the most affordable in South Florida.
Robust local demand drivers, limited development and lower perceived risk are fueling buyer interest in Broward County’s industrial market. These factors, though, are also contributing to owners holding onto assets longer, reducing available listings. As a result, competition for premium assets is growing, triggering a willingness to pay higher prices on a per square foot basis, pushing past the $100-mark last year.
With initial yields in the low-7 percent band, investors are eager to deploy capital. The popularity of urban core properties near major travel routes has risen as buyers focus primarily on Pompano Beach and Fort Lauderdale. Strong rent growth and compressing vacancy will provide investors with some of the greatest potential revenue gains nationwide this year.
Access the Marcus & Millichap report here.