A number of new speculative industrial developments will break ground in the next 12 months in Miami, as large blocks of Class A space are becoming increasingly scarce. Close to a million square feet of new plans are in the works from a range of developers, including DCT Industrial, Prologis, and KTR Capital Partners, said one industrial broker in the area. Some of the sites could break ground as early as the fourth quarter. Debt financing is coming back to the market, but that most of the developers can self-finance the projects, the broker added.
In addition to space scarcity, a key driver behind the construction surge is the widening of the Panama Canal, explained Andrew Lehrer, research coordinator for CB Richard Ellis’ Miami office. The development of a third set of locks will allow the canal to accommodate double its current shipping capacity by 2014. “As a result, the port [of Miami] is predicting double the cargo by 2020,” Lehrer said. This trend is expected to make its way up the East Coast to other major port cities including Savannah, Ga., Charleston, S.C., Norfolk, Va., and into New York/New Jersey, the broker added.
Fundamentals in Miami’s industrial markets are improving. In the second quarter, vacancy dropped to 7.5%, down 2% from the same time last year, according to CBRE’s industrial report. The market also had its fifth consecutive quarter of positive absorption, and rents are ticking up in several of the more sought after submarkets, like the airport area. There is concern, however, that spec developers could have difficulty in getting the new space leased quickly once it comes on line, Lehrer said.
Calls to officials at DCT, Prologis, and KTR were not returned.