The Doral-based firm owns more than 2.5 million square feet of industrial space, and it’s one of several speculators bullishly investing in warehouses to meet forecast spikes in demand when even larger cargo ships reach South Florida ports after the Panama Canal expansion.
The company spent more than $10 million for a 120,000-square-foot warehouse and four acres at 2525 NW 82nd Ave. in Doral in December and has two other properties under contract in Miami-Dade County.
“It’s nothing but positive,” chairman Edward Easton said. “I’m optimistic about industrial properties and would be glad to buy them, but they’re hard to find. There are very few motivated sellers out there. The market is very strong.”
Across the region, the industry is strengthening, buoyed by billions of dollars in capital investment in PortMiami and Port Everglades to prepare for the influx of new trade from the widened Panama Canal.
PortMiami dedicated its tunnel to move its truck traffic off city streets, and a dredge project is deepening the shipping channel to 52 feet in preparation for the post-Panamax ships expected in 2015.
Port Everglades officials plan more than $1.5 billion in projects over the next two decades through a self-supporting enterprise fund that does not rely on public funding.
“People are starting to position themselves,” said Tom O’Loughlin, vice president in CBRE Inc.’s Fort Lauderdale office. “Major developers are already in motion forecasting the need and building additional capacity in anticipation of the growth.”
Bridge Development Partners LLC, a Chicago-based conglomerate with about 1 million square feet of office and industrial square feet under development in South Florida, set up shop in Brickell and has two projects in the works in Broward.
By August, Development Partners plans to deliver Bridge Point Port 95, two speculative Class A buildings with 229,632 square feet in Dania Beach. Another project, Marina Mile, also in Dania Beach, would deliver 185,000 square feet of premium space in the fourth quarter.
“There’s definitely renewed interest in industrial space from pent-up demand over the last five years,” said Brian Latta, the company’s vice president. “But the ports are also getting ready for post-Panamax ships carrying more cargo. And that’s definitely a trend we’re excited about. Being close to the airport and seaports is key to industrial development.”
Further north, the McCraney Property Co. is starting its first new development in five years at Vista Center Business Park in West Palm Beach. The company is investing $5 million in two Class A, 100,000-square-foot buildings on 7.2 acres set for delivery in September. It’s set to break ground in the third quarter on a $7.5 million development on 44 acres along Florida’s Turnpike between Southern Boulevard and Belvedere Road.
“We are clearly ramping up today. We saw a clear amount of recovery, especially in the Miami area, that took hold two and a half years ago, grew into Broward and took a little longer to reach Palm Beach County,” said Steven McCraney, president and CEO of West Palm Beach-based McCraney Property Co. “What we have now is a new boost in industrial business.”
In the third quarter of 2013, buyers closed 62 industrial transactions worth about $155.5 million, according to Co-Star’s South Florida Industrial Market Report.
As prices continue to rise and large parcels become increasingly scarce, analysts said these transactions occurred in a climate favoring developers in sectors that lend themselves more easily to high-density projects.
“We’re already at the point where developers are looking at reused properties and competing with different types of product uses. And the highest and best uses often aren’t industrial,” CBRE’s O’Loughlin said. “Even after you find the land, sometimes it just doesn’t work because you need big footprints for truck courts and warehouses, and you need to be near highways and away from residential areas to accommodate heavy truck traffic.”
But volume ticked upward, with investors purchasing 62 buildings totaling about 2.3 million square feet at an average price of $67.70 per square foot. By the third quarter, industrial sales volume passed $531 million, shattering the $377 million recorded during the same period a year earlier with average prices reaching $63.66 per square foot.
Rental rates also spiked, growing 2.5 percent to $8.14 per square foot.
That’s good news for industrial investors.
“There are price increases across the board,” said Easton. “And for us, it means we’re not selling. We’re buying.”
The Easton Group is a Corporate Member of the Commercial Industrial Association of South Florida (CIASF). John G. Mekras, Senior Property Manager at Easton Management serves on the Board of Directors for the organization.