Even though the pace of emptying space has slowed down, Miami industrial real estate is still experiencing a growing vacancy rate which, as reported by the Florida Real Estate Journal, reached 9.8% at the end of 2009. All the industrial areas of Miami, from northwest Miami-Dade at the Broward County line, to Homestead in the south, are experiencing soft demand due to high unemployment rates, economic distress, limited credit availability, and declining international trade.
Asking rates throughout the region dropped to an average of $4 per square foot in areas such as Hialeah and Medley to $7 to $9 per square foot for more modern warehouse space in Doral, down from $6 and $12, the prior year, respectively. Tenants are taking advantage of the abundance of space for lease, obtaining concessions from landlords such as reduced rents, lower deposits, grace periods and free buildouts.
As a result, the value of industrial buildings has been tumbling. Even as motivated sellers come to grips with today's pricing environment, and forward-looking investors grab real estate at sensible prices, sales continue at a slow pace. The South Florida Multiple Listing Service records that, in the last six months, there were 46 closed sales of industrial space in all of Miami-Dade County, totaling 426,798 square feet. The median sales price was $302,200 with an average 13% reduction off the list price. This compares unfavorably with sales in the previous six months, when the median selling price was $600,000 and the average reduction was 10%.
Recent sales range from a 997 square foot condo in the Tamiami Airport area to a 100,188 square foot self storage facility in Homestead. The first sold in 77 days for $71,100, at 93% of list price. The latter took 330 days to find a buyer, who paid $1,750,000, or 59.42% of list price.
Predictions for increased absorption towards the end of 2010 or beginning 2011 were based on all the standard criteria. However, it would have been hard to predict a major event that is already having a significant impact on Miami industrial real estate: the Haiti earthquake.