Growth within the U.S. industrial sector has experienced a fast pace of acceleration since early 2020, due in large part to a surge in e-commerce and construction activity. This spurred a rush in leasing volume that has driven record development activity and rent growth across the sector, resulting in impressive sales volume for industrial properties nationwide.
This uptick in sector-wide activity has been acutely felt in Florida, with investor demand in the Sunshine State growing quickly in 2022 alongside the continued strengthening of industrial market fundamentals.
Nearly 2,300 industrial properties traded hands in 2022, accounting for total volume of roughly $12.5 billion in the state. Top buyers here included Prologis, Blackstone and Ares Management, while the top seller was Duke Realty Corp.
Total sales volume within Florida’s six largest metropolitan areas — Miami, Tampa, Orlando, Jacksonville, Fort Lauderdale and Palm Beach — was up nearly 20% over the previous year. The greatest increase in year-over-year volume was in the Miami industrial market, the state's largest by asset value, where sales volume was up 43% over 2021 totals. Investment activity was up markedly throughout all of South Florida, with Fort Lauderdale and Palm Beach each posting gains of approximately 30%.
In Central Florida, the Orlando industrial market saw a rise in total sales volume of 28%. This helped to temper the declines reported in the neighboring Tampa and Jacksonville markets.
One of Florida's most significant single-property industrial trades in the past year occurred in March, when Miami-based Starwood Capital Group completed the sale of a 1.1 million-square-foot distribution facility in the Orlando West Industrial Park that's fully leased to Amazon. New York-based Related Fund Management paid $115.5 million, or $106 per square foot, at a reported 3.55% in-place capitalization rate.
While the run-up in investment activity was impressive, year-over-year leasing volume in these six large Florida markets declined by more than 10% in 2022 compared to the record leasing achieved in 2021. That said, leasing volumes remain above what was reported for both 2019 and 2020 in most areas.
In 2022, there were more than 4,300 industrial leases signed in these six markets, more than 40% of which were for spaces of 20,000 square feet or larger.
The only market that posted a gain in overall leasing volume last year was Palm Beach, which was up nominally. Its neighboring market of Fort Lauderdale, however, is down 50% over the previous year, the largest decline in the state. Miami posted a drop of 16%, followed by losses of 8% in Jacksonville, 5% in Orlando and 2% in the Tampa industrial market.
The number of total lease deals was down as well, declining by 31% on average, with the greatest declines coming in Palm Beach and Miami, both down approximately 40% over the previous year.
While year-over-year leasing totals were down across the state, there were still several deals signed for spaces 500,000 square feet and larger.
The most notable deal took place last February in the Plant City area of Tampa, when home improvement giant Lowe’s signed a lease for the entire 1.2 million-square-foot distribution building in the County Line Farms industrial park.
Rounding out the top three largest leases in the state was a 683,000-square-foot deal with Walgreens in the Jupiter area of Palm Beach County and a 547,000-square-foot lease with Medline in Orlando.
Sealy Mattress Manufacturing Co., Imperial Bag & Co., FedEx Ground, Crown Products, Alta, Dollar General and FreezPark Logistics were also on the tenant list for the 10 largest industrial lease deals reported in Florida during 2022.