Florida has done it again. If writing about rent growth in the Sunshine State could be set to music, it would be a case of the same song, second verse. An examination of all markets in the country with a total industrial inventory of at least 100 million square feet shows that Orlando was the top market in the nation for the third consecutive quarter.
Furthermore, four of the top 10 U.S. markets are in Florida.
Additionally, eight of the top 10 markets are still in the Sun Belt. That’s quite a feat given that an increasing percentage of industrial demand has been shifting to markets in the North and Mid-West, but it is a testament to the impact of population growth into warmer climates since the beginning of the pandemic.
Nowhere has that growth been more apparent than in Florida and Texas, which are the leaders for in-migration, and yet none of the Texas markets made the list for the first quarter of 2024.
Even with demand down sharply in Tampa in the last year by more than 70%, it still ranked as the second leading market in the U.S. for the pace of annual rent growth. That’s not surprising, however, considering that vacancy remains under 5%, nearly half of the vacancy rate in Phoenix, which is ranked third.
The vacancy rate in Orlando is higher at 5.7%, however, there was twice as much demand in the past 12 months as there was in Tampa. In both markets, vacancy is very tight in buildings under 25,000 square feet, which is where an outsized share of tenant demand is taking place.
The Jacksonville market rounds out the final Florida market in the top five. Its accelerated pace of demand is tied to its deep-water port and its proximity to a major industrial hub in Atlanta. It is also the only Florida market in the ranking that has seen an increase in demand in the last year, with absorption, or the change in the number of occupied squared feet, up nearly 25% in that time. The only market in the list with a lower vacancy rate was Fort Lauderdale, which trails the pace of rent growth in Jacksonville by less than 150 basis points.
It is also worth noting that these 10 markets represent nearly 40% of all U.S. industrial demand in the last year. But perhaps most notable of all is that of all the top markets for the pace of annual rent growth as of the first quarter of 2024, only the four Florida markets are also in the top 10 for projected rent growth over the next four years.