Emerging Industrial Markets: Florida I-4 Corridor
October 5, 2021
More than 5 million people live within 50 miles of Lakeland, the Florida I-4 Corridor’s central point, with a projected growth rate of 9.5% over the next five years—the highest of any region in the Southeast. The important 18-to-34 age cohort accounts for more than 24% of the total population. Within 250 miles, occupiers can reach 21 million people or 8.3 million households.
Figure 1: I-4 Corridor Population Analysis
Source: CBRE Location Intelligence.
Figure 2: I-4 Corridor Warehouse & Storage Labor Fundamentals
Source: CBRE Labor Analytics.
Over the past five years, there have been 132 economic incentive deals in the Tampa and Orlando metropolitan areas. Combined, these total more than $110 million at an average of $6,680 per new job.1
According to CBRE’s Location Incentives Group, among the top incentive programs offered for projects in Metro Tampa and Orlando is the Quick Response Training (QRT) grant, which provides funding to new and expanding businesses to train new, full-time employees. Grant funding recipients typically are high-skill industries that produce exportable goods and services and have wages that are 125% above state or local averages.
To attract higher wage jobs and significant capital investment, Florida also offers the Capital Investment Tax Credit (CITC) and High Impact Performance Incentive (HIPI) programs. CITC is a corporate income tax credit for companies that make a minimum investment of $25 million and create at least 100 new high-paying jobs, while HIPI is a cash grant for companies that make a minimum investment of $50 million and create at least 50 new high-paying jobs.
Figure 3: Top Incentive Programs
Source: WAVTEQ Incentives Monitor; January 2016 to December 2020.
The I-4 Corridor is recognized as a prime distribution hub in the Southeast. With access to nearly all of Florida within a four-hour drive by major North-South (I-75) and East-West (I-4) highways and with a growing blue-collar labor force, the corridor has attracted many big-box users over the past few years. A recent surge in net in-migration from other states has increased the demand for local goods and services.
The region is home to two international airports (Tampa and Orlando) with growing air cargo handling capabilities. Not only has the surge in e-commerce resulted in rapidly growing footprints across Central Florida, but industry diversity spanning food & beverage production to third-party logistics to tourism (theme parks) has sustained core industrial momentum.
Furthermore, the Central Florida Intermodal Logistics Center (ILC) in Winter Haven is a key distribution point well-located in the center of the state and served by CSX rail as well as I-4, State Road 60 and US 27. The ILC has access to the Tampa and Orlando airports, deep-water ports, a transportation system with access to 10 million people within a one-hour radius and is the only large industrial park in the state serviced by rail. Coca-Cola announced earlier this year it is moving its operations from a facility in Lakeland to a 400,000-sq.-ft. warehouse at the ILC.
Supply & Demand
The I-4 Corridor has an industrial inventory of nearly 317 million sq. ft., approximately 89% of which is in facilities of less than 500,000 sq. ft. 2020 was a banner year with net absorption rising almost threefold from 2019 to 11.5 million sq. ft., eclipsing the previous five-year average by 80%. Demand carried over into 2021 with 2.9 million sq. ft. of absorption through Q2, driving the vacancy rate down to 5.1% from 6.1% in 2020. The under-50,000-sq.-ft. size segment has the tightest vacancy rate at 3.7%. Overall asking rents rose to $6.93 per sq. ft., compared with $6.75 per sq. ft. at the end of 2020. Orlando had particularly significant year-over-year rent growth of 10.3% to $7.59 per sq. ft.
Construction completions totaled 6.2 million sq. ft. last year and were spread evenly across all sizes. In 2021, 2.1 million sq. ft. has been delivered as of Q2 and another 6.6 million sq. ft. is currently under construction, 44% of which is preleased. Thus, transaction volume is expected to remain strong.
Figure 4: I-4 Corridor Historical Data
Source: CBRE Research, Q2 2021.
Figure 5: I-4 Corridor Size Range Comparison
Source: CBRE Research, Q2 2021