Central Florida Big-Box Industrial Vacancy Tightens in 2021 as Rents Rise 15% Year-Over-Year

A new report from CBRE highlights impressive rent growth in Central Florida’s industrial “big box” warehouse market, with 2021 first-year taking rents 15 percent higher than the previous year.

North American “big-box” warehouse transactions – those of 200,000 square feet or larger – hit new highs in 2021 as retailers added safety stock to limit supply chain disruptions and continued to meet online shopping demand. This category recorded 450 million square feet of transactions in the top 23 North American markets last year, up significantly from 350 million square feet in 2020. The study includes markets with more than 75 million square feet of big-box product.

Central Florida

Most of Central Florida’s 100 million square feet of existing inventory is comprised of facilities under 500,000 square feet. A large amount of preleased space was delivered in 2021, increasing net absorption to 3.7 million square feet and lowering the direct vacancy by 1.1 percentage points to 6.8 percent. As a result, first-year taking rents rose to $5.60 per square foot, 15 percent higher than 2020. The Central Florida market includes Tampa, Orlando and Polk County.

“With e-commerce consumers demanding delivery times as short as two hours, products are being redirected from the traditional Atlanta distribution hub to the Central Florida region. This shift has dramatically increased industrial demand throughout Central Florida as the market becomes an established logistics hub for statewide distribution,” said CBRE Executive Vice President David Murphy, a local Industrial & Logistics expert.

More than 5 million people live within 50 miles of the Central Florida core, with an expected growth rate of 9.4 percent over the next five years – the highest of any region in the Southeast. Within 250 miles, occupiers can reach 21 million people or 8.3 million households.

According to CBRE Labor Analytics, the local warehouse labor force of 72,040 is expected to grow by 10.7 percent by 2030.

National Trends

General retailers and wholesalers led the way in transactions at 35.8 percent, followed by third-party logistics (32.2 percent) and last year’s leader, e-commerce-only users (10.7 percent). National vacancy rates in this category fell to a record-low 3.4 percent, down from 4.6 percent in 2020.

Construction completions were down slightly in 2021 at 186.7 million square feet, compared to 194.4 million square feet the year prior. Some relief may be found in the construction pipeline, which is at a record 323.9 million square feet

“Consistent construction completions will be essential for sustained transaction activity in 2022,” said James Breeze, Global Head of Industrial & Logistics Research for CBRE. “The demand is there, but supply is extremely tight. If projects are delayed due to lack of materials or slow delivery from supply chain challenges, occupiers will find it difficult to make big moves.”

To download the report, click here.