Central Florida Sees Robust Transaction Volume, Record-Breaking Construction for Big-Box Warehouses

A new report from CBRE highlights robust transaction volume and record-breaking construction for industrial big-box (200,000 square feet or larger) warehouse space across Central Florida.

Even though most of Central Florida’s 100 million sq. ft. of inventory is made up of facilities under 500,000 square feet, in 2022, transaction volume for the big-box size range drove overall big-box leasing to 7.1 million square feet, triple 2021’s rate of leasing and nearly double 2020’s. General retailers and wholesalers (33%) and automobiles, tires and parts(20.8%) drove demand in the market in 2022, driving up net absorption and lowering the direct vacancy rate to 5.1%.

While construction completions totaled 2.8 million sq. ft. in 2022, a record-breaking 11.5 million sq. ft. is currently under construction. Of that, 4.6 million sq. ft. of product is dedicated to building out spaces of 750,000 sq. ft. or more. Demonstrating a push toward larger facilities, the available space under construction is 51% larger than existing vacant space.

“The Central Florida market is seeing significant demand from industrial warehouse and logistics occupiers seeking to utilize the region’s centrally located geography for statewide distribution. Improved road linkages throughout Central Florida, including a widening of Interstate 4 and the completion of Orlando’s Western Beltway (SR 429), are driving new development opportunities,” said CBRE Executive Vice President David Murphy.

Over 5 million people live within 50 miles of the region’s core, with a 5.1% expected five-year growth rate — the second highest of any region in the Southeast. The local warehouse labor force of 83,997 is expected to grow by 11.3% by 2032, according to CBRE Labor Analytics.

CBRE Vice Chair José Lobón added, “Historically, Florida has been a distribution hub for other bulk markets in the Southeast region. But the flow of goods has now moved into Florida due to its nation-leading population growth. Larger big-box facilities have performed well and key sites that have strategic access to major interchanges are becoming more scarce due to competition. We’ve seen investor interest in ground-up development, vacant shells and stabilized product significantly increase in Florida.”

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Third-party logistics (3PL) providers leased more big-box warehouse space in North America than any other occupier category. Accounting for 41% of all big-box lease transactions in 2022, 3PLs expanded their footprints and claimed the largest share for the first time since CBRE began tracking the activity in 2012.

3PLs typically operate companies’ logistics and warehousing operations on a contractual basis, gaining efficiencies by handling that work for multiple clients simultaneously. As a result of enduring pandemic-era shifts, companies have expanded their reliance on 3PL partners to create resilient supply chains and economically address customer needs.

“During the pandemic, companies relied on partnerships with 3PLs to stabilize their operations and accommodate demand,” said John Morris, CBRE’s President of Americas Industrial & Logistics. “The initial thought was that companies would eventually return to self-reliance for their fulfillment needs, but more companies have since realized that 3PLs can play a vital role in their business models, and demand is stronger than ever.”

CBRE analyzed warehouses of 200,000 square feet and larger because warehouses of that size are used for large-scale national and international product distribution. Encompassing the United States, Mexico and Canada, the big-box report found that industrial facilities had record-low vacancy rates and unprecedented rent growth in 2022, despite record new construction deliveries. Demand was driven primarily by a desire to serve markets with growing populations, modernize space for automation and improve supply chain resilience.

To read the full report, click here.