- April 22, 2016
Southwest Florida's industrial market, much like its larger counterpart — the Interstate 4 corridor between Tampa and Orlando — has rebounded significantly and consistently since the end of the recession.
Vacancy has fallen from a high of 13.8% in 2009 in Collier, Charlotte and Lee counties, to 3.1% — a decade low — at the close of the third quarter of this year.
Curiously, rental rates remain lower today than at the end of 2006, when they averaged $9.65 per square foot in the three counties. Today's average rental rate, too, is just 74 cents higher than in 2009, what was considered the nadir of the market.
A decade ago, too, more than 1.4 million square feet of new space was under construction, versus the roughly 235,000 square feet that is being built today. That figure is significant because at the end of 2006 — generally considered the high-water mark for commercial real estate in Florida's recent history — the Southwest Florida vacancy rate was 3.6%, roughly equivalent to the third quarter 2016 figure.
The lack of development, combined with absorption rates and the constrained rental hikes over the past few years, suggest that the market has additional runway for new construction going into 2017.
Average vacancy in Collier County, the lowest in the three-county Southwest Florida region. Collier's total inventory is less than half, however, of neighboring Lee County, which has more than 30 million square feet of industrial space. By comparison, South Fort Myers, which has more inventory than all of Collier County, has an average vacancy rate of 2.9%.
Average industrial vacancy in Southwest Florida's submarket as of Sept. 30. Four quarters ago, the vacancy rate averaged 5.5%. Five years ago, the vacancy stood at 12%, whereas in 2006 the average vacancy was 3.6%.
Average rental rate per square foot in Southwest Florida for all industrial product types at the end of the third quarter. The rate climbed 2.2% during the three-month period. By comparison, at the end of 2011, rates averaged $5.65 per square foot.
Total amount of industrial space absorbed in Southwest Florida since the final quarter of 2015. In the third quarter of this year, 281,996 square feet were taken off the market, marking the fourth consecutive quarter of positive absorption.
Amount of new industrial space, as measured in square feet, delivered in the Southwest Florida market since the final three months of 2015. In the third quarter, 92,235 square feet was completed, the largest amount per quarter this year so far.
Amount of industrial square footage under construction at the end of the third quarter. The largest new building yet to be completed is a 213,508-square-foot project for FedEx in Lee County, which is slated to be completed by the end of the year. To illustrate the market's wild undulation during the past decade, in 2011 just 10,110 square feet of industrial space was under construction, while in 2006, 1.45 million square feet of new space was being built.