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22Q2 | Southwest FL Industrial Market Report

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The Southwest Industrial Market surges despite shrinking availability.

Executive Summary

The national and global economy saw their fair share of fluctuations during the year’s first half, from geopolitical events and increased interest rates to the ongoing war in Ukraine and recovery from the pandemic. However, signs of activity and demand for industrial space in the Southwest Florida market remained relatively constant in light of the negative economic forces globally. The Southwest Florida market’s unemployment rate hit 3.3%, falling 120 basis points (bps) year-over-year, adding 13,700 jobs, for an employment growth rate of 3.7%. In addition, office landlords benefited from steady employment gains in sectors that positively impacted demand. Those sectors included an increase in whole trade of 4.7%, construction by 2.3%, and job growth in trade, transportation, and utilities of 4.7%.

The overall vacancy rate for industrial and flex properties in the market was 1.8% in the 2nd quarter. Distribution/Warehouse (non-flex) properties, which comprise 80% of the industrial market, had a vacancy rate of 1.8% and have remained under 5% for seven consecutive years. Flex properties, 20% of the industrial market, dropped to a vacancy low of 1.9%. The shrinking vacancy rate positively impacted asking rates. Warehouse and distribution space averaged $9.40 per sq. ft. during the year’s first half. These rates were up $1.50 from three years before the pandemic. The region recorded 200,000 sq. ft. of absorbed space during the 2nd quarter, while year-to-date absorption stood at 347,000 sq. ft.

Healthy tenant demand, combined with a decline in vacancy, continued to create a ripe environment for industrial development in the region. As a result, industrial construction tripled over the last three years, with nearly 4M sq. ft. currently under construction or proposed near-term construction, as developers attempted to meet the growing demand for space as tenants migrated to the local area.

Year-to-date investment sales were 52% higher than last year. Interest from local, national, and foreign investors in Southwest Florida industrial products remained active for all industrial types and product categories, ranging from value-add opportunities to stabilized assets. Several assets have recently traded, albeit investment activity remained vibrant during the year’s first half, with lenders remaining cautious/conservative for industrial products due to worldwide events affecting the market.


SW FL Industrial Market Report 22Q2 Pic

22Q2 | Southwest FL Industrial Market Report

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