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Q4 2021 Central Florida Industrial Market Report

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No Pause in the Industrial Market

This year saw no pause in the industrial market, although the pandemic impacted worldwide transportation and logistics. With financing options plentiful, low cap rates and record levels of capital flowing, industrial remained the prized asset class for most investors. Demand for industrial space continued to boost land costs, which in core areas increased rapidly within a year ranging between $250K - $500K+ per acre. This cost passed on to tenants through increased rental rates, which increased 27.4% since Q4 2019. Despite record-high land prices and the increase in raw material cost, investors’ appeal for industrial assets remained solid as the market rental rates rose, ensuring future return on investments. Because of the extraordinary escalation in land and
material costs combined with the absorption of almost all the lower basis developments, we expect rental rates to jump 4-8% in the near term to adjust to these higher costs and then continue to grow at 4-5% for the next several years until the market supply balances market demand. In addition, the increased transaction activity secured future development sites by locking in pricing for the underlying assets. As a result, during Q4 2021, there was 5.6M sq. ft. of industrial space under construction in six submarkets in the metro area. In addition, over 3.7M sq. ft. delivered year-to-date, some of which secured tenants before construction. While much of the space under construction was for buildings 100,000 - 300,000 sq. ft., local rear load space will continue to be scarce. With continued decreasing vacancy rates and strong positive absorption, demand across all sectors of industrial will continue to
be robust in 2022.

 


CFLIndustrial21Q4

Q4 2021 Central Florida Industrial Market Report

Download Report