At the end of the third quarter 2016, the overall vacancy rate for Southwest Florida’s industrial market was the lowest seen in a decade, with over 1.5 million square feet absorbed in 2016. New construction has increased, with the 213,500-square-foot FedEx warehouse being the largest industrial project in the Southwest Florida market for 2016. Due to the lack of new construction during the recession, end-users are finding it difficult to meet their needs. As such, construction of new warehouse space for the end-user, is expected to increase into 2017.
Overall, the quoted rental rates have steadily increased, with average asking rates of $6.00 for Lee County and over $7.00 per square foot in Collier County.
Demand for industrial space is directly related to changes in employment levels. According to the Bureau of Labor Statistics, the Cape Coral/Fort Myers market area had a total labor force of approximately 325,000 and an unemployment rate of 4.7 percent, at the end of the third quarter 2016. This was an improvement from the same period last year, but only slightly. Recent studies indicate that projected job growth in the professional and business services approximately 1.8 percent per year, with the greatest annual increases occurring in the construction and health related job markets at 2.6 percent. Our local market should benefit in this projected annual increase in construction jobs.
This upward growth in jobs and new residential construction will continue to drive demand for industrial space. A good example of this is the recovery of the flex-space market, which was hit particularly hard during the recession. Those vacant flex units have since been leased or sold to end users.
A review of 2016 industrial land sales in Lee County indicates a 24 percent increase in the average sales price per square foot of land area, and a 25 percent increase in the average sales price for improved warehouse properties.
In summary, the demand for industrial space next year is projected to be very strong, with increased demand for 10,000 to 20,000-square-foot warehouse space.
If you have need for additional industrial space, please contact me to discuss your options.