Four impacts of
COVID-19 on
South Florida's
industrial market
Trends emerge as sheltered-at-home consumers are adding to delivery demand for essential goods
As major metropolitan areas are seeing accelerated growth of e-commerce during the COVID-19 pandemic, so too is South Florida. Especially while businesses aim to better meet consumers’ increased need for essential goods during these trying times, the local industrial market is seeing new drivers of demand. Here we explore four impacts of COVID-19 on South Florida’s industrial market.
1. Essential goods are driving today’s industrial demand
As most discretionary retailers and consumers have either entered self-imposed or state-mandated closure periods and quarantines, respectively, retailers that provide essential goods are driving the majority of demand in South Florida’s industrial market (e.g. home improvement stores, grocers, pharma, convenience retailers, and food product providers). E-commerce continues to be hot in the region, where JLL has leased nearly 700,000 square feet of space for e-commerce tenants since 2019.
2. Warehouse users are focusing on space that supports safety and efficiency
Most warehouses are considered critical business and are remaining operational while workers are following the set guidelines for social distancing and wearing appropriate protective gear. Most industrial transactional activity today centers on larger spaces for e-commerce companies that start at about 100,000 square feet and above. Ample parking and storage within sites allow for efficiencies that are required to move massive amounts of goods quickly and effectively. These attributes are imperative for the high throughput that e-commerce retailers require.
3. Cold storage is remaining in high demand
Cold storage facilities continue to be in demand as delivery companies need more space to address orders for fresh and frozen food, especially as consumers are sheltering at home. If supply chains increasingly move to a more regionalized approach, this will only add to the existing factors already driving demand for cold storage and industrial warehouse spaces more broadly in South Florida. What’s more, even prior to the pandemic, online grocery sales had been increasing as part of rising consumer interest in online shopping.
4. South Florida’s industrial market is balancing new development with demand
South Florida is continuing to experience a balance of new development and demand for industrial space. Fortunately, the South Florida region is not significantly overbuilt, despite recent trends. During the past decade, South Florida has experienced an average of 4.4 million square feet of net absorption while delivering an average of 3.2 million square feet of new product to the region. There may be some vacancy in the shorter term, but the industrial real estate market remains resilient and is well positioned to bounce back once the health crisis has been contained.
