Death of the Mid Sized Industrial User in South Florida

Written by smacke01 on December 1st, 2010

When the residential real estate market imploded in Palm Beach, Broward and Miami counties, the fall out left many companies scrambling to make payroll and reduce overhead.  The lack of construction activity caused positions to be eliminated, inventories slashed, and anything overhead related was on the chopping block.  All the industrial users that needed warehouse space to store all the bathtubs, granite slabs, sinks, wood, and whatever other materials and wares slashed everything.  The great “Right-Sizing” in the industrial user market place has already occurred leaving an enormous hole in the middle of the market.  Sales transactions and leasing activity is still happening at the large institutional level and the small space units are still seeing some action, but the 5,000 – 10,000sf industrial user has all but disappeared.

Today's Warehouse User

These users obviously exist, but in the same way rare gold bars exist in lock boxes.  Landlords are forced to do whatever it takes to retain their larger users these days because there is no growth in the South Florida construction industry and therefore no smaller companies growing into more space.  Very rarely will you find a user that is trying to expand from 3,000sf to anything over 5,000sf.  There is no growth…whatsoever.  It’s because of this, landlords are protecting their existing tenants like little cubs because it might take a long time before you see another one come along.  Landlords will cut rents, do tenant improvements, give free space, pretty much anything to keep the tenant.

Good Luck Poaching That Tenant

If you are a landlord trying to lease 5,000 – 10,000sf units GOOD LUCK…..

Until the economy turns around the only way you are going to find tenants is by poaching them from other buildings, which is very difficult because nobody likes to move and landlords are cutting incredible deals to keep their tenants.  My advice to you would be to divide the space into smaller units.  Make sure you have a variety of units to offer prospective tenants.  The smaller ones will rent quicker and then hopefully you can slowly encourage them to move up in space over the years.  The key is to get them in the door today.  There is nothing worse than an empty property and trust me that 10,000 SF golden goose isn’t walking down the street anymore to save your day.  You have to go out and cultivate the smaller guys and hope over time they are going to grow into more space.

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This entry was posted on Wednesday, December 1st, 2010 at 1:44 am and is filed under Commercial Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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