Industrial real estate sector is experiencing sustained growth | Business Observer
According to the data collected, since 2015 more than 40 million square feet of new industrial property – modern warehouses, distribution and fulfillment centers, and so-called “last mile delivery posts” – have been delivered along the Gulf Coast and to central Florida by commercial real estate agents.
This roughly equates to all of the office space in Hillsborough and Pinellas counties, and is testament to the strength of the location and demographic in central and southwest Florida.
Although the breadth of the new product was enormous, experts say the sector is poised for even greater growth in the future, the result of continued macroeconomic development in the logistics industry.
“Consumer demands and consumption patterns have driven industrial development in new directions,” said Ed Miller, executive managing director of Colliers International, a Tampa commercial real estate agent specializing in commercial real estate.
Tangibly, industrial building designs are also changing to adapt to new and more efficient methods of distribution – a trend that is leading to both larger buildings than ever with a greater emphasis on trucking and parking lots, and smaller buildings on the last mile, which are positioned closer to population centers.
Together, the new product and the increasing functional obsolescence of older buildings could sustain the current boom in industrial real estate for years.
Most recently, Orlando-based Parkway Property Investments LLC laid the foundation stone last week for Lakeland Central Park, a 740-acre industrial center that will include more than five million square feet of retail space and associated space when completed in Polk County around 2028.
Parkway Property officials say the new industrial project will include state-of-the-art designs that are quickly becoming a hallmark of the logistics business as it increasingly revolves around delivering e-commerce to consumers.
“We anticipate that Lakeland will continue to grow given its central Florida location and ability to reach a wide range of consumers. The cargo capacity of Lakeland Airport will also increase,” said Jim Heistand, CEO of Parkway Property.
“So we wanted a property big enough to respond to.”
In order to meet the growing demand for space as quickly as possible, the company will initially develop a 708,000 square meter distribution center as part of the 4045 Old Tampa Highway project, which will be built speculatively without tenants.
So-called “specification development” has become popular in recent years in response to the immediacy of tenant needs. Many companies say they just can’t wait to develop new bespoke stores.
“E-commerce has changed the game and is not going to go away,” said Whit Duncan, managing director of development at Parkway Property. “By 2040, e-commerce is estimated to account for 90% of all retail sales, up from around 15% today.
“That in turn requires more inventory and space for logistics,” adds Whitman. “At the same time, we are experiencing a quality flight among retailers who want higher ceilings for shelving purposes, a more robust truck circulation, trailer parking spaces and parking lots.”
For example, the Parkway Property development will have a current ceiling height of 40 feet. A decade ago, most industrial buildings were confined to 28 feet headroom. The additional height allows tenants to store more goods on site for shipping.
While central Florida has become an epicenter for retail space, it is not the only Gulf Coast locale where industrial development has taken hold.
In the Ellenton section of Manatee County, Benderson Development Co. has constructed four such buildings totaling 450,000 square feet, all of which are 100% let.
Over the next 16 months, the company plans to add seven more buildings, adding 800,000 square feet, said Larry Fineberg, executive director of industry, office and warehouse at Benderson.
“Last year’s pandemic accelerated companies’ focus on home deliveries. Traditionally, online shopping made up 10 to 15 percent of a company’s business, but now that whole equation has shifted dramatically, ”says Fineberg.
The journey of increasing online shopping has also led Benderon to develop new industrial products in the North Port section of Sarasota County and to fill a long-available warehouse in East Naples, Collier County.
In North Port, Benderson is building the first of two planned buildings with a total of 285,000 buildings. The first building is due to be completed next month. the second around the end of the year.
“We don’t limit ourselves to ‘last mile’ tenants, but we definitely see that component,” says Fineberg. “Now it’s a matter of getting to the customer quickly, and the proximity to Interstate 75 in Ellenton and North Port provides that. The savings are enormous, because for these logistics companies time is money. “
In east Naples, online giant Amazon is preparing to begin delivering a Benderson project on the last mile early next month.
The 104,860-square-foot building on over 18 acres on 8760 Davis Blvd. had been available for several years prior to the Seattle-based company’s engagement.
Miller of Colliers International notes that a shortage of buildings from 2006 to 2015 combined with technological improvements in tracking goods impacted new industrial designs.
“When business picked up again in 2013, people found that many buildings had ceilings that were too low, there weren’t enough dock doors or truck parking,” Miller says.
“Now work, transportation and technology are much more important in industrial projects.”
In this case, Miller is marketing a 1.01 million square meter building with a ceiling height of 40 feet in Lakeland on behalf of developers Brennan Industrial Group and Grandview Partners.
CenterState Logistics Park East, valued at US $ 90 million on 165 hectares, is the largest speculative industrial development in central Florida history.
Miller believes developers will continue to adjust building designs to reflect improved technology and greater efficiency.
“Buildings are getting bigger and bigger because they can now be managed more efficiently,” he says. “That was the influence of technology on the industry.”