Slide continues in Broward industrial

The Broward industrial market continues to experience market corrections during the third quarter of 2009. Vacancy and availability rates have risen again while lease rates have declined even further. Negative absorption has been recorded each quarter year-to-date, indicating that supply continues to outpace demand. With Florida’s unemployment at a 26-year high of 10.9%, it is inevitable that the reduced commercial real estate demand will continue.

Total vacancy increased by 3.2% over third quarter 2008. There is 1,126,966sf of vacant sublease space now on the market, an increase over third quarter 2008’s 753,106sf. Leasing activity totaled approximately 2.0 msf as of third quarter 2009. As a comparison, approximately 2.5 msf was leased as of third quarter 2008.

Third quarter 2009 saw net absorption of negative 736,217sf, as compared to negative 21,308sf reported in third quarter 2008.

Leases signed in third quarter 2009 include a 99,874sf renewal/expansion by Interline Brands at 3420 NW 53rd St. in the Central Broward submarket. Kellogg’s signed a 60,160sf renewal at Meridian Business Campus, and the U.S. Drug Enforcement Agency also signed a new lease in this location for 56,861sf. The majority of leases signed this quarter are still in the 1,000sf to 5,000sf size range. According to market professionals, effective lease rates of deals closed are still currently between $5 to $6.50 psf NNN.

Approximately 432,248sf of inventory has been completed year-to-date in 2009. Notable projects completed during third quarter 2009 include Waterside Commerce Park, for 85,988sf and 11760 Miramar Parkway, Building E, for 85,660sf. Premier’s Phase I and Building 3 projects, both 112,518sf, could be delivered early fourth quarter 2009, adding 225,036sf to Broward County’s industrial inventory.

Sales activity for third quarter 2009 remains limited, totaling 84,971sf and less than $6.8 million.