Low Vacancy and High Demand Continue to Drive Growth as 2024 Comes to an End.
The industrial real estate sector is thriving in Sarasota and Manatee Florida. The region is experiencing sustained low vacancy rates, driving up rental rates and property sale prices. This trend is fueled by sustained long-term demand for industrial space as well as limited properly zoned land for increasing supply.
In the third quarter of 2024, the Sarasota/Manatee industrial market showed positive absorption for a fourth consecutive quarter. This brought the trailing 12-month absorption rate to roughly 540,000 SF. A significant portion of this absorption came from United Natural Foods’ new one-million SF cold storage facility.
That stated, overall leasing activity has slowed down. The third quarter saw just under 200,000 SF of leases, the lowest since the second quarter of 2020. Big leases are rare in the Sarasota/Manatee market. There were only three leases made public with over 20,000 SF year-to-date, with none exceeding 50,000 SF.
Construction of new industrial space remains high. Roughly 1.9 million SF is currently under construction, which could temporarily push the vacancy rate as high as 6%. This would be the highest vacancy rate since 2014. However most of the new space services only large users so there is no relief for rising prices for the small to midsize user that defines the bulk of the Sarasota Manatee Market.
Despite the rising vacancy rates, the market is still strong. Investment volumes remain high, with $236 million traded over the past year. Private investors and users make up about 75% of the buyers.
Key takeaways:
- Low vacancy rates are driving up rental rates and property sale prices.
- Leasing activity has slowed down, but big leases are still rare.
- Construction of new industrial space is high, which could lead to higher vacancy rates in the future.
- Investment volumes remain high, with private investors and users making up the majority of buyers.
Overall, the Sarasota Manatee industrial market is still strong, but it’s important to keep an eye on the rising vacancy rates.
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