South Florida Developers Pull Back On Industrial Construction
Industrial developers in South Florida are putting their shovels down as rising costs hit their bottom lines.
Adding to the inflation headaches are an inability to push rents and power shortages that are slowing timelines and deterring tenants, all making it increasingly hard to justify building new industrial projects in South Florida, developers said Tuesday at Bisnow’s Florida Industrial and Manufacturing Conference.
“I think the only way that it can change is if rents go much higher, or interest rates go much lower, or construction costs go much lower,” The Easton Group CEO Ed Easton said onstage at the Marriott West Palm Beach. “I don’t see any of those happening in the near term.”
The industrial pipeline for Palm Beach, Broward and Miami-Dade counties has fallen to 3M SF at the end of the third quarter from 5.2M SF a year prior — a 42% drop in construction, according to third-quarter Colliers reports.
Most of the new development is focused in Miami-Dade County, with 18 buildings underway concentrated in the Northeast Dade and Miami Airport West submarkets, according to a Colliers report.
The county’s pipeline shrank from 3M SF to 1.8M SF year-over-year following 1.4M SF in deliveries in the third quarter. Broward County’s pipeline fell from 1.4M SF to 994K SF, and Palm Beach County’s fell from 735K SF to 277K SF, according to Colliers.
The dynamic is in stark contrast to the rest of the country, where construction is picking up. There were 314M SF under construction nationwide in the first six months of 2026, up from the 271M SF under construction at the end of 2025, according to an October Colliers report.
That’s still a far cry from the historic surge of supply during the pandemic — the construction pipeline soared from 347M SF in 2020 to a record 711M SF in 2022, according to Colliers.
Construction costs have been the demise of plenty of commercial projects across every real estate sector amid tariffs, higher fuel prices and elevated interest rates. Prices for construction-related materials rose 13.3% year-over-year in the U.S., according to a September Cushman & Wakefield report.
It costs roughly $350 per SF to build a new warehouse today, and the cost of debt is on the rise, restricting the possibility for sufficient returns, said Easton, who founded Miami-based The Easton Group more than 50 years ago.
“We haven’t built anything since 2023, and really aren’t looking to build anything because the economics just don’t work for those,” Easton said. “Nobody’s going to take a speculative venture on for a projected 3% return.”
Bisnow/Chloe GallivanColliers’ Lauren Pace, Cushman & Wakefield’s Christopher Metzger, Kitson & Partners’ Matt Buehler, MLCO Construction’s Jordan Cater and NAI Miami, Fort Lauderdale’s David Oxios
To make new construction work, rents need to be around $23 net per SF, Easton said, well above the tri-county area’s average, which sits between $16 and $18 triple net per SF, according to Colliers.
Rents are starting to peak as tenants reach their limit after years of increases, which has led to some companies packing up and moving north to cheaper markets like Orlando, downsizing their footprint or shutting down Florida operations, Cushman & Wakefield Vice Chairman Christopher Metzger said.
“I think some of the developers that are out there are saying, ‘Hey, I think we’ve kind of peaked out as far as our rent growth of what we’re asking,’ and offering some free rent and starting to offer some discounted rates,” Metzger said.
“We’re seeing that plateau as we speak, so I think that you’re going to see a flattening of that rent growth over the next year.”
Even though they are hitting their limit on rental costs, tenants are increasingly asking for pricey additions to traditional warehouses, such as more energy capacity and air conditioning.
The types of companies asking for more power include aerospace, pharmaceuticals, defense, data center and general manufacturing, Metzger said.
“We are looking at really increasing the amount of power that’s available to our tenants because automation is obviously the dirty little secret,” said Mark Levy, chief investment officer of FRP Holdings Inc., which is planning a handful of projects, including a 300K SF logistics center in Broward County.
“They want to really have the physical plant that’ll support that,” he added. “That’s very important.”
Bisnow/Chloe GallivanGreenberg Traurig’s Kerri Barsh, FRP Holding Inc.’s Mark Levy, The Easton Group’s Ed Easton, Insoco’s Magin Perez, Realterm’s Arnie Capute and Basis Industrial’s Anthony Scavo
The increased demand comes at a time of heavy competition for access to power amid the data center boom. Securing it is a costly and lengthy process that has become increasingly vital to attracting and retaining tenants, industrial developers, operators
Source: www.bisnow.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.