Greater Fort Lauderdale Alliance Marks Retention, Creation Of 757 Jobs

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The Greater Fort Lauderdale Alliance helped companies retain or create 757 jobs in Broward County in a span of six months, leaders of the nonprofit economic development organization said at its mid-year luncheon on Friday.

More than 600 people attended the gathering at the Seminole Hard Rock Hotel & Casino in Hollywood. The event was presented by Florida Power & Light and the Broward Metropolitan Planning Organization.

“Companies continue to choose Greater Fort Lauderdale’s highly competitive business climate and unbeatable quality of life,” said Bob Swindell, president and CEO of the Greater Fort Lauderdale Alliance.

Below are economic development highlights from the Alliance between Oct. 1, 2021 and April 30:

West Marine, a national chain of boating supplies and retail stores, will create 225 jobs at its new national headquarters at 1 E. Broward Blvd. in Fort Lauderdale. West Marine’s previous headquarters was in Santa Cruz, California. The company is also making an $800,000 capital investment to build out its 50,000-square-foot office space.

Icon International, a Greenwich, Connecticut-based corporate barter service, will add another 100 jobs as it increases its office footprint at 301 E. Las Olas Blvd. in Fort Lauderdale to 23,598 square feet this summer.

Project Play, the code name for an anonymous company that makes plush toys, action figures, collectibles, and musical instruments, has retained 75 jobs, created 150 jobs, and will make a $10 million capital investment in Plantation. Back in October 2021, Project Play was seeking up to $112,500 in incentives from Broward County in exchange for making more than $8 million in capital investments and creating 150 jobs by 2029 that pay an average salary of $80,874 a year. It’s leasing a facility that’s 100,000 square feet in size — the location of which can’t be revealed as yet.

Funtrition, a manufacturer of gummy vitamins affiliated with the Procaps Group (Nasdaq: PROC), that will be moving into a a 60,000-square-foot warehouse at 11600 Miramar Parkway in June. Funtrition will create 100 jobs, retain 42 jobs, and make a $9 million capital investment in Miramar.

CIG Financial, a Los Angeles-based company that specializes in providing loans for automobile, will be create 30 jobs in a 7,800-square-foot office at 1475 W. Cypress Creek Road in Fort Lauderdale.

Pherros Biosciences, a biotech company based in Deerfield Beach that produces novel drugs and treatments, will create 20 jobs at its 25,000-square-foot space at 740 S. Powerline Road.

Norse Atlantic Airways, a low-cost airline based in Arendal, Norway, will open its U.S. headquarters at Fort Lauderdale Executive Airport at 5520 N.W. 21st Terrace. Norse Atlantic Airways will create 15 jobs as it launches flights from Fort Lauderdale to Paris, London and Oslo later this year.

Swindell also touted other significant moves into Broward that either occurred outside of the six month period, or by companies that weren’t assisted by the Alliance. They include:

Stryker (NYSE: SYK), a multinational medical technologies company, which opened a facility at 3365 Enterprise Ave. in Weston in 2019 with the Alliance’s assistance. Stryker is in the process of adding 550 jobs, retained 351 jobs, and made a capital investment of $25 million.

TD Bank (NYSE: TD) and the Alan B. Levan NSU Broward Center of Innovation, will soon launch an innovation program that will create 200 new jobs in the Fort Lauderdale area.

JP Morgan Chase (NYSE: JPM), which leased 15,000 square feet inside The Main Las Olas, a newly constructed Class A building at 201 E. Las Olas Blvd. in Fort Lauderdale. JP Morgan Chase will hire 15 to 40 people, Swindell said.

Starr Insurance Co. leased 11,000 square feet at the Main Las Olas.

UK-based Vantage UAE opened a drone factory at 13798 N.W. 4th St. in Sunrise.

Former Gov. Jeb Bush also spoke at the event. He advocated a return to “decent politics” encouraged entrepreneurs to take more risks.

Other sponsors of the event include Delta Airlines, Fort Lauderdale Executive Airport, Memorial Healthcare System, Seminole Heritage Services, the City of Hollywood, JetBlue Airways, JM Family Enterprises, South Florida Business & Wealth, AutoNation, Becker, Broward Health, Capital Analytics Associates, Duke Realty, Fort Lauderdale/Hollywood International Airport, Hotwire Communications, Starmark, Verizon, and the South Florida Business Journal.

A partnership between private companies and Broward local governments, the Greater Fort Lauderdale Alliance advocates for companies to move to Broward County, The organization also advocates for incentives on behalf of private enterprises that hire and make a significant capital contribution. Additionally, the Alliance helps with permitting and connecting outside companies with local businesses and officials.

 

Source:  SFBJ

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Former Sears Site In Fort Lauderdale To Be Sold To Developer

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National multifamily developer Aimco (NYSE: AIV) has the former Sears site, known as Searstown, in Fort Lauderdale under contract, according to three sources familiar with the deal.

Sears closed its doors in January after 66 years at 901 N. Federal Highway, on the north side of the Flagler Village neighborhood. Sunny Isles Beach-based RK Centers, led by Miami Heat co-owner Raanan Katz, owns the property through RK Associates and first filed an application to redevelop the property in 2020.

After buying Sears out of its lease, RK Associates purchased the last remaining parcel there from Sears for $4.3 million in January.

In its first quarter earnings report, Denver-based Aimco disclosed that it entered into a $100 million contract to purchase a 9-acre site in the Flagler Village neighborhood of Fort Lauderdale. It plans to develop the site with a 3 million-square-foot, mixed-use project with up to 1,500 residential units.

 

Source:  SFBJ

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Warehouse Vacancy Rates Sink To 27-Year Low

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The nation’s industrial real estate market continues to set marks for low vacancy rates and high rents despite a “flatline” of e-commerce growth as many Americans return to their pre-pandemic routines, according to commercial real estate firm Savills.

Those steep vacancy declines and rent spikes are driving record development of new warehouses and other facilities, the firm said in its “U.S. Industrial Market Update – Q1 2022.” Developers are currently building nearly 750 million square feet, up from the 507 million square feet they were creating in the same quarter last year.

“With vacancy rates as low as 1.6% in Southern California and top markets experiencing double-digit rental growth, the industrial market continues to be challenging for tenants. National construction activity is up 48% from one year ago, which should help ease conditions going forward with current pipelines as high as 73 million square feet in Dallas-Fort Worth,” Savills said in its report.

However, while all that new warehouse space is still under construction, U.S. industrial vacancy sank to just 4.2% in the first quarter, a 27-year low after declining another 130 basis points over the past year.

Those pressures have led to industrial space being essentially “sold out” in coastal locations near maritime ports, where renters now encounter double-digit rent growth in top markets like Southern California (up 18.8%), northern New Jersey (up 16.1%), and South Florida (up 15.8%).

Even when occupiers are lucky enough to find space to rent, they face the additional challenge of hiring enough workers to run the warehouses, Savills said. Average monthly warehouse job postings were up 126% over the past year compared to 2019.

In response, employers are offering higher wages for warehouse jobs including laborers and freight, stock, and material movers. The average advertised wage for warehouse jobs has risen steadily from just below $15 per hour in March 2021 to just over $17 per hour in March 2022.

Sorted by employer, the companies that have posted the most warehouse job openings since 2015 are: Amazon (4,125,477), FedEx (1,397,790), UPS (583,081), The Home Depot (310,477), and Lowe’s (146,599), Savills said in the report.

 

Source:  Supply Chain Quarterly

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Broker Sentiment Falls On Industrial. Yes, Industrial

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That super hot industrial market? Brokers are losing confidence and seeing strain, according to the first quarter sentiment report from the Society of Industrial and Office Realtors. Office, though, is still on the rebound.

The industrial sector might seem an odd subject for a loss of confidence. The sector has led CRE through the pandemic, scoring top marks time after time and continuing to crush cap rates. But nothing can go on forever.

“The red-hot industrial market is starting to see the effects of high demand and lack of space catching up with each other,” the report stated. “This strain caused by limited supply caused confidence in the industrial sector to drop for the first time in sentiment reporting.”

On-schedule industrial transactions had been increasing for almost a year. That changed in the first quarter of 2022 as they fell by 3%. On-hold transactions were up by 10% and cancelled transactions went from 4% to 6%. A “lack of space seems to have caught up to the industrial sector, which saw a 25% decrease in leasing activity in Q1. Only 61% of industrial SIORs reported high leasing activity, compared to 81% in Q4 2021.” It was the lowest leasing activity in over a year and 93% of respondents said vacancy was lower than a year before.

If you’re a broker, you need property to lease and sell. Without it, there’s little you can do other than perhaps donning a hard hat and heading to a construction site.

There’s been other growing evidence that areas of real estate were pressing the bounds. The CRE Finance Council (CREFC) found that overall sentiment among its board of governors took a nosedive for the first quarter of 2022. Similarly, according to the 2022 RCM Lightbox Investor Sentiment Report, another star, multifamily, is facing headwinds this year. And while there’s some room for cap rates to fall more with additional upward pressure on prices, as First American Financial Corporation notes, things have been getting closer to modeled cap rate bottoms.

 

Source:  GlobeSt.

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Commercial Real Estate Predictions For 2022

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The commercial real estate industry has undergone a rocky road over the past two years, as pre-Covid-19 predictions have been upended due to the unforeseen nature of the pandemic. But as the world begins its shift toward post-pandemic life, I believe that commercial real estate is on track for a serious rebound this year. While not every area of commercial real estate is set to see an upswing, there are a few predictions that are safe to make based on trends in the market.

Here are a few of my commercial real estate predictions for 2022:

Commercial Real Estate Will Bounce Back

First and foremost, the biggest prediction for 2022 is the recovery of the commercial real estate industry. While it has taken a beating during Covid-19 (and the Omicron variant does present a hurdle toward full recovery), sound fiscal policy could help the industry recover. Monetary policy could also ease some of the long-term inflation pressures as commercial real estate values rise. The demand for real estate will be high, though the areas in which people are investing might look a little different than in previous years.

Industrial Real Estate Will Keep Growing

Industrial real estate has blown up over the past year thanks to the rise of e-commerce. Online retailers such as Amazon are driving the construction of warehouses to house their products, while retailers like Walmart and Kroger are snatching up distribution facilities left and right. Manufacturers are also going to keep investing in commercial real estate as they increase the amount of inventory they keep onsite.

Office Real Estate Won’t Be Out Of The Woods Yet

The one part of commercial real estate that still has some trouble ahead is office real estate. While it won’t be terrible, demand won’t be nearly what it was in previous years as companies continue to hold off on returning to the office. As working from home both full-time and part-time becomes more of the norm, office space utilization will most likely be on a downward trend.

Hospitality Will Rebound

It will be good news for hospitality, as business and leisure travel seem inclined to grow this year. The travel boom will drive luxury hotels to continue to embark on renovation projects that may have stalled during the pandemic. These projects will likely be driven by both city centers and the hotels themselves as the demand for more hospitality spaces continues its upswing.

The Supply Chain Will Be Retooled

The supply chain has suffered quite a blow during the Covid-19 pandemic, which will require some retooling over the next year. Because the space near seaports is not widely available, many developers will have to invest in commercial real estate inland. In order to account for rising transportation costs, manufacturers will most likely have to add distribution facilities in closer proximity to manufacturing facilities.

Although nothing is set in stone for the future of commercial real estate, it’s safe to say that the economy behind commercial real estate is here to stay and that these predictions are well on their way to becoming reality.

 

Source:  Forbes

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Small Industrial Tenants Feel Squeezed Out Of Booming Warehouse Market

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Warehouses keep getting larger, catering to retailers like Walmart Inc., The Home Depot Inc. and the biggest industrial user of them all, Amazon.com Inc., that these days frequently take down 1 million square feet or more in a single lease transaction.

But while mammoth distribution hubs or sprawling manufacturing plants tend to be headline-grabbers, small warehouse users — including those needing 100,000 square feet or less — remain the bread and butter of many industrial markets nationally.

And in a warehouse market with constrained inventory, rapid rent escalation and fierce competition, it’s getting tough for small warehouse users to find, and afford, space.

“We are having to educate these tenants pretty quickly that the days of going out and touring 10 options, taking your time to shortlist those options, whittling them down to your favorite choice and negotiating back and forth are gone,” said Darren Ross, senior vice president at Colliers International Group Inc., specializing in industrial deals.

The market right now is causing companies that want to be in warehouse space of, in particular, 50,000 to 150,000 square feet to internally examine their business models and figure out whether they really need space in a specific submarket — or at all, Ross continued.

And beyond higher asking rents, industrial landlords today are putting in higher annual escalation clauses into leases — what used to be 2% or 3% is now closer to 3% to 5%, said Warren Snowdon, managing director and principal at Foundry Commercial LLC.

Foundry Commercial LLC, which has a development division, in 2019 considered whether to build multiple small buildings or one 565,000-square-foot warehouse at an industrial park in Charlotte, North Carolina. It ultimately decided to build the larger warehouse, seeing where the broader market was going, Snowdon said.

That’s a decision more developers are making today, especially as costs in every part of the process — from land entitlement, acquisition and development — have escalated.

Aaron Ahlburn, practice lead for logistics and industrial data at Avison Young, said current construction is heavily weighted toward bigger users, with the average size of a warehouse delivering today measuring 350,000 square feet among U.S. markets it tracks.

That’s reflective of a market where deal sizes have gotten progressively larger, from an average of a little more than 40,000 square feet in 2008 to, today, trending closer to 70,000 square feet, according to Avison Young.

Still, the biggest warehouse users — ones at or larger than 1 million square feet, in particular — are usually the tip of the pyramid in any given industrial market, Snowdon said. Tenants smaller than that comprise the rest of the pyramid, with the 50,000 to 150,000-square-foot tenant size making up the base of the pyramid, or the bulk of a market’s activity.

There’s a bit of a blind spot right now in the industrial sector for that size user, which the industry needs to be cognizant of, Snowdon continued. But lack of inventory and competition also means tenants right now facing sticker shock for sub-100,000-square-foot spaces are, by and large, going to have to accept the reality of higher costs.

 

Source:  SFBJ

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SperryCGA | RJ Realty’s Ron Osborne Negotiates Sale Of Downtown Ft. Lauderdale Owner/User Office Building

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Ron Osborne, Managing Director/Broker of Sperry CGA | RJ Realty, negotiated the sale of a vacant, single tenant office building at 2100 S. Andrews Ave. in Fort Lauderdale, Florida.

The deal closed April 18.

2100 S. Andrews Ave is a free-standing office building consisting of 5,200 square feet on 17,000 square feet of land with 21 parking spaces.  It is situated on the SE corner of Andrews Ave and SE 21 St., ideally located minutes from the courthouses, Broward General Hospital, Port Everglades and Fort Lauderdale-Hollywood International Airport.

The property was listed at $2,800,000 and was purchased for $2,500,000 or $480 per square foot.  The buyer will eventually relocate some of his staff to the building from its corporate offices in Port Everglades, however, they initially intend to lease it out for 5 years.

“This is the second building purchase I negotiated for the buyer, who is affiliated with Port Consolidated for this purpose,” commented Osborne. “The buyer leased the first building in a long-term lease.”

Osborne will be offering this location for lease with a minimum of a 5-year term at $30.00 NNN.

Osborne went on to state that finding well-located, small-user office buildings with onsite parking in the greater downtown Ft. Lauderdale area is a challenge.

“We are still working with buyers looking for office, retail and industrial properties with long term upside potential,” he added.

The Seller, RFH 2100 LLC, was represented by Brian Batchelder of Berger Commercial Realty.

 

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Outdoor Storage Demand Keeps On Truckin’

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Seagis Property Group LP (“Seagis”), one of South Florida’s most active industrial real estate investors and owners, announced it closed on a $14.75 million acquisition of a 6.3-acre, fully paved and secured, trailer/fleet parking lot and maintenance facility located at 13399 NW 113th Avenue Road in Medley.

The property features a newly renovated, 14,056-square-foot warehouse with 12 drive-in doors, situated on an oversized lot with substantial frontage on Okeechobee (Route 27).

The property is fully leased for the next three years by Gables Transport, Inc., a national freight services and truck repair company that is a subsidiary of the property seller, RCR Investment Group. Seagis was represented in the transaction by Jose Sasson, Director of Investment Sales at Axiom Capital Advisors.

bradlee lord_seagis property group_crop“This marks our second recent investment in a well located, fully secured trailer parking lot in South Florida,” said Bradlee Lord, Vice President of Seagis, who is based out of the company’s South Florida office. “These unique industrial real estate assets remain in high demand across the nation, but especially in a land constrained market like ours. Beyond its prime location in one of Miami’s most desirable industrial submarkets, this property was attractive, as it’s a low coverage site and offers long-term optionality.”

Strategically located in Medley, a gateway market, the property offers immediate proximity to South Florida’s highway infrastructure and easy access to the region’s busiest air and seaports while having substantial frontage on Route 27, one of the main thoroughfares in Miami.

This acquisition expands Seagis’ South Florida regional foothold to 114 logistics properties, totaling more than 6 million square feet of investment-grade industrial space.

 

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This Converted Fort Lauderdale Warehouse Is Now 100% Leased With Retail, Office Tenants

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A recently converted warehouse in Fort Lauderdale’s Progresso Village is now 100% leased with retail and office tenants that will altogether employ about 100 people.

Called Fabrick, the former industrial space at 801, 807, 815, and 819 N.E 2nd Ave. has 24,000 square feet of office and retail. The developer, BH3 Management, moved its headquarters from Aventura to the project’s office component in April. It’s larger than BH3’s previous office in Aventura, which was only 5,000 square feet.

The other seven businesses leasing space in Fabrick will employ an estimated 75 people. The final employee count for all tenants will not be known until they have completed their build outs and are open for business, Freedman stated in an e-mail to the Business Journal.

A subsidiary of BH3, BH3 DJ Flagler LLC, bought the warehouse in November 2017 for $2.8 million, according to online records from the Broward County Property Appraiser office. Another subsidiary, BH3 DJ Sub LLC, purchased the warehouse from BH3 DJ Flagler LLC for $1.64 million in May 2020.

After receiving $350,000 in incentives from the Fort Lauderdale Community Redevelopment Agency in December 2020, BH3 launched an adaptive reuse project of the warehouse building.

Besides the incentives, the project was financed through a $5.1 million loan from New York-based Maxim Capital Group.

 

Source: SFBJ

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Here Come The Multifamily Headwinds

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There are usually multiple ways to look at anything. In the case of the Yardi Matrix National Multifamily Report for March 2022, you could emulate the late lyricist Johnny Mercer: accentuate the positive, eliminate the negative, and don’t mess with Mister In-Between.

But what works for an upbeat song isn’t necessarily good for business planning. There is ample good news of increased asking rents and occupancy rates, but in a sense, that’s all in the past. The question investors and operators must ask is what might be coming.

One big consideration is rent growth. “Asking rents increased by $34 nationally, up 2.1%, in the first three months of 2022, which is record growth for a first quarter,” the report said. However, that’s unlikely to continue for a few reasons. One is slowing economic growth as inflation continues to take a toll on activity. Slower growth will affect incomes, meaning the likelihood of fewer gains to cover costs of higher rents. The war in Ukraine is also an issue, according to Yardi because that could help sustain inflation, especially with the effect on energy prices.

Inflation means higher interest rates as the Fed tries to cool the economy. But multifamily acquisition yields are low, at a 4.5% average and down into the threes for prime locations. “Low cap rates caused little concern when the risk-free rate was 1% and the typical mortgage coupon was 2.5% to 3.5%, but when the cost of capital gets more expensive, low yields can complicate transactions and refinancings,” the report says.

Then there’s household formation.

“Although official numbers for 2021 have not been released, some estimates put the number of new households formed in 2021 in the two million range, which makes sense given record multifamily absorption of nearly 500,000,” the report says. “Household growth and absorption are likely to slow to more normal levels in 2022, to about half of last year. That would presage healthy—albeit more moderate—gains in multifamily fundamentals.”

Also, rent growth is not at all nationally even. Migrations to the southeast and west are a big force in rent growth, presumably because there’s a lot of new construction happening, which means higher costs given rising building materials and labor expenses and a steady stream of asking rents not tied to previous occupancy.

Occupancy is cooling in some high-growth metros—that is, the very west and southeast that has led growth because of demographic migration.

“Occupancy rates in several markets have decreased over the last year as demand hasn’t kept pace with deliveries,” the report says. “Phoenix showed the largest decrease in occupancy (-0.5%) in March, followed by the Inland Empire and Las Vegas (-0.4%) and Sacramento (-0.3%).”

 

Source:  GlobeSt.

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