Florida is a Leading E-Commerce Market
The state is in the forefront of shifting retail landscapes and service deliveries. It’s growing demand for goods are fueled by increased levels of international tourists and diverse local populations. As the retail buying experience moves more online, the connections between retailers and consumers are critical to the success of many e-commerce companies. “Last Mile” locations and the speed with which purchased items can be delivered to people’s front door are driving a significant amount of real estate activity in major markets throughout the state. While new development for Last Mile delivery concentrated on most market’s periphery, demand for space in urban cores area has also intensified.
The following report highlights trends in urban core submarkets. It focuses on the availability of space and changes in rental rates as well as construction activity. The submarkets chosen include most CBDs and have higher than average incomes that likely have larger concentrations of online consumers. While the report looks back on changes in these markets and submarkets over the last twelve months, it also points to several key broader factors that tenants and property owners should watch out for in the near future. These include:
- As older long-term leases expire or rollover, many tenants will see rent bumps potentially double or triple what they are paying currently.
- Vacancy rates have dipped to new lows while construction was limited in core submarkets by a lack of available land, high land prices and zoning restrictions.
- Tenant demand to be closer to customers will continue to encourage investor interest warehouse/distribution assets in infill locations and benefit once obsolete buildings that can be repurposed.
Finally, as “direct-to-consumer” service delivery becomes more pervasive, residents and local governments will eventually push back on last mile locations in dense residential areas due to the added traffic, congestion, and inconvenience. We are already seeing these changes manifest in the innovative ways some ecommerce companies are experimenting with package delivery. The next five years could see dramatic changes in an already dynamic industry.