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Pharma, Medical Equipment Driving Miami Warehouse Demand

Some industries that drove demand in South Florida’s warehouse market — such as flowers — are shrinking due to the coronavirus pandemic. But one is growing: Pharma.

While commercial travel is now restricted, cargo airlines are expanding flights to meet increasing demand for pharmaceutical products leaving Europe. Some shipments that would normally travel in the belly of passenger flights are now arriving by special cargo flights.

“Pharmaceuticals and pharmaceutical manufacturing is a very important part of the industrial market in South Florida and a key economic driver,” said Brian Smith, managing director for the Chicago-based commercial real estate services firm JLL and South Florida industrial lead. “As the sector grows, it may offset other losses.”

Cargo flights have dropped since the coronavirus pandemic spread in the U.S., according to Miami-Dade Aviation Department Communications Director Greg Chin. In March, the total number of cargo flights dropped by two percent year over year, from 4,185 in March 2019 to 4,088 in March 2020.

 

Source:  Miami Herald

“What’s in demand has shifted away from groceries and perishables to medical supplies. There are less shipments of flowers and other goods associated with social events,” Chin said. “Supplies for cruise lines — integral to cargo and warehouse demand — have plummeted since new cruises stopped in mid-March.”

Trade data run only through February, said Ken Roberts, president of Coral Gables-based WorldCity. Though that was before the pandemic hit Florida, imports of plasma, vaccines and blood jump to 4.5% of all MIA imports this year, up from 2.5% in all of 2019.

And freight companies now are adding more flights. The Hialeah-based Amerijet International Airlines launched a weekly flight from Brussels to Miami in early April, said Derry Huff, vice president of sales and marketing for Amerijet. Demand increased and the company added a second flight in mid-April.

“About 40% of every arrival from Brussels includes pharma,” said Huff. “The rest is a combination of apparel and perishables. Miami is a gateway to the Caribbean, Central America and South America — our core market.”

Bonn, Germany-based DHL added five flights from Miami to Brussels in late March “to fill the gaps of a steep reduction in commercial passenger airline flights and to meet the high demand of priority or urgent shipments,” said Jon Olin by email, the vice president of the aviation division for DHL Express Americas region.

While demand for some once-popular products — flowers, engineering equipment and machinery — has dropped, medical equipment and pharma is up, said José María de Orduna by email. He’s the DHL Global Forwarding vice president of operations for the eastern region of the States.

Masks, gloves and COVID-19 testing kits are some of the most common medical items, Olin said. Many are in transit from Europe to Latin America, with a Miami stopover. Recently, the company shipped one million masks to Chile and 180,000 testing kits to Central America.

German logistics firm Rhenus is seeing similar trends, said Gabriel de Godoy, Chief Operating Officer in the U.S. The company recently opened 160,000 square feet of warehouse space just west of MIA. As much as 30% of it is packed with pharma products.

“Demand for personal protective equipment, including testing kits and ventilators, has seen a tremendous increase. This is not a niche we were involved in before the pandemic,” de Godoy said. “Thirty days ago, information technology equipment dominated. Now medical equipment and pharma are on an upswing. We were one of the companies that was asked to ship 240 million masks from China…we have 20 tons of tests coming in two trailers from Vancouver to Miami. Until a vaccine is created, we think that demand is going to increase. Masks will be part of our daily life. High end brands are now doing this too. You’ll see masks by Gucci and Louis Vitton.”

But some goods remain in the U.S., according to Megan Conyers, the executive vice president for the Florida Customs Brokers & Forwarders Association.

“What stays here is only what can be consumed here,” said Conyers. “Imports of blood and plasma for vaccine testing have increased.”

She’s seen an uptick in shipments coming in from Brussels, Hungary and Ireland — the countries equipped to meet pharma demands. Shipments to South Florida from once-steady trade partners Brazil, Chile, China, Colombia and Uruguay have diminished.

The Result Is A Boon For Warehouses

In the first quarter, demand grew for mid-sized warehouse spaces — ranging from 30,000 square feet to 50,000 square feet — that would accommodate pharma products and manufactured goods, according to the JLL first quarter 2020 Broward Industrial Insight report. The two largest deals in the last three months included United Medco leasing 87,885 square feet at the Coral Springs Commerce Center II and Renew Life leasing 55,897 square feet in the East Davie Commerce Center.

“That trend has carried over to the early part of the second quarter,” Conyers said.  “One reason: cruise supplies already shipped to Miami are staying in warehouses until distributors can figure out where it will go.”

Demand may weaken down the road but won’t be permanent, predict’s JLL’s Smith.

“The industrial real estate market remains very resilient and is well positioned to bounce back strong once the health crisis has been contained,” Smith said.

 “The impact has yet to be felt fully, and you can’t see it in the data, since that is only through February,” said WorldCity’s Roberts. “But it will hit the fuel imports at Port Everglades hard. It is already hitting the flower industry here and will continue to do so. My guess is salmon imports from Chile will suffer, more so than melon, fruit and vegetable imports from Central America. Tech and other trade from China will take a hit… If Covid-19 makes its way south in an aggressive fashion as they go into winter, watch out. South Florida ports are big net exporters to South America.”

Source: Miami Herald