The economy is on the rise and with that comes industrial commercial real estate growth.
According to CBRE, there is about 1 million square feet of new warehousing space coming into Miami Dade County in 2016.
South Florida is one of the key markets to first recognize and take advantage of this growth. Industry watchers report an overwhelming increase in industrial development thanks to the PortMiami expansion and improvements at the Miami International Airport.
Ron Atapattu, founder and CEO of Overseas Cargo, a Miami-based third party logistics company, is one of those industry watchers. Atapattu has 30-plus years of experience handling supply chain management, distribution, transportation, inventory management and warehousing for some of the world’s most recognizable brands, including General Mills and PepsiCo.
“Historically, Florida has been known for its financial and tourism sectors, not necessarily logistics,” Atapattu tells GlobeSt.com. “Now, the logistics sector is growing, resulting in the development of warehousing to support the business coming into Miami. No other markets have yet spent the federal money to improve their infrastructure the way South Florida has, so that is one of the main reasons we are seeing such a spike in available warehousing space.”
As Atapattu sees it, the PortMiami expansion has opened the door to new business, leading to growth in warehousing. This growth is beginning to occupy landscape this kind of traffic did not formerly touch.
“The traditional costs of logistics in South Florida have doubled over the last five years, with warehousing and trucking costs up almost 50%,” Atapattu says. “You can see a similar escalation in the years 2014 and 2015, as a result of the beginnings of infrastructure development. In fact, Amazon, which many consider the shipping giant of the world, added about a half a million square feet of warehousing space in South Florida, recognizing the growth that was already happening in the market.”
With the expansion of the port, Atapattu says South Florida is experiencing volumes of business for which it was not necessarily ready. The local infrastructure now has to cope with this added traffic, especially at the port.
“Located at the heart of downtown, it now has to absorb all of the logistics related traffic that was never planned in its network,” Atapattu says. “Additionally, the rail track that has been modified to accommodate this additional traffic, and now travels through the heart of the city through residential neighborhoods, having a huge impact on the community and the quality of living.”
Indeed, some project logistics will flood already congested roads that will create hardships to the local commuters. The City of Miami is working on solutions.
“On the other hand, as a result of all of this growth, businesses are beginning to take advantage,” Atapattu says. “In fact, well-known investment companies have already begun to invest in warehousing land in anticipation of the growing demand.”