While I typically look forward to visiting new places and experiencing different ways of life, I admittedly was apprehensive about embarking on my first cruise as an adult for a checklist of reasons. However, a combined-family trip to celebrate my father-in-law’s 85th birthday presented the opportunity to once again sail the high seas and gain a surprising new perspective of industrial & logistics real estate and port infrastructure in the process.

Here’s the thing about industrial land use and transport infrastructure, unless of course if you are a professional in one of the parts of the ecosystem, it’s all right there in front of us but, it tends to either get taken for granted, is uninteresting or visually unappealing compared to other sexier types of property and land use or because even though these hubs have intersecting mission-critical, specialized logistics, transport and land use activities going on that impact our daily lives in numerous aspects, their complex inner workings simply aren’t very well understood.

In a new setting on the top deck of a cruise ship with my family also onboard and a re-energized perspective taking in 360 views of turquoise waters, sunshine, a striking downtown skyline, luxury residential island enclaves and iconic South Beach destinations - and a Corona- I began thinking about the industrial infrastructure and port activities ongoing before me and the bigger picture of where Miami - and our Bahamas cruising destination’s role in global logistics.

PortMiami - the Port of Miami is situated on Dodge Island, a +-520 acre man-made island at the mouth of the Miami River in Biscayne Bay between Downtown Miami and the southern tip of Miami Beach. The Port is divided by the passenger cruise terminal facilities on the north side, container ship infrastructure on the south and an incomplete mixed-use community designed to stitch into the existing Downtown fabric at the western end of the site. PortMiami is the largest leisure travel passenger cruise terminal in the world with four million+ passengers per year. Additionally, PortMiami’s industrial component, the South Florida Container Terminal (SFCT), represents the second busiest container terminal in Florida behind Port Tampa Bay. In 2021, PortMiami’s processed cargo volume exceeded 11 million total tonnage, annually generates over $40 B in revenue and supports nearly 350,000 jobs for Florida’s economy. Increasing every year, in 2021 PortMiami hit 1.25 million TEU.

Miami’s strategic position near the tip of Southeast Florida elevates the location as a critical hub at the center of major North-South-East-West global maritime routes with proximity to Central and South America and trans-Atlantic traffic connecting Asian markets to the US and Europe via the Panama Canal. Domestically, Miami and other large ports along Florida’s east coast including Port Everglades in Fort Lauderdale, Port of Palm Beach, Port Canaveral and JaxPort, collectively anchor powerhouse industrial and logistics submarkets and are connected to interior Florida and US markets via a robust multi, intermodal and air freight networks.

PortMiami has undergone significant modernization and channel deepening to accommodate larger vessels in the last 10 years and continues to develop new capacity according to the 2035 Master Plan. This investment will ensure its market position in the decades to come including deep berths, multi & intermodal connections and logistics tech. The robust highway transport networks accessible via the Port Miami Tunnel, intermodal partnership with Florida East Coast Railway linking to Miami International Airport (and the adjacent industrial real estate submarkets) collectively support Miami’s status as one of the most critical ports in the United States.

Industrial Real Estate Market Analysis

Dodge Island/PortMiami is located in the Airport East/Downtown submarket. The island is controlled by Miami-Dade County and therefore there are no privately-owned warehouse/distribution spaces on Dodge Island proper. Airport East/Downtown is the fourth largest submarket in Miami-Dade with approximately 23 MSF of total industrial space consisting mostly of smaller-medium footprint infill w/d space positioned near the I-95/I-195/I-395/SR836 interchanges. There is currently a sub-2% vacancy with 1.3 MSF under construction. Average net lease asking rents are just under $9 PSF, among the lowest rents in all of Miami-Dade due to the relatively smaller buildings, land parcels and older vintage bricks found in this submarket.

The largest industrial submarkets achieving the highest asking rents are near Miami International Airport. And while PortMiami is approximately 10 miles away from MIA, Florida East Coast Railway operates an exclusive and direct intermodal connection linking the container port to the airport. The Airport West and Airport North submarkets, combined, have nearly 82 MSF of industrial real estate inventory, ~3% vacancy and relatively limited new construction underway compared to submarket size (<2 MSF). Weighted average net rents range from $11-$13 PSF reflecting significantly larger, modern industrial buildings controlled and tenanted by institutional investors, global logistics providers and e-commerce companies.

With roughly 2% vacancy in Miami-Dade, new construction underway will add approximately 5% of new inventory to the market. Notwithstanding macroeconomic headwinds and potential storm forecasts, Miami-Dade industrial real estate appears to be well-positioned to weather downturns in the economy and any potential retrenching of w/d space demand taking into account the market’s solid underlying fundamentals. Moreover, densely-populated South Florida with investors competing for a finite number of sizable, viable development sites available should limit overwhelming amounts of new construction going forward in the near-medium term, setting a firmer floor for lease rates across the submarkets. 

Overall, Miami is the largest industrial market in Florida with approximately 167 MSF and commands the third highest lease rates in the state. Only Fort Lauderdale (Port Everglades & FLL Intl airport) and Palm Beach (Port of Palm Beach & PBI Intl Airport) boast higher lease rates between ~$13-$14 PSF. However, Fort Lauderdale and Palm Beach Counties combined have nearly 22% less inventory than Miami.

The more densely populated, ‘urban’ markets of Miami, Fort Lauderdale and Palm Beach have the highest industrial lease rates in the state, while other booming markets including Orlando, Jacksonville, Tampa and Lakeland have blended average rents of ~$6.70 PSF and over 350 MSF of combined inventory. In total, the nine largest industrial real estate markets in Florida contain approximately 740 MSF, 12 MSF of YTD 2022 deliveries and nearly 33 MSF under construction. 

Taking a view from an even higher elevation, the Florida industrial real estate market is well-positioned when compared to other major industrial markets (with and without global shipping port facilities) progressing north along the east coast and I-95 corridor. While markets such as Savannah, GA, Charleston, SC and Hampton Roads, VA have attracted increased investor attention in recent years due in part to major investments and expansion capacity at respective port infrastructure, these markets are characterized by lower lease rates coupled with substantial YTD 2022 deliveries and inventory under construction. And while market dynamics change moving up and down the eastern seaboard, northeast I-95/mid-Atlantic coastal markets- most notably Philly with nearly 9 MSF of YTD delivery plus another 15 MSF under construction- questions of potential overbuilding for near term absorption are not unfounded. After reviewing this data and comparatively, the Florida industrial markets just don’t seem overbuilt.

Source Data - the three charts above and data contained therein was sourced from Cushman & Wakefield Q3 2022 Miami-Dade Industrial and U.S. national market reports. MeeseRE interpreted the base data, added corresponding port identifications and dreorganized geographies and sortation for the purpose of this analysis.

The Bahamas comprises an archipelago of 700 low-elevation islands- only around 30 of which are habitable. Sitting at a range of 50 to several hundred miles off of the coast of Miami, The Bahamas is a parliamentary constitutional monarchy with a population exceeding 400,000 residents. The Bahamas Maritime Authority (BMA) registers vessels under the Bahamian flag (a top 5 global registrar jurisdiction) and enforces standards from offices in capital city Nassau, New York, London and Hong Kong.

The region is known for its popular island beach resorts, exclusive gated communities as well as passenger cruise ports of call. Lesser known, Bahamas’ container shipping ports cater to island commerce as well as serving as trans-Atlantic maritime traffic hubs. The primary cargo shipping activity originating in the Bahamas consists of mineral goods, salt, animal products, rum, fruits, vegetables, construction equipment exports. With tourism and financial services being the primary economic engines and relatively little in the way of domestic manufacturing and exports, most of the maritime activity taking place derives from leisure travel on passenger cruise ships, intra-island commerce, transport and import-driven traffic. Fishing vessels seeking les fruits de mer including local delicacy conch @ Potters Cay. I passed on it this time around due to persistent queasiness from all the boat-based transport, but for me it would be in a fritter dipped in tartar sauce and that’s about it.

Capital city Nassau is situated on New Providence, the most populous island in the country home to more than 70% of its total population. The Nassau Container Port (NCP) is the primary shipping terminal comprising approximately 50 acres of container, bulk and break bulk facilities. NCP is the second busiest container port in The Bahamas behind Freeport Container Port (FCP), which is located on Grand Bahama and possesses the largest deep water harbor in the region. Interestingly in recent years, FCP received $3 B investment from Chinese investors that value The Bahamas proximity to the US as well as the expectation of continued/increased regional maritime traffic in the coming years due to the Panama Canal’s expansion.

Shipping port facilities on New Providence are supported by Gladstone Freight Terminal, a 15-acre site with a 100,000 square foot cargo warehouse and deconsolidation space. Industrial transport and logistics facilities throughout the Bahamas are regularly threatened and damaged by hurricanes throughout the region, which present challenges to developing and maintaining modern infrastructure to support maritime commerce.

Sources and notes

• All images were personally taken on my i-phone

• I Googled and referenced Wikipedia sites for information about the various islands, geographic identification, economy, etc

• In addition to the hyperlinks above and the real estate market data C&W source I also referenced these sites for tid-bits of info on the Bahamas and regional maritime transport sites: https://en.wikipedia.org/wiki/Bahamas_Maritime_Authority; https://www.forbes.com/sites/daphneewingchow/2019/05/21/the-caribbeans-share-in-the-global-cargo-industry-is-growing-rapidly/?sh=5705c83661a2; https://www.miamidade.gov/portmiami/master-plan.asp; https://flaports.org/portmiami-growing-at-full-speed/; https://www.miamidade.gov/portmiami/cargo.asp; http://www.nassaucontainerport.com/freight_terminal.cfm; https://www.marineinsight.com/know-more/major-ports-in-the-bahamas/; 

• Over the last few years in addition to site visits, I have referenced two texts in particular that have been instrumental for me to learn more about logistics and transport: Arriving Today by Christopher Mims and The Geography of Transport Systems 5th Ed by Jean-Paul Rodrigue 

• Google maps never ceases to amaze me

Thanks for reading