South Florida industrial continues to be one of the more closely watched markets in the US for institutional CRE investors. The combination of population growth, e-commerce penetration, port-driven logistics demand, and extremely constrained land supply has produced vacancy rates that remain structurally tight even as broader US industrial markets begin to show softness from the 2021-2023 speculative supply surge.
This brief documents the Q2 2025 vacancy and absorption picture for Miami-Dade and Broward counties, drawing on county deed records, CMBS servicer data, Census commercial vacancy surveys, and transaction comp data from Valuevynt's data pipeline.
The Headline Numbers: Vacancy and Net Absorption Through Q2 2025
Miami-Dade industrial vacancy — defined as existing Class A and Class B industrial and flex properties above 20,000 SF — held at 3.2% at the end of Q2 2025, essentially flat from Q4 2024's 3.4% reading. Net absorption for the full metro across Q1-Q2 2025 was approximately 1.8 million square feet positive, spread across the Airport West, Medley, Doral, and Hialeah submarkets.
Broward County industrial, historically a secondary market to Miami-Dade, posted a stronger absorption quarter. Broward's overall vacancy came in at 3.9% at Q2 2025, down from 4.3% a year prior. The compression reflects continued demand from last-mile logistics operators and third-party logistics (3PL) providers occupying suburban Broward locations with access to the Sawgrass Expressway and I-95 interchange corridors.
The combined Miami-Dade plus Broward industrial market — approximately 285 million square feet of existing inventory — shows an aggregate vacancy rate of approximately 3.4-3.5% as of mid-2025. This is the tightest the market has been since 2022, when a brief post-COVID demand surge pushed vacancy below 3.0% before several years of delivery activity temporarily widened it.
Supply Deliveries and the Pipeline Through 2025-2026
The 2021-2022 construction boom that added significant speculative industrial supply in markets like Phoenix, Dallas, and Inland Empire was less pronounced in South Florida because of land constraints. Miami-Dade industrial land is effectively exhausted within reasonable logistics distance from the Port of Miami and Miami International Airport. New industrial development in the county is increasingly confined to infill redevelopment, vertical industrial (multi-story), and smaller flex park configurations on previously developed commercial land.
Broward County faces similar constraints, though somewhat less acute. The western Broward corridor — Miramar, Pembroke Park, Davie — has accommodated new industrial development, but available parcels are diminishing rapidly as residential and mixed-use conversions consume the suburban land bank.
Based on permits pulled and reported deliveries, South Florida is expected to add approximately 3.2 million square feet of industrial space in the second half of 2025 and into early 2026. At the current absorption run rate of 3.5-4.0 million SF per year, this supply is absorbed as fast as it delivers — the market is not in the supply surplus condition that has characterized markets like Phoenix or Charlotte during the same period.
Demand Drivers: What Is Absorbing the Space
Port of Miami Logistics
Port of Miami cargo volume has grown steadily as the port has deepened its channels and extended its reach into containerized cargo. Importers and exporters requiring proximity to the port generate consistent demand for high-clear industrial space in the Airport West and Medley submarkets, within 5-12 miles of the port. These are among the tightest-vacancy industrial submarkets in the country on a per-square-foot basis.
Third-Party Logistics (3PL) and E-Commerce Last-Mile
3PL operators serving the South Florida consumer market represent the largest component of industrial demand growth over the past five years. South Florida's population — roughly 6.2 million in Miami-Dade and Broward combined — requires significant last-mile logistics infrastructure, and the lack of adequate Class A distribution space at competitive rents has repeatedly constrained 3PL operators seeking to serve the market. Asking rents for Class A last-mile space in optimal locations have reached $18-$22 per square foot NNN in Doral and Airport West, levels that would have seemed extreme in 2019.
Cold Storage and Food Distribution
South Florida's international character drives above-average demand for cold storage and temperature-controlled distribution, particularly for Latin American food imports. Cold storage industrial is one of the most supply-constrained industrial segments in Miami-Dade — existing inventory is largely obsolete in construction vintage, and new cold storage development is constrained by power availability and construction cost premiums. Users who require cold storage capacity increasingly pre-lease speculative cold build-to-suit projects rather than waiting for competitive availability.
Cap Rate and Transaction Market Context
South Florida industrial cap rates compressed sharply from 2021 through Q2 2023 as institutional capital competed aggressively for a thin inventory of available assets. Class A industrial in Airport West and Doral transacted at cap rates as low as 3.8-4.2% at the peak — levels that reflected both strong current NOI and aggressive assumptions about rent growth.
As of Q2 2025, the transaction market shows cap rates ranging from approximately 4.6-5.2% for Class A South Florida industrial, reflecting the broader cap rate re-widening driven by the interest rate environment rather than any deterioration in market fundamentals. The spread between South Florida industrial and the 10-year Treasury remains below historical averages at approximately 125-150bps, suggesting that cap rates in this market have not fully normalized to historical spread levels relative to risk-free rates.
For underwriters modeling South Florida industrial acquisitions in 2025, the implication is a market where the current income yield (NOI/price) is moderate relative to borrowing costs — a thin DSCR market — but where the underlying demand-supply dynamics remain favorable for NOI growth over a 5-7 year hold period. The underwriting thesis is less about current yield and more about rent growth and exit cap rate assumptions.
Comp Pool Depth and Confidence Interval Notes
One of the analytical peculiarities of the South Florida industrial market is that transaction volume, while consistent, is low in absolute terms relative to market size. In any given 24-month window, same-submarket institutional-grade industrial transactions in a specific Airport West submarket corridor might number only 8-14 — adequate for a Tier 1 comp pool but below what markets like Dallas (50+) or the Inland Empire (30+) produce for the same asset class in the same period.
This thin comp pool translates to wider confidence intervals on South Florida industrial valuations than on more liquid industrial markets. A comp pool with 10 transactions and a cap rate IQR of 65bps produces a different confidence bound than a 35-transaction pool with an IQR of 30bps. Underwriters should account for this by treating South Florida industrial automated valuations as having higher intrinsic uncertainty than their headline numbers suggest, and should verify material assumptions against direct market intelligence where available.
What the CMBS Data Shows
CMBS exposure in South Florida industrial is meaningful for larger assets. For the institutional-quality industrial assets that have gone through CMBS securitization, servicer remittance data provides useful occupancy and DSCR confirmation. As of Q2 2025, CMBS-encumbered South Florida industrial loans show limited distress — delinquency rates are below 1.5% for the class, and the majority of South Florida industrial CMBS loans with maturities in 2025-2026 have executed or are in process of executing extensions, reflecting borrower and lender confidence in the underlying asset class and market fundamentals.
The CMBS distress picture for South Florida industrial is favorable relative to the broader national industrial CMBS book, which has seen elevated delinquency in over-supplied secondary markets. South Florida's structural supply constraint means that even assets with modest NOI growth assumptions can support loan extension economics — a positive signal for investors monitoring the secondary market for distressed acquisition opportunities, which currently appear unlikely to emerge in volume in this market.
Submarket-Level Summary
- Airport West / Doral (Miami-Dade): Tightest vacancy in the metro, approximately 2.4%. Asking rents $18-$22/SF NNN. Limited development pipeline. Cap rates 4.6-4.9% on current transactions.
- Medley / Hialeah (Miami-Dade): Vacancy approximately 3.1%. Strong 3PL demand. New development constrained by infill land availability. Cap rates 4.9-5.2%.
- Deerfield Beach / Pompano Beach (Broward): Vacancy approximately 3.8%. Active speculative development activity but being absorbed on delivery. Asking rents $14-$17/SF NNN. Cap rates 5.0-5.4%.
- Miramar / Pembroke Park (Broward): Most active Broward submarket for new development. Vacancy 4.1%. Absorption positive. Cap rates 5.1-5.4%.
South Florida industrial remains a fundamentally supply-constrained market with structural demand drivers that are not replicating in other US regions. The current cap rate environment reflects the national interest rate context rather than local market weakness. For long-hold institutional buyers, the market continues to present a compelling combination of income stability and potential NOI growth — provided the entry pricing assumption is stress-tested against a realistic DSCR at current financing costs.
