Duke Realty (DRE) Starts Speculative Development in Florida

·3-min read

The industrial asset class has grabbed the limelight for showing resilience amid the coronavirus pandemic with low vacancy rates, high asking rents and robust rent collections. Amid this, the domestic-only, pure-play logistics property REIT Duke Realty Corp. DRE is witnessing continued demand for its well-located industrial real estates.

Particularly, with the REIT’s South Florida in-service portfolio being currently 99% leased and Miami properties being 100% leased, the company finds it apt to start speculative development to bank on the favorable market conditions as reflected by rising demand and limited supply of newer, larger industrial spaces.

As a result, Duke Realty recently announced about breaking ground on a speculative development in the Miami 27 Business Park. This Building 1 is a 501,224-square-foot facility on 23.3 acres in Medley, FL, which is being built to LEED® certification standards.

Being immediately adjacent to U.S. Highway 27 and enjoying convenient connectivity to the Florida Turnpike, I-75, and State Road 826 that offers direct access to the cargo area of Miami International Airport, the speculative development is likely to grab tenants’ attention, and command decent rent and enjoy healthy occupancy.

In fact, Duke Realty’s Miami 27 Business Park was planned as a two-building development. The other building referred as Building 2 of Miami 27 Business Park is a 221,984-square-foot facility at 10310 NW 121st Way. While it is under construction and is slated to be complete this July, the building is already 72% pre-leased. Markedly, the company’s recent investments in South Florida have augmented in-service or under-construction space to 9.3 million square feet in the market.

Notably, the U.S. industrial market had an impressive start to this year with robust demand and record-high rents. What is encouraging is that demand outpaced supply for the first time since second-quarter 2019, per a report from Cushman & Wakefield CWK. There was a net absorption of 82.3 million square feet (msf) of space during the March-end quarter. The tally is, in fact, up 78.2% over the 46.2 msf reported in first-quarter 2020. Particularly, warehouse/distribution space emerged as the strongest secondary property type. This is ushering in good news for industrial landlords, including Duke Realty, Prologis PLD, Rexford Industrial Realty, Inc. REXR, among others.

Encouragingly, with a robust pipeline of development, both build-to-suit and speculative, as well as an active pipeline of build-to-suit prospects, Duke Realty is well poised to enhance its presence in Tier 1 markets. During the January-March period, Duke Realty’s building acquisitions totaled $51 million, while building dispositions aggregated $94 million. In addition, the company started 11 development projects, with projected costs of $412 million, aggregating 3.8 million square feet, which were 60% pre-leased.

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Prologis, Inc. (PLD) : Free Stock Analysis Report
Duke Realty Corporation (DRE) : Free Stock Analysis Report
Rexford Industrial Realty, Inc. (REXR) : Free Stock Analysis Report
Cushman & Wakefield PLC (CWK) : Free Stock Analysis Report
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