South Florida’s Outlying Markets, From Belle Glade to Treasure Coast, Heat Up – Commercial Observer
Palm Beach County’s economic developers have for years identified the rural Glades area as an emerging area for industrial development. And for years lively business failed.
The recently Changed when Apopka-based Finfrock, a precast concrete manufacturer, bought 94 acres on the site of a former state prison in Belle Glade, just off State Road 80, the cross-state trucking route, with plans for 140,000- square foot manufacturing facility.
“It was pretty much the business of the century,” said Shereena Coleman, president of the Glades area for Palm Beach County’s Business Development Board. “The Glades has been waiting for this for 40 years.”
As commercial space becomes scarce in the urban cores and sprawling suburbs of South Florida, manufacturers and retailers in search of affordable land are increasingly looking for areas on the edge of the region, say Coleman and others. Currently, the new occupants are almost entirely industrial and distribution tenants, attracted by cheaper land and, in the case of Belle Glade, by an abundant labor force.
“Belle Glade will receive more attention given the lack of land inventory,” said Christopher Thomson, an industrial broker at Cushman & Wakefield.
The search for space is pushing users not only to the Glades region in western Palm Beach County, but also to Homestead in southern Miami-Dade County and north to Counties Martin and St. Lucie, an area known as the Treasure Coast is.
In an example of Homestead heating, auto dealer Copart USA paid $ 34.8 million for 117 acres there last year. Good luck finding this much free dirt in the more populated areas of South Florida.
“When you need a full-scale location, you don’t have many options,” said Ted Elam, vice president of Foundry Commercial, at a recent NAIOP South Florida panel discussion on the area’s new boundaries.
Amazon illustrates the trend: As the e-commerce giant builds its distribution network in South Florida, the company is planning fulfillment centers in Homestead and the Palm Beach Park of Commerce west of Jupiter. Once considered remote, the Palm Beach Park of Commerce is now home to a Walgreens warehouse and 1 million square foot Amazon facility currently under construction and soon to open.
As the Palm Beach Park of Commerce nears expansion, it no longer offers many options for users looking for retail space.
“When I’m a million –[square]– Foot renter looking for space in South Florida – and we expect there is a lot more of that – you don’t have many options in Dade and Broward [counties]and now you don’t have a lot of options in Palm Beach County, ”Elam said.
As occupancy costs rise in Palm Beach County, distribution tenants can save about $ 2 per square foot of rent by purchasing locations in Martin County, Elam added.
“Instead of paying $ 9 triple net, you might be paying $ 7,” he said. “There are significant cost savings for the large tenants located a little north.”
While South Florida real estate professionals consider Martin and St. Lucie counties too far away for distribution centers, New York and California players aren’t as concerned about the extra distance, Thomson said.
“You’re not afraid to look north at an exit,” said Thomson.
As a result, the industrial area at the Interstate 95 junctions in the two counties is very busy.
At Homestead, the story is similar, with industrial land available for just $ 300,000 to $ 400,000 an acre, compared to $ 2 million an acre in the busy Airport West and Doral corridors.
“We’re not the only group looking down there,” said Elam.
Palm Beach County and Miami-Dade County each cover 1,900 square miles – meaning each county covers roughly the same landmass as Delaware. In other words, there is a lot of land in South Florida that is not directly on the ocean and not covered by office towers or suburbs.
The new borders have faced challenges over the decades. Homestead was pounded by Hurricane Andrew in 1992, a natural disaster that halted development there.
Belle Glade, an agricultural enclave separated from coastal markets by miles of sugar cane fields, has a difficult labor market that is further weakened by the closure of a state prison. Martin County, for its part, has built its identity around defying new developments.
With more than 6 million inhabitants in the region and a resurgent population growth after the Great Recession, the formerly extensive areas of South Florida are also being opened up for residential housing and commercial development.
“We are optimistic about these peripheral markets over the long term,” said Elam.
Jeffrey Chamberlin of SLC Commercial Realty and Development said that “every I-95 interchange will soon be one million square feet” in the Treasure Coast area.
Although the wave of development is looming on the horizon, developers and investors in South Florida are still hesitant. Some simply cannot focus on the possibility of distribution centers in a Chamberlin recognized “tertiary market”.
One buyer had a contract for 65 acres of Treasure Coast land but withdrew from the deal because his supporters could not figure out how the area would emerge as a desirable location.
“What is proposed to be built doesn’t yet exist, so they couldn’t make their investors comfortable,” Chamberlin said.
Belle Glade’s Deal of the Century, meanwhile, landed after a series of fits and beginnings. In 2014, economic developers expanded their parking spaces in the region and announced that new projects would create hundreds of jobs in the region. However, many of these deals went wrong.
Then came Finfrock, attracted by the combination of comparatively cheap land and plentiful labor. The median household income in the Glades area is just $ 26,000, Coleman said.
Finfrock expects to employ almost 200 people in Belle Glade. The County Commissioners approved Finfrock a $ 1.9 million grant over 10 years and tax breaks of $ 400,000 over a decade. According to a charter, Finfrock paid $ 3.85 million for his land in Belle Glade.
Finfrock “fell in love with the community,” said Coleman. This is a departure from the reaction of many employers who commonly associate the Glades area with crime and poverty, she said.
“We worked tirelessly to present the clearings in a different light,” said Coleman.
Users heading into the clearing will have to deal with a wild card: the cost of preparing the region’s muddy topsoil for construction can quickly add up. This process, known as demucking, can cost up to $ 300 per square foot.
“That’s a lot of the cost added to this cheap land,” Coleman said. “There is something to be considered and we try to be very honest.”