2020 Industrial Market Report BROWARD Q2 2020

Q2 2020 CUSHMAN & WAKEFIELD MARKETBEAT The arrival of the COVID-19 pandemic has created an economic shock that has likely pushed the global economy and the U.S. into recession. Policies initiated to “flatten the curve” of potential infection include the voluntary and mandated shutdown of large sectors and regions of the economy. Retail establishments, restaurants, passenger transportation, schools and leisure activities have almost all grinded to a halt while customers self-quarantine and practice social distancing. Economy

BROWARD COUNTY MARKET OVERVIEW recorded the most leasing activity in the quarter with almost 450,000 square feet (sf). Amazon continued to expand its footprint in South Florida as it signed for the largest second quarter lease at over 250,000 sf in the Pompano Beach submarket.

Market Demand Broward recorded over 1.5 msf of new leasing activity YTD, with nearly half of it occurring in the second quarter. The five-year average for new leasing activity in the first six months was nearly 1.9 msf showing a 19.4% decrease in 2020. Warehouse/distribution space recorded the bulk of the activity accounting for 85% of the total in the second quarter. The North Broward market

Market Supply The first half of 2020 ended with an overall vacancy of 6.2%, a 270-bps increase over the year. Warehouse/distribution jumped 340 bps from twelve months prior to 7.3%. Office Service/ Flex vacancy increased by 1.9% bps to 4.0% year-over-year (YOY). Over 687,000 square feet of speculative space delivered YTD, of which approximately 9% was preleased. All deliveries added to warehouse/distribution inventory. Over 3.3 million square feet (msf) remained under construction with many deliveries set for the second half of 2020. Market Pricing As space options increased due to deliveries, triple net asking rates dropped minimally over the year by 1.0% to $9.91 per square foot (psf). Warehouse/distribution product contributed to the fall in rents with a 2.8% decrease YOY to $9.35 psf. Increased vacancy in warehouse/distribution due to project completions was the main reason for limited rent adjustments in the second quarter as new availabilities were priced at market. The Pembroke Pines/Miramar/Weston submarket did show a substantial rise in asking rents to $13.06 psf, a 25.8% increase YOY.

Broward County, including Ft. Lauderdale, had an unemployment rate of 16.0% in May 2020, up 110 basis points (bps) from the previous month and 1,300 bps higher than one year ago. Nonagricultural employment was 767,000, a decrease of 97,700 jobs, or 11.3%, over the year. Every major employment sector forfeited jobs over the year with just under half of the losses coming from the Leisure & Hospitality sector, at 45,500 jobs gone. Construction lost 2,200 jobs over the year. The COVID-19 pandemic struck the U.S. in March 2020, late in the quarter but with enough time to have a significant impact on first quarter market fundamentals. In the second quarter of 2020, the U.S. economy felt its effects more fully, as government-mandated shutdowns along with shelter-in-place ordinances pushed the country deeper into recession. The situation remains very fluid. To view our latest perspective on the coronavirus and its potential impact on CRE and the economy, access Cushman & Wakefield’s COVID-19 resource page.

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