Commercial Real Estate News / Buying / How to Buy Warehouses for Sale in Miami

How to Buy Warehouses for Sale in Miami

Published: 08-16-23 Category: Buying

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

A birds-eye view of Miami during the day.

With recent surges in demand and record-low vacancies hovering around 2%, the Miami industrial real estate market is quickly heating up. Amidst a rapidly growing population and increased business activity, the city continues to provide refuge for both its residents and business owners.

Whether you're a business owner or investor looking for warehouses for sale, you'd be remiss to overlook Miami's market. Aside from business utility, investing in warehouses in Miami can provide profitable additions to your commercial real estate portfolio.

Here, we'll discuss everything you need to know when looking for and buying warehouses for sale in Miami. Let's get started.

Miami Flood Zones

Miami sits at the tip of the Florida peninsula, so it exists at sea level, surrounded by water from most sides. Given the cirty's geographical location, most zones in Miami are at an elevated risk of flooding, warehouse real estate included.

According to city data, about 93% of all buildings in Miami exist in a Special Flood Hazard Area (SFHA), where SFHA lands have a 1% annualized chance of flooding.

The higher flood risks mean that warehouse property in Miami will probably be more expensive to insure than warehouses in cities with lower flood risks. Be sure you diligently check what the flood risk in your preferred area is before buying so you can factor flood risk and insurance into your business or investment strategy.

You can check for Miami flood zones using the Flood Zone Map tool on the Miami-Dade County website.

Miami Warehouse Zoning Rules

Local zoning designations for warehouses in Miami fall under the IU-1 light industrial classification, which allows the following property uses:

Light industrial manufacturing;
Wholesale distribution facilities;
Warehousing;
Storage facilities;
Automobile storage and service stations;
Materials testing laboratories;
Wholesale sales rooms;
Marine warehouses;
Passenger and freight terminals; and
Office space.

According to Miami's official zoning map, the city has approximately 1,068 parcels set for light industrial use. A fair amount of these parcels are located in the I-95 corridor. Note that warehouse zoning and zoning for multifamily residential property in Miami can overlap, so multifamily and warehousing can exist right next to one another.

Miami Commercial Rent Sales Tax

Florida is the only state that charges a sales tax on commercial property leases. The state recently lowered commercial rent sales taxes to 4.5%, excluding local optional surtaxes. If you are a business buying industrial real estate and want to rent a warehouse, your landlord will factor this additional sales tax into your monthly rent.

Conversely, if you're an investor looking to buy, you'll need to factor in sales tax when leasing the property. Tax rates will depend on the overall lease structure, the tenant's base rent, and other costs that are a condition of occupancy (i.e., property taxes, insurance, maintenance, and more).

Keep in mind that this reduced 4.5% tax rate only applies to commercial lease transactions. Commercial property sales and purchases are still subject to the regular 6% Florida sales tax.

How Much Does a Warehouse for Sale in Miami Cost to Buy?

The average cost of industrial space in Miami is $196.43 per square foot, with an average property size of 13,278 square feet. The median cost per square foot for warehouses for sale in Miami is $228.75 per square foot, with a median size of 6,776 square feet.

How Much Does a Warehouse for Lease in Miami Cost to Rent?

The average cost to lease industrial and warehouse space in Miami is $14.25 per square foot as of Q1 2023, representing a 6% quarter-over-quarter increase.

The submarket with the highest lease asking rates is $18.15 per square foot in the Doral region, next to Miami International Airport.

More specifically, higher-quality, larger warehouses are taking the lion's share of rental increases: Market data shows asking rates for industrial properties larger than 100,000 square feet spike over 43% between 2022 and 2023.

What's the Current State of the Miami Warehouse Market?

Miami's warehouse market has been faring well amidst a rocky economic climate over the past year. As of Q1 2023, vacancy rates had risen slightly to 3.2% while total annual absorption is 1.4 million square feet.

Between 2021 and 2022, average Miami warehouse rents jumped nearly 53%, making Miami the fastest-growing industrial rental market in the country. In Q1 2023, the Miami industrial market saw over 1 million square feet of leasing activity.

In other words, the Miami market is a great opportunity for businesses and investors looking for warehouses for sale. The city has over 6 million square feet of warehouse and flex industrial space under construction, meaning opportunities for buyers will be plentiful over the next few years as developers start delivering product inventory.

Is Buying a Warehouse for Sale in Miami a Good Idea?

Yes, buying a warehouse in Miami right now can be an excellent idea, both from a business and investor perspective. Miami's population is rapidly growing, and job growth is very high, so businesses can buy warehouses to take advantage of growing consumer demand.

Miami-Dade County also has a very business-friendly tax code, with no local personal or corporate income taxes. Right now, there's large demand for warehouse labor, which reflects high consumer demand. Based on data from Zippia, the total number of warehouse worker jobs in Miami nearly tripled between 2022 and 2023.

Moreover, the industrial real estate scene in Miami is one of the strongest in the country, meaning businesses and investors can reasonably expect warehouse values to appreciate in the near future. Commercial real estate investors can deduct the following investment property expense from taxes: