Cigarette Boat Manufacturer Article

Logicar, a distributor of automotive accessories, expected its search for a larger warehouse in Miami-Dade County to take months. Instead, "it was done in three weeks," says Doug Armstrong, president of the Barbados-based company, which began operating out of the Miami area in 2002.

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Armstrong's experience is no anomaly. Though development of warehouses and offices has slowed county-wide, a construction boom in recent years has left Miami-Dade with an ample inventory of commercial buildings for lease.

"We have no shortage of inventory," says Richard Neve, senior vice president for The Hogan Group, a Tampa-based developer. The company built a complex of 14 office buildings near Miami International Airport, known as Waterford at Blue Lagoon. Tenants occupy million square feet of the two million square feet there, or 81 percent, "which is one of the lowest occupancy rates in the 16 years we've been here," Neve says.

Commercial vacancy rates throughout the Miami metropolitan area have settled into the mid-teens, according to commercial real estate broker CB Richard Ellis. Its research shows that, during the third quarter 2004, Miami-area vacancy rates stood at percent for office space (compared with percent nationwide) and percent for industrial space (compared with percent nationwide).

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Slower economic growth in Latin America diluted demand for Miami-Dade warehouse space among many international businesses, but not all of them. And for those in need of more space, the price and selection may be better in Miami than in other major cities in the Southeast with lower industrial vacancy rates, such as Houston (11 percent) and Tampa ( percent).

Miami remains a popular platform for doing business in Latin America because it is located so close to the region. But besides geography, the city has other assets as a distribution hub.

Miami was ranked No. 22 out of 331 US metropolitan areas on a list called "America's 100 Most Logistics-Friendly Metros," which was compiled by two trade magazines, Expansion Management and Logistics Today. The publications gave Miami high marks for the quality of its work force, air cargo infrastructure, and overall logistics and transportation climate.

Companies drawn to that climate include:

* Korean auto parts manufacturer Mobis Parts America, which decided to set up shop in Miami last year. A subsidiary of automaker Hyundai. Mobis announced in July that it would move into a 127,000-square-foot distribution center in the Miami area to serve Latin America and would create 30 new local jobs within three years of its arrival.

* Speed boat designer and manufacturer Cigarette Racing Team announced last year that it would move its main facility from northwest Miami-Dade County to a 100,000-square-foot building in Opalocka, where it is planning to make a capital investment of more than $ million and add 15 employees to its work force of slightly more than 100.

* Other companies are finding reasonably priced office space in Greater Miami. For example, Singapore-based Tanker Pacific Management established a regional headquarters in Miami last year to oversee North American and Latin American operations. The crude oil shipper moved into 4,000 square feet of office space and pledged to create 30 local jobs during its first three years in the Miami area. Alternative locations that Tanker Pacific considered included Houston, New York, and Stamford, Conn.

A boom in residential condominium development in Miami may be restricting commercial development by driving land prices higher. The median price that investors paid for commercially zoned land in Miami-Dade more than tripled during second quarter 2004, to $ per square foot from $ during the same period in 2003, according to a study by Miami-based realty firm Keyes Co.

For office developers, "the hard part here is that you compete with residential developers for land," says Edgar C. Jones, senior director of Florida operations for Rockefeller Group Development Corp.

One possible sign of a shift away from the residential construction trend may be a decision by local developer Alan Ojeda to build a 30-story structure as an office building instead of an apartment building, as originally planned. Ojeda will apply for a permit to switch the use of the planned structure on Brickell Avenue in Miami.

"I think it's going to take him [Ojeda] three years to deliver that building," says Peter Harrison, a Miami-based senior vice president for TransWestern Commercial Services, "and by then, we should be flat out of office space."

Office Market Snapshot: Yearend 2004

 Vacancy YTD Net Total
 Rate Completions Absorption Stock

Kendall/Dadeland % - 98,474 5,729,740

Coral Gables % 264,746 503,040 8,168,981

Miami Lakes % - 78,063 2,209,459

Downtown Miami % 163,000 61,832 8,747,791

Coconut Grove % - 56,639 1,582,587

Miami Airport % - 427,359 11,942,771

Aventura/North Miami % 70,000 7,506 1,701,708

Brickell % 260,000 401,384 6,134,319

Miami Beach % 40,000 34,776 3,403,948

Miami-Dade Total % 797,746 1,669,073 49,621,304

Source: Jones Lang LaSalle / Vacancy includes sublease.