Lee & Associates South Florida Q1 Report: Industrial Stabilizes as Retail and Office Fundamentals Remain Strong
Industrial
South Florida’s industrial vacancy increased to 6.3% in Q1 2026, up from 5.3% one year prior, while average asking rents climbed to $17.51 per square foot triple-net (NNN).
"South Florida’s industrial market entered Q1 2026 in a continued phase of stabilization, with vacancy rising to 6.3% and absorption remaining negative as recent deliveries are worked through. While overall sales activity has slowed from prior peaks, recent institutional portfolio trades in Broward County show there is still strong demand for well-located product. Rent growth has started to level off, and tenants are taking longer to backfill space, though continued growth in cargo volumes at MIA (up roughly 13% year-over-year) reinforces the region’s role as a key logistics hub and supports long-term demand."
- Conner Milford, Senior Vice President at Lee & Associates South Florida
Retail
Retail fundamentals remained among the strongest in the country, with vacancy holding near historic lows at 3.5% despite a modest pullback in absorption. Average asking rents increased to $36.00 per square foot NNN.
“Across the tri-county region, retail fundamentals remain among the strongest in the country, driven by population growth, tourism, and limited developable land. Over the trailing 3-month period, the market recorded negative net absorption indicating a modest pullback following several years of aggressive tenant expansion. This contraction is not indicative of weakening demand, but rather reflects limited available inventory and tenant consolidation in select categories. Average asking rents across all of South Florida reflect continued upward pressure driven by limited availability and strong tenant demand. Vacancy remains historically tight at ~3.5%, reinforcing landlord leverage across most submarkets. High-performing corridors and grocery-anchored centers are effectively fully leased, with little to no functional vacancy and average sales pricing at approximately $423 PSF."
- Stephen DeMeo, Principal at Lee & Associates South Florida
Office
South Florida’s office market continued to demonstrate long-term resilience, with vacancy stabilizing at 8.6% while average asking rents rose to $40.98 per square foot NNN.
“South Florida’s office market continues to demonstrate long-term resilience, underpinned by sustained population in-migration, capital inflows, and severe land constraints. While vacancy has stabilized in the mid-8% range and absorption has moderated in recent quarters, fundamentals remain healthy relative to national benchmarks. Class A assets, particularly in core CBDs like West Palm Beach and Miami, are capturing outsized rent growth, with trophy product pushing well into triple-digit rents. Capital markets activity shows renewed momentum, with pricing rebounding and cap rates adjusting to a higher-rate environment. Looking ahead, disciplined development and evolving tenant demand should continue to support durable performance across the region."
- C. Todd Everett, SIOR, Principal at Lee & Associates South Florida
Multifamily
South Florida’s multifamily sector remained steady in the first quarter, with vacancy holding at 6.5% and average rents increasing to $2,289 per unit.
"South Florida’s Multifamily sector once again showed positive or at least resilient signs across most metrics. Vacancy rates remained steady and were much lower than national averages, asking rents rose and cap rates on sales moved down significantly quarter over quarter. With continued uncertainty surrounding the recent activity in the Middle East, as well as higher fuel prices exacerbating the already high costs for pretty much everything involved in development and building operations, continued growth will be tempered. But South Florida remains one of the most desirable markets in the world, and as companies continue to move into the area, lured by a favorable business climate and lower taxes, jobs will follow."
- Todd Cohen, Principal at Lee & Associates South Florida
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