Lee & Associates South Florida Q3 Report: Industrial Market Continues Softening, Retail Remains Resilient
Industrial
South Florida’s industrial vacancies jumped substantially in the third quarter, from 6.6% to 7.7% year-over-year. The average asking rent modestly increased from $17.09 per square foot triple-net (NNN) to $17.35 in the same span. Average closed sale price across the tri-county steadies at $224 PSF up from $201 PSF year-over-year.
"Q3 2025 delivered mixed trends across the South Florida region," said Lee & Associates South Florida Principal, William Domsky. "The average vacancy rate is up with a significant year-over-year increase. Despite the overall lower volume of deals, the rental rates continue to grow but at 2.8% on average down considerably from a high of 18% in 2022. Sales volume has moderated from the fervent pace of the years 2020-2023 but asking pricing continues to rise, now averaging $264 per square foot with limited available inventory. South Florida is a critical logistics hub, a gateway market to the world with direct access to a sizable and influential population. The market performs well above the U.S. average consistently with confidence over the years."
Retail
Retail vacancies inched up in the third quarter, from 3.1% a year ago to 3.4%. Average asking rents dipped year-over-year, from $36.51 per square foot NNN to $36.36.
“South Florida’s retail market remained resilient through Q3 2025, balancing steady demand with measured new supply," said Lee & Associates South Florida Principal, Stephen DeMeo. "The vacancy rate remained stable at 3.4%, flat quarter-over-quarter, and up slightly from 3.1% a year ago, while asking rents inched upward to $36.36 PSF-reflecting strong tenant retention and limited availabilities in prime higher end demographic corridors. Despite softer absorption and a recalibration in pricing, investor appetite remains intact, with cap rates compressing slightly as quality assets continue to trade in the $300-$350 per square foot range throughout South Florida. Developers are cautiously optimistic, with over 2.4 million square feet under construction, signaling long-term confidence in the region’s demographic growth and tourism-driven retail base."
Office
South Florida closed the third quarter of 2025 with an 8.3% office vacancy rate, which matched the vacancy rate from a year earlier. The average asking rent climbed year-over-year from $37.22 per square foot triple-net (NNN) to $39.19 per square foot.
“The South Florida offi ce market continues to demonstrate robust activity. Notably, the financial and medical sectors are exhibiting stronger growth," said Lee & Associates South Florida Principal, Elias Porras, SIOR. "Downtown West Palm Beach is experiencing significant expansion within its central business district, contributing to the overall 4.7 million sf of office space currently under construction across South Florida. Rental rates remain within the low-to-mid $100 per sf range in both Miami and Palm Beach CBDs. Meanwhile, sales price per sf has remained
stable and cap rates have compressed slightly, averaging 6.58%. The political environment continues to be a key factor influencing developments. South Florida is anticipated to benefit from increased population growth, especially as political dynamics evolve in the Northeast and Western United States."
Multifamily
South Florida’s multifamily sector also stayed flat in vacancies in the third quarter of 2025 at 6.5%. Asking rents increased year-over-year from $2,243/month to $2,264/month.
"The multifamily market in Q3 2025 continues its robust trajectory, with over 15,000 units absorbed and a steady vacancy rate of 6.5%, reflecting enduring demand for rental housing," said Lee & Associates South Florida Principal, Michael D. Hinton, CCIM. "Asking rents remain resilient, while sales prices per unit have surged significantly compared to last year, underscoring investor confidence. Major transactions highlight strong activity across Miami and South Florida, led by institutional and private buyers, as construction keeps pace with expanding inventory. 'The smart money is looking for the next cycle to kick off shortly, as the groundbreakings are usually planned 12-36 months prior.'"
INDUSTRIAL
MULTIFAMILY
OFFICE
RETAIL
