2023 Year-In-Review | Vaught Hurrell Team

Year-In-Review

Prepared by Your Colliers Vaught Hurrell

Industrial Team

Central Florida Leasing Division

THANK YOU

To Friends, Family, and Business Partners

While many would say 2023 is a year to forget, our team would disagree. Internally, we recruited and added top tier talent. Existing team members were forced to learn news things and grow in new directions because of changing macroeconomic challenges and market fundamentals. Mentorship was witnessed up and down the hierarchy of our business as we learned best practices from new and existing team members. You all faced challenges that had not been seen in the last decade, requiring new ways of executing business. The factors we worked through together last year will make us all better in the years to come.

As we kick off 2024, the tone of our team is cautiously optimistic. While we do not view the turn of the calendar year as the sole reason for renewed optimism, our current view is a result of hyper-attention to every aspect impacting our business – treasuries, international conflict, an election year, construction pricing, port volumes, availability of debt and equity capital, user demand volumes, consumer spending levels, along with many other variables.

As the world around us continues to evolve, our commitments for 2024 remain the same. We will continue to recruit and retain top talent within the industry. We will use a “white-glove” service approach in everything that we do. We will outwork and outperform our competitors. We will always strive to exceed your expectations. Our team is in this game with you all for the long haul.

Once again, thank you. May we collectively have a successful 2024.

Robyn Hurrell

Harrison Pithers

Ryan Vaught

Jimmy Ullrich

Mike Macchia

Riley Vaught

Your Central Florida Industrial Leasing Team

Your Southeast Industrial Capital Markets Team

A Year of Stabilization

4.5% Vacancy Rate

796K SF

Net Absorption

3.48M SF

Under Construction

$9.50/SF

Average Direct Asking Rate NNN

NEW PROJECTS ANNOUNCED

Proposed

Submarket Property Name Developer

East Tampa Crossroads Industrial Center East EastGroup Properties

East Tampa Florida Central 75 Distribution Center - Phase II Pattillo Industrial

East Tampa 4Ward Logistics Center Scannell Properties

East Tampa Lakeview Industrial Park Richland Capital Holdings

East Tampa Tampa Regional Industrial Park Stag Industrial

Greater Ocala Trailhead Logistics Park - Phase II Transwestern Development

Pasco 75 Logistics at Double Branch Columnar Investments

Polk 0 Coronet Road EastGroup Properties

Polk Park 570 Lincoln Property Company

Polk 2800 Henderson Way Link Industrial

Polk County Line Crossing Robinson Weeks

Polk 3900 County Line Road The Ruthvens

Polk 4040 County Line Rd Bellagio Property Management

Polk Hamilton Logistics Center Summit Real Estate

Polk County Line South (CLS) Logistics Center Stonemont Financial

Polk Southern Oaks Business Park - West Phase The Sudler Companies

Polk Lakeside Logistics - Phase III & IV Foundry Commercial

Polk CenterState Plant City Brennan Investments

Polk Lakeland Main Street Ridgeline/Mitchell Dev/Cabot

Polk Cornerstone Industrial Center TBD

Polk I-4 Plant City Logistics Center Seefried/Clarion

Sarasota/Manatee Port Manatee Logistics Center Barron Collier

Sarasota/Manatee 7725 Fruitville Rd Benderson Development

YEAR-OVER-YEAR LEASING VELOCITY

Slowdown of Leasing Velocity

Contrary to what the market is saying, the statistics don’t support a major slowdown in 2023 for users occupying over 50,000 SF. When analyzing the data set of leases over 50,000 SF signed in 2022 against the replica data set for 2023, our overall transaction volume – by count of total leases signed – is very comparable. However, the average size deal decreased by 43%, which supports the thesis that the mega-bulk sector slowed dramatically.

However, when we analyze the two years for leases smaller than 50,000 SF the data demonstrates an approximate 15% slowdown in deal velocity, emphasized by the average size remaining almost the same year-over-year. The market saw a 14.1% decrease in total transactions by count and 15.9% decrease in total square footage of leases executed.

DELIVERIES IN 2023

100,000 SF & Greater

7,799,684 SF

29.4%

1,522,607 SF

Total SF of Spec Development Completed of Spec Developments Leased within Delivery Year of Delivered BTS Projects

LAND ACQUISITIONS

Historically Low Land Acquisitions

When 2022 ended, the market was exiting out of a record year and entering a year of continued high construction costs coupled with an exceptionally volatile interest rate environment that significantly impacted the capital markets. The market experienced a multitude of sites falling out of contract at acquisition prices that no longer made sense, however there were a few sites that withstood the volatility of 2023.

2023

2023

2023

Analyzing the Central Florida Submarkets: Summary of Leases Signed Over 50,000 SF

Airport

2 Transactions | 302,980 Total SF

East Tampa

22 Transactions | 2,178,539 Total SF

Pasco County

2 Transactions | 154,059 Total SF

Pinellas County

4 Transactions | 339,358 Total SF

Polk County

25 Transactions | 4,151,393 Total SF

Sarasota & Manatee

1 Transaction | 55,234 Total SF

Historically the best performing submarket with respect to vacancy, rent growth, and barriers to entry. The minimal volume of transactions can be directly tied to few remaining development sites.

East Tampa proves to see stable demand and a correlating supply pipeline to match as the market expands both north and south along the I-75 corridor. Rent spreads between Class A and Class B product continue to tighten as location trends as a priority over quality.

This submarket is recognized as one of the fastest growing bedroom communities in Florida, with very few historical industrial projects. Gaining state-wide attention, Pasco has been home to some of Central Florida’s largest BTS projects – namely the 1.4M SF Target Distribution Center built in 2023 by NorthPoint Development.

Pinellas is a very slow-velocity leasing market with demand traditional solely focused on this sole geography (rarely overflow from Hillsborough County); however remaining development sites are far and few between which helps to accelerate rent growth.

Predominantly the active submarket for users seeking over 100,000 SF, Polk has become a focus for both Central Florida distribution efforts (Tampa Bay MSA east through Orlando MSA) and statewide distribution efforts for occupiers seeking to service Florida as its own supply chain.

These counties have historically been dominated by two local developers –Benderson Development and Harrod Properties. 2023 brought a flurry of new deliveries that appears to be massively outpacing demand.

Largest Lease in Central Florida

Vacant Shell Owned by CBRE IM

Lakeland, FL | 530,000 SF

THE MEGA-BULK DEMAND THE LOGISTICS TRIANGLE

Analyzing Demand Over 250,000 SF

We compared 2023 leasing velocity of leases 250,000 SF & greater to that of 2022 and, as predicted, the total transaction volume decreased by 59% by total count and 53% by total square footage. In this combined data set of 31 transactions in a 24-month period, only two leases surpassed a million square feet (Target for 1.4M SF and Lowes for 1.2M SF), further demonstrating that occupiers requiring over 1M SF in Central Florida will gravitate towards a custom solution.

Summary of Leases Signed Over 250,000

*Above statistics reflect Q1-Q4 across Tampa Bay MSA (inc. Sarasota/Manatee/Pasco), Polk County, Marion County (Ocala), and the Orlando MSA.

2023 MEGA BULK LEASE TRANSACTIONS

Florida Central Park

Market: Polk

Signed: 2023 Q1

Size (SF): 448,500

Type & Year Built: Renewal | 2001

Ocala Logistics Center

Market: Ocala

Signed: 2023 Q4

Size (SF): 350,899

Type & Year Built: New | 2022

Key Logistics Center - Bldg 100

Market: Polk

Signed: 2023 Q4

Size (SF): 330,200

Type & Year Built: Renewal | 2018

I-4

Logistics

Park - Bldg 100

Market: Orlando MSA

Signed: 2023 Q2

Size (SF): 984,960

Type & Year Built: New | 2023

Turnpike Logistics Center

Market: Orlando MSA

Signed: 2023 Q4

Size (SF): 977,441

Type & Year Built: New | 2023

Horizon West Logistics Park

Market: Orlando MSA

Signed: Q1 2023

Size (SF): 291,875

Type & Year Built: New | 2023

Firstpark at Bridgewater

Market: Polk

Signed: 2023 Q2

Size (SF): 400,000

Type & Year Built: Renewal | 2006

CenterState

Logistics Park

Market: Polk

Signed: 2023 Q4

Size (SF): 530,000

Type & Year Built: New | 2021

Florida Central Park

Market: Polk

Signed: Q2 2023

Size (SF): 367,254

Type & Year Built: Renewal | 1999

Analyzing Supply Over 500,000 SF

While the overall decrease in leasing velocity provides for some concern, the development pipeline reacted with caution in 2023 and we saw many projects pivot marketing strategies to chase build-to-suit opportunities versus igniting speculative construction. However, the spike in vacancy statistics shows this cautionary reaction likely came slightly too late. As of year-end, there are ten buildings across the greater Central Florida region that are available or under construction over 700,000 SF – nine of which are still under construction or delivered in 2023.

HOT TOPICS

1

2

Annual Rent Escalations Continue Growth

Despite rental rate growth continuing, the growth of annual rent escalations continues to trend towards a market standard of 4.0% over the historical 3.0% standard. Furthermore, over 13% of leases executed exceed annual rent escalations over 4.5% while only 1.9% of leases executed resulted in an annual rent escalation below 3.0%.

Tenants Prioritize $/SF Over Core-Infill Location

As rates continue to climb in core in-fill markets such as the Airport and East Tampa, Tenants are becoming more receptive to shifting operations to non-proven or emerging markets. This year alone, we saw two sizable tenants relocate from core-infill East Tampa locations to get more bang for their buck. See comps below:

Tenants Prioritize $/SF Over Core-Infill Location

Throughout 2023, especially Q3/Q4, the Tampa market for Class A/Class B product underwent a dramatic shift in asking rates. In East Tampa alone, Colliers reported a range of $6.50 - $9.50 for industrial product asking rates in Q1, unexpectedly growing to $8.50 - $11.00/SF by the end of Q3. While there’s no question that rates can increase over a 9-month period, a growth rate of 14% - 24% is tough to justify to Tenants and sustain from a long-term standpoint. As a result, our team begin to see Tenants grow increasingly frustrated with the higher rates/escalations and begin to consider alternative class of product & locations. Towards the end of 2023, it became apparent that the Industrial hockey stick was over, and the more-aggressive Landlord’s were beginning to pull back. The pull back of 5% escalations, self-countered proposals & comped deals at $1.50-2.15/SF lower than quoted rents began to emerge, hence the stabilization in effect. While it is easy to view as a negative, we believe this stabilization and normalization of rates will have a positive long-term effect on the market, as it creates a more transparent and streamlined process for all parties.

County Line Distribution Center

CENTRAL FLORIDA THE TENANT PROFILE

Key Findings

• Heaviest concentration of deal velocity (count of leases signed) is in the ‘Retailer’ industry which includes all e-commerce related uses – 23.8% of total deal count

• Highest total volume of deals (sum of size) is in the ‘Building Supply & Construction’ industry that includes roofing, plumbing, cabinetry, flooring, etc. – 25.9% of total lease volume (SF)

• Logistics & Transportation rank 3rd by both total deal count (21 leases) and total lease volume (2,357,070 SF) of deals signed; this includes third-party logistics (“3PL”) and commercial/residential moving occupiers.

• By total deal count, 5.2% were categorized in the ‘Energy’ industry related which includes solar related, battery operations, and recycling.

• Manufacturing related users, in the Tampa Bay market, are still far and few between – 3.8% of total lease volume (SF)

• When exploring this same data set by County, Hillsborough County proved to be the most diverse with leases signed in twelve of the thirteen industries identified (missing an auto-related).

• The ‘Building Supply and Home Related’ industry can be found in every major County.

Total Square Feet by Industry

Hillsborough

Pinellas

Polk

Manatee

Sarasota

Pasco

PROJECT HIGHLIGHT

Double Branch | 965+ Acre Mixed Use Development

Double Branch Pasco County is a master planned development located at the south-east quadrant of I-75 and State Road 52; providing immediate access to one of Florida’s most utilized elevated highways which drives the state’s logistics and transportation.

The entirety of the development is entitled to 1,600 multifamily residential units, 1,440 residential townhomes, 650,000 SF of restaurant and office space, 300 hotel beds, a 30-acre health campus and 4.5 million square feet of planned industrial. Double Branch is expected to create 6,000 jobs in Pasco County and have a projected economic impact of $600 million.

Our leasing team was fortunate enough to attend the ground-breaking ceremony, held in October, 2023; alongside Mike Wolf, Senior VP of Columnar Land, and Daniel Traylor, Managing Principal at Traylor Capital, who both spoke at the event.As news stations swarmed and the project “officially broke ground”, the successful ceremony and robust attendance is a testament to how supportive and excited Pasco County and our leasing team is to see this come out of the ground in the near future.

75 Logistics at Double Branch

Entitled for up to 4.5M square feet of total indsutrial and accommodating occupiers requiring 30,000 SF to 3,000,000 SF, Columnar are actively clearing 2,000 yards of dirt per day in preparation for this multi phase & asset class development.

With full entitlements in hand, design complete, and permitting in for approvals, 75 Logistics ntends to begin Phase 1 of their speculative industrial development in Q2 2024. The totality of Phase 1 encompasses 5 total industrial buildings. Columnar is kicking off Phase 1 with Building 2, a 202,708 SF rear-load warehouse equipped 41 dock-high doors and a SF speculative office. Both buildings 3&4 will shortly follow, with the aim to deliver all three simultaneously.

From an industrial perspective, Pasco county has been dubbed Tampa’s “Emerging North”, as occupiers continue to shift northward along the I-75 corridor. With a large emphasis on Life Sciences, Manufacturing, and Healthcare, the industrial portion of the Double Branch development will be able to cater to a variety of different users looking for a footprint in Pasco County.

Kicking Off Construction in Q2 2024

OUR GROWING TEAM

Leasing & Southeast Capital Markets

2023 presented an opportunity for strategic growth of our team, allowing us to double in size and add six incredibly talented individuals to the team, each with a very diverse and complementary skillset.

If you could have a 2nd home anywhere in the world, living your current lifestyle, where would it be?

QUESTIONS

If it didn’t impact the course of history, what year (or decade) would you timetravel to for a month?

If the commercial real estate industry vanished today, what career would you consider pursuing?

Central Florida Leasing

Executive Vice President

Central Florida Leasing

Aspen, CO 1980s

Event/Wedding Planner

Associate

Central Florida Leasing

New York, NY

Mesozoic Era

Professional Soccer Player

Southeast Capital Markets

Executive Vice President

Southeast Capital Markets

Southwest Ireland 1776

United States Army

Executive Vice President

Southeast Capital Markets

The Tuscany Region of Italy Early 1950’s College Professor

Niagara-on-the-Lake, Canada 1970s

Corporate Trainer

Sr. Client Services Specialist

Central Florida Leasing

Ann Arbor, MI 1945 Event Planner

Associate

Southeast Capital Markets

Montana 1920’s Italian Restaurant Owner

Associate

Southeast Capital Markets

Lake Como, Italy 1969

Commercial Airline Pilot

Seaside, FL 2021 Event Planning

Chicago, IL 2080

Professional Golfer

Aspen, CO 1970’s

Something in Sports

ROBYN HURRELL

HARRISON PITHERS

EMORY LAY

RILEY VAUGHT

RYAN VAUGHT

MICHAEL MACCHIA Senior

JIMMY ULLRICH

BLANTON HAMILTON Research Analyst

LOGAN WELCH Research Analyst

DEBI STOLBERG

Sr. Client Services Specialist

JACLYN LOVE

Sr. Client Services Specialist

2023 TEAM HIGHLIGHTS

100+ Transactions Completed

41% Revenue Growth YOY

8 New Institutional Leasing Assignments

$30M+ Tenant Rep Transaction Volume

100+ Acres Acquired

3.5M+ SF in Capital Markets Transactions

HIGHLIGHT OF OUR YEAR

2023 Client Appreciation Event

Annually, our team hosts a Client Appreciation Event, with the aim of furthering our existing relationships with clientele both from a business and personal perspective. A two-day event, this provides our team the opportunity to thank our trusted clients, while also introducing them to like-minded teams and individuals across the nation and fostering collaboration. Just as we pride ourselves on our white-glove service to our clients daily, we pride ourselves just as much in fostering meaningful relationships outside of the office.

This year, we kicked off our outstanding event with an in-shore fishing tournament, splitting up into teams of 3-4 with the aim of catching the largest Trout, Redfish, or Snook. While Mike Wolf was under the impression it was a competition to hook the largest Pelican & others scared the fish away blaring music, the event was a smashing success with (Insert names) taking home the grand prize. Following our fishing expedition, we headed to the hotel to briefly refresh and head to a scenic happy hour on the St. Pete Pier. Pictured below. Great conversation & cocktails flowed while we watched the sunset and made our way to (Insert name) for dinner. To conclude our evening, the team toasted our most trusted clients over some great steak and fantastic wine, many thanks to wine connoisseur & GC Len Venckus.

We continue to thank our clients for your continued trust and business in this ever-changing environment, and we look forward to continuing to work together into 2024 and beyond. See you at next years event!

Client Outings and Team Events

OUR NOTABLE EVENTS

2023 Central Florida Industrial Summit

In the last week of April, the Colliers industrial offices within Central Florida hosted their third annual Central Florida Industrial Summit (“CFIS”). This one-and-a-half-day event is intended to foster and deepen relationships between our Colliers industrial brokers and the active ownership groups and developers in the region. Wednesday kicked off the conference with a golf tournament at Lake Jovita Golf Course, which was followed by a 100+ dinner at the rooftop of the Grand Hyatt, overlooking the Tampa skyline and Tampa Bay. The following day concluded the conference with a networking breakfast and forum moderated by Central Florida Market Leader, Matt Siegel.

SPONSORS INCLUDED

2023 Southeast Ladies in Logistics

Asheville, NC

17 Landlords/ Developers Represented

8 Southeast Colliers Industrial Leasing Brokers

The annual Southeast Ladies in Logistics, is a great use of time to catch up on the more macro trends related to the industrial market throughout the southeast and share insights on deals actively underway. This year, the two-day event was hosted in Asheville, North Carolina. It began with a welcome dinner in downtown Asheville, followed the next day by a tour of the Biltmore Estate, Biltmore Winery, and finished with dinner at the Biltmore’s Bistro.

SPONSORS INCLUDED

SAVE THE DATES

2024 Upcoming Events

MARCH 27-29 Colliers Southeast Ladies in Logistics

Charleston, SC

APRIL 24-25

Colliers Central Florida Industrial Summit Tampa, FL

MAY 6-9

SIOR Spring Event

Amelia Island, FL

MAY 20-22 Colliers L&T Supply Chain Conference

Toronto, Canada

SEPT 25-27

Colliers National Industrial Conference Chicago, IL

OCT 15-18

SIOR Fall Event

Hollywood, CA