Polk County's Industrial Real Estate: A Rising Star in Florida's Logistics Corridor

The industrial real estate market in Polk County is experiencing significant growth and transformation, making it a prime location for investors, developers, and businesses. Situated along the critical I-4 Corridor, Polk County's strategic location plays a pivotal role in the distribution of goods across Florida and beyond.

Key Market Statistics

Vacancy Rate: 8.7%
Market Asking Rent Growth: 7.7% year-over-year
12-Month Deliveries: 2.6 million square feet
12-Month Net Absorption: -260,000 square feet

Leasing Trends
Polk County's industrial market is heavily influenced by big-box leasing activities. However, there's been a noticeable decline in such activities over the past 18 months. In the first half of 2024, only one new lease exceeded 100,000 square feet. Notably, LifeScience Logistics leased a 422,000-square-foot facility at Dalfen Industrial's Midpoint Florida Logistics Center, accounting for over a third of the total leasing activity.

Despite the slowdown in large leases, significant renewals have bolstered the market. Key renewals include ParkSite's 175,000 square feet at Lakeland Logistics Center and PlayCore's 200,000 square feet across three buildings in Parkway Partner Park.

Construction and Development
Polk County has been one of Florida's most active industrial submarkets for new construction. Approximately 25% of its inventory has been delivered in the past decade, with 2.5 million square feet completed over the past year. This includes Tratt Properties' 1.2 million-square-foot speculative cross-dock warehouse in Winter Haven, which remains vacant, impacting the market's vacancy rates.

The slowdown in new leasing activities has led to a reduction in new construction starts. Currently, 650,000 square feet are under construction, with Stonemont Financial Group's 350,000-square-foot Lakeland Commerce Center Building 400 being the next significant project set to deliver.

Market Challenges and Opportunities
The Polk County industrial market faces challenges with its high vacancy rates, primarily due to new construction outpacing tenant demand. Of the 4.1 million square feet delivered since the end of 2022, 85% remains available for lease, including one of Florida's largest vacancies at Central Florida Logistics Park Building One.

However, Polk County's affordability remains an attractive feature. Industrial asking rates, currently at $8.80 per square foot, are the lowest in Central Florida compared to markets like Tampa and Orlando, which average over $12.00 per square foot.

Future Outlook
Despite the current challenges, the outlook for Polk County's industrial market remains positive. Asking rent growth is expected to return to pre-pandemic norms of 4% to 5% by 2025. As the market stabilizes and new developments lease up, vacancy rates are likely to decrease, offering more balanced supply and demand dynamics.

Conclusion
Polk County's industrial real estate market is at a crucial juncture, presenting both challenges and opportunities. Its strategic location, coupled with competitive rental rates, makes it an appealing destination for businesses and investors looking to capitalize on Florida's robust logistics network. As the market adjusts to recent developments, Polk County is poised to strengthen its position as a key player in the industrial real estate sector.

For more information on industrial real estate opportunities in Polk County, contact Zach Cichocki at NAI Realvest. Our team specializes in providing tailored solutions to meet your industrial real estate needs.