‘Sustained’ Demand For Industrial: BBX Logistics Properties' Mark Levy At Bisnow’s South Florida Event

While the national industrial vacancy rate sits at 3.9%, unstable economic conditions continue to worry lenders, investors and developers alike, causing a chain reaction of skepticism to spread throughout the sector. Because of this, demand has somewhat softened. However, it continues to be strong on a relative basis.

One market that is still on the upswing is South Florida.

This year, the South Florida industrial market closed Q1 with a 3.7% vacancy rate, below the national average. The market also has 13.3M SF currently under construction, a significant uptick from last year’s 10.4M SF.

The market is showing signs of growth and resilience, and BBX Logistics Properties, a South Florida-based infill logistics development company, is focusing on finding opportunities where others have not. Backed by BBX Capital Real Estate, BBX Logistics Properties understands the importance of quickly meeting the evolving needs of its clients and the industry at large, said the firm's president, Mark Levy.

“Given the team’s tenure in industrial real estate, we use a very specific set of analytics to seek out and analyze development opportunities,” Levy said. “While we remain bullish on the Florida market, we are in a period of transition where markets are normalizing and values are resetting. Given the sophistication of data intelligence, more attention will be given to investment fundamentals and sustaining long-term value.” 

Levy will be speaking at Bisnow’s South Florida Industrial and Logistics Summit, along with other local leaders in the South Florida industrial market, including Malcolm Butters, principal at Butters Group, and Erin Byers, executive vice president of industrial at Colliers, on June 15. Register here.

Bisnow spoke with Levy about what inspired him to speak at this event, the challenges the market is facing this year and the new trends that investors and developers should be aware of in South Florida.

Bisnow: What inspired you to speak at Bisnow’s South Florida Industrial and Logistics Summit? What topics will you cover? 

Levy: Bisnow does a great job of reaching a broad audience, so it is an opportunity to talk not only about all the work that BBX Logistics Properties is doing in the market, but to discuss more broadly the market opportunities and challenges that we’re observing. The logistics sector is an important component of the South Florida real estate landscape, and we appreciate the opportunity to add to the overall conversation.

At the event, it is important we focus not only on opportunities, but also how to effectively navigate challenges brought on by the current market uncertainty. We also will touch on how we are underwriting differently today and offer a forecast on rental rate growth, land values and how demand is evolving.

Bisnow: Can you tell us about the business plan you put in place at the launch of the business and what projects the firm has been working on?

Levy: We started the company with no pipeline, and have opted to build our deal flow by taking on challenges where others may not. The entitlement process takes time and has great inherent risk, and we're fortunate to have an experienced team to lead us through this complex process.

We are in the midst of entitlements on a number of projects in Broward and Palm Beach counties, as well as in the early stages in the Tampa and Orlando markets. We just received final approvals on an approximately 700K SF, three-phase project in Delray Beach, at U.S. 441 and Atlantic Avenue, which we plan to commence later this year. This project symbolizes our thesis of delivering best-in-quality logistics space in severely constrained, high-barrier locations. I've been very fortunate to have worked in multiple eastern U.S. markets, and as such, we also have a steady pipeline of interesting opportunities outside of Florida.

The firm is focused on properties that meet our defined criterion, and as I stated previously, we exercise tremendous discipline in our location analytics. It’s not just infill, per se, it’s a confluence of a series of factors that drive our decisions.    

We’re also focused on helping our customers create a better employee experience. The war for talent isn't easing. This involves focusing on amenities and quality-of-life elements. We also strongly believe in community benefits, and are laser-focused on ensuring we are integrated into the communities in which we build.

Bisnow: What are the long-term goals for BBX Logistics?

Levy: Our goal is to build an enterprise that delivers maximum value to our investment partners, customers and the community.

From a geographic standpoint, Florida presents opportunities few other markets do. We’ll focus on key markets throughout the state and will be opportunistic in other key growth markets such as Charlotte, North Carolina, and Texas. We’d be remiss not to enter the New York and New Jersey markets, as we are also convinced of the permanent drivers that exist there. What we won’t do is speculate on markets or build projects based on the theory of 'build it and they will come.' We will leave the market-making to others. 

Bisnow: What challenges are industrial investors and developers facing in South Florida? 

Levy: The basic challenge is land availability. We need to think about how we build projects in the future with respect to verticality and mixed-use orientation. This may also be exacerbated by Florida Senate Bill 102, which will reflect the ability for affordable housing to be constructed by-right on sites with an underlying commercial or industrial zoning.

We are also dealing with a paradigm shift — money has a cost, construction labor shortages are real, and supply chains will take years to correct. Due diligence is 'en vogue' again, and scrutiny and more comprehensive deal level analysis is back.   

Bisnow: What trends should investors and developers be aware of in the South Florida industrial market?

Levy: Redevelopment is the major trend across the board in South Florida. We are beginning to see some opportunities to repurpose obsolete office and retail assets. We will also see opportunities in redeveloping older industrial assets. Mixed-use is a growing component of this equation.

We're also focused on developmental impacts in the communities in which we live and work — both socially and environmentally. In South Florida, we need to become role models for how companies give back to their communities, as well as partnering together to build a better future. Environmental considerations are especially important, including how well a property is positioned to handle climate-related risks like rising ocean levels and extreme weather. We're conscious about seeking specific building certifications to limit our environmental footprint and operate at the highest standards to increase overall efficiency.

For more information on BBX Logistics Properties, please click here.

This article was produced in collaboration between BBX Logistics Properties and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.