In this edition of Berger Commercial Realty’s Broker’s Corner, Sales Associate John Forman shares how property owners can profit from their excess land.
With the Atlantic Ocean to the east and the Everglades to the west, the future of commercial land development in South Florida is defined by immutable natural boundaries. Despite robust demand for commercial real estate in one of the most sought-after and expensive commercial real estate markets in the country, South Florida has no more room for the type of sprawling expansion that is typical in high-demand locations. But as the saying goes, “Necessity is the mother of invention,” and growing businesses such as transportation and logistics companies, contractors and builders who need more space to store their equipment have taken a fresh look at what to do.
One of the most viable solutions is renting small or large lots of unused space, such as lots zoned for outside storage or retail and office buildings with excess parking spaces. Renters are often divisions of large national or international companies conducting business in South Florida and with no time to spare. For property owners, the benefits of leasing their excess land are significant.
Companies in need of space are often prepared to pay big bucks for access to open areas where they can keep vehicles, machinery and other equipment they need. The scarcity of available space creates an environment where renters, relieved to find the land they desperately need, are likely to pay their rent promptly and keep their leased space clean and functional.
Rents vary by location and the features of the land, such as surface quality, with paved lots renting at a premium over gravel or dirt lots. In this limited-supply, high-demand environment, we are seeing companies in need of storage paying $6,000 to $12,000 per month for one-acre lots. That’s between $1.65 and $3.31 per square foot, or $80 to $125 per parking space per month. Other property features that drive up rent include utility access (water and electric), fencing, signage, access to major highways, lighting, onsite security and surface quality.
Duration of such leases varies by land use and the renter’s business. We’ve seen companies rent month-to-month or for periods of five years or more. Typically, leases for utility vehicle parking are shorter term than leases for tractor trailer parking and open storage.
Regardless of the length of the lease or size of the lot, renting excess land is a lucrative and strategic opportunity for commercial property owners in South Florida. Rather than sitting on prime real estate that’s not yielding maximum income, the time is right to take advantage of the current owners’ market with assistance from Berger Commercial Realty. Contact John Forman at JForman@BergerCommercial.com or 954.652.2026 to discuss how you can monetize your excess land.
Broker’s Corner is a bi-weekly series where Berger Commercial Realty brokers share their commercial real estate insights.