Doral small-bay trade prices scarcity at $296 a foot

The $86 million Midtown Capital Partners paid for 14 Doral warehouses works out to $296 per square foot, a price that makes sense only against the vacancy split underneath it: small-bay space is running near 4 percent while larger warehouses run double that.

Connect CRE describes the seller as a longtime holder, and the ownership structure explains why the 300,000-square-foot portfolio survived as one block: many of the buildings were held in separate LLCs, with Martin Waas of Waas Realty handling leasing and management on a portion of them. The buildings range from 8,000 to 25,000 square feet, the oldest dating to 1973, and that LLC friction likely narrowed the field of buyers who could move on all 14 at once. Midtown was one of them.

Avison Young's Michael Fay and David Spillers, Industrial Advisors' Tommy Gil and David Olade, and Michael Waite of Miami Warehouse Real Estate represented the buyer, and the firm said tightening small-bay supply and demand from local businesses fueled investor interest and pushed rents higher.

At 4 percent vacancy, pricing power sits with these 8,000- to 25,000-square-foot buildings because local businesses are not footloose the way national tenants are and the landlord sets the rent. Midtown paid $296 per square foot for that scarcity rather than for speculative growth—the right end of the industrial market to be buying. That the buyer's side alone required five brokers from three firms shows how much coordination a 14-LLC portfolio demands, and the risk is that the 4 percent number drifts toward the big-box figure; if it does, the basis gets thin in a hurry.

Avison Young, which advised the buyer, had its own balance-sheet news this month: a second recapitalization in two years that, as this publication has argued, turned lenders into owners. The Doral trade is the brokerage's other line of work, but the two stories rhyme: capital is being selective, paying up where vacancy is tight. For Midtown, the bet is that Doral small-bay scarcity is durable. The 1973 building in the portfolio is the reminder that this is old, existing stock — and in a 4 percent vacancy market, that existing stock is exactly what a landlord wants to own.