In our first chapter, we're going to be talking a little bit more in depth today about understanding the Miami industrial market- starting with the supply and demand trends in Miami Dade County today.

Now, it's no secret: if you've owned a property in Miami Dade County for the last 5, 10, 15, maybe even 20+ years, you've seen a distinct uptick in rental rates. If you go back to before 2008, things were chugging along at a steady clip. We took a major hit along with the rest of the country from 2008 to about 2012–2013, and then the rents started ticking up nicely once again. Along the way, we saw great rent appreciation…

It wasn't until we had the kind of black swan event of COVID that things really changed. As an example, I purchased a property in 2020—right before Covid, and when I put it under contract in 2019— I was figuring on $8/ft. rents. Today, 5 short years later, we're averaging over $20/ft. for that exact same property. So, in terms of rent appreciation, we've seen a very unprecedented time.

A big factor contributing to that was that Post Covid, a lot of people started moving in from other parts of the country: California, the Northeast—New York, New Jersey, Philly, etc. So, what we've seen is not only an increase in demand, but we've also seen that very few people are building—particularly small bay warehouses. If you're fortunate enough to own small bay warehouses, what you'll see is the rents just keep going up and up and up.

From an investor’s standpoint, there's nothing better than supply staying exactly the same and a serious increase in demand like we've seen the last four to five years. We've seen rents more than double in the last 5 years—more than we've seen in any previous 5-year period, and probably more than in most average 10- to 15-even 20 year periods.

Let's talk about cap rates, lease rates, and buyer types.

What we're seeing a lot of nowadays is cap rates are a bit compressed compared to where you can borrow money. As of the writing of this guide, you can borrow money conventionally for about 6.5%. But a lot of people are buying at cap rates not far off from 6.5–7%.

Typically, when an investor buys a property, if you're going to borrow money at 6.5%, you're going to want at least 1.5 to 2 points of spread—or 150 to 200 basis points—depending on the terminology you use above your cost of funds. This “Spread” allows for issues with vacancy, increases in property tax, insurance, etc.  It’s basically your “margin of safety” when buying the property so that you don’t get into trouble.  As such typically, you're going to need a spread of 1.5 to 2 points above your borrowing rate for the deal to make sense and for it to be worth the risk that is involved in acquiring it, operating and owning it.

What we're seeing is people are buying at a cap rate today—that may be  just slightly above their cost of funds-if not right at it. What they’re doing is buying something they believe will appreciate and tick up over the years.

Normally, in a regular market (Miami being a bit of an outlier)—in a secondary or tertiary market in the U.S.—you’d see: if you can borrow money for instance at 5%, people are selling at a 6.5% cap; if you can borrow at 6%, they're selling at a 7.5% cap and so on. Miami is one of the few markets where cap rates are a bit compressed in relation to the cost of funds.

In terms of lease rates, in the Doral–Medley area, we're seeing asking rents in the $19–$23 or $24 range. Most people are getting a little north of $20.

In the Hialeah market, as an example, we’ve seen around $19–$21 depending on the unit size. If you’re under 7,000–8,000 sq ft, you can get right at $20 per foot. If you're bigger than that, the rate is slightly lower due to economies of scale.

That’s what we’re seeing across the Airport vicinity: Airport East and Hialeah; Airport West being Doral and Medley. The sliver along the 72nd Avenue corridor is usually just slightly lower than the Doral market.

Now finally, buyer types.

There are several types of buyers entering the market. First, flight capital—as always. Whenever a foreign country sees a decline in their currency value, people look to denominate their money in U.S. dollars. Those folks will often pay more for a warehouse.

But here's the caution—something I’ve seen happen over and over: many sellers wait for what I call the “unicorn buyer”—that one-in-a-million buyer. Unfortunately, we don’t make the market. Unicorn buyers exist, but they’re the exception, not the rule. So if you are planning on retiring and slowing down the pace of your life, I wouldn’t wait for the “unicorn” buyer, because the reality is- everyone else is waiting for them too- and there are only so many out there.

Other buyer types include:

- Institutional buyers: For properties over 50,000 sq ft. These groups borrow money from others (pension funds, insurance companies, sovereign wealth funds, etc.)—usually cheaper than banks—and invest it. They can buy at lower cap rates than the average mom-and-pop investor.

- Mom-and-pop investors: Everyday people looking to make a return. They’ll borrow at 6–6.5% and need 1.5–2 points of spread for the deal to make sense like we discussed earlier.

- There’s also domestic flight capital—buyers from within the U.S. After Covid we saw a huge wave from the Northeast and California. In recent months ,we are starting to see individuals moving from the Northeast (like New York), in reaction to things like local politics. We’re still seeing a fair amount of people relocating to Florida. All of these buyers are a net positive for the Miami real estate market.

Let’s talk about why timing your sale is everything in this market.

Raise your hand if you remember 2008–2009. I remember it. I was managing 125 tenants at the time, and what followed over the next 3–5 years was one of the toughest times in the U.S. economy in the previous 75 years. I'm not saying that's going to happen again—but over a long enough timeline, cycles happen.

If you look at economic history since the Civil War, the average cycle is 18.6 years. If it's 2025 now and you go back 18.6 years, guess what? We were right at the peak around then.

So a lot of people are talking about a pullback. Things can’t go up forever. Just like in the stock market, there tends to be a retracement in value. So, if you’re considering selling in the next 1–3 years, I’d start moving that from a “back burner” to a “front burner” activity.

Why? Because we are due.

Think of it like this: it’s the end of October in Chicago. You see the leaves start to change color. You don’t know when the first snow will fall—but it will. Winter is coming. The question is: will you prepare your house before the snow comes, or will you wait to go buy a shovel after there is a blizzard?

Using that metaphor: if you're thinking about selling in the next 2–3 years, now is the time to start preparing. Nobody likes getting caught behind the eight-ball. Taking that idea a step further, one of the reasons the great Wayne Gretzky was so successful, is that he never skated to the puck… Since he was a young boy, he would watch hockey on TV and draw on a pad where the puck was going to be…

As an investor considering selling at Top Dollar, your best bet is get ahead of the market and make your move ahead of the curve (where the metaphorical puck is going to be).