New Industrial Supply Pipeline.

The Pipeline Is Contracting.

For the second consecutive quarter, the Tri-County industrial construction pipeline contracted. 4.2M SF is under active construction as of Q1 2026, down from 4.5M SF at year-end 2025 and a cycle peak of 5.2M SF in Q2 2024. The decline reflects two things: deliveries are still outpacing new starts, and the new starts that are happening have a meaningfully smaller average size than 2022–2023 vintage starts.

The contraction is healthy for the medium-term outlook. The supply pressure that drove vacancy up over the past four quarters is structurally peaking. We expect under-construction inventory to settle near 3.5M SF by year-end as remaining 2024–2025 starts deliver and the 2025–2026 starts come in below the deliveries pace.

Where It's Landing.

Q1 deliveries were concentrated in Miami-Dade and Broward, accounting for 67% of new product hitting the market. The geographic skew matters: Miami-Dade and Broward have been the primary destinations for institutional spec product, while Palm Beach and the Treasure Coast remain meaningfully undersupplied relative to demand.

Pipeline by county and segment

Pre-Lease Rates Are Slipping.

Pipeline-wide pre-lease rates fell to 31% in Q1, down 4 percentage points from Q4 and well below the 58% reading at the cycle peak in early 2024. Spec product is hitting a more skeptical tenant environment — tenants have more options, more leverage, and more reason to wait.

The submarket dispersion in pre-lease rates is meaningful: Palm Beach pipeline is 38% pre-leased, reflecting strong underlying demand against limited new supply. Treasure Coast is at 21%, where smaller projects are leasing more slowly to a more local tenant base. Miami-Dade sits at 28% — the lowest reading in over five years.

The Small-Bay Anomaly.

The most important detail in the entire supply dataset isn't in the headline numbers — it's in what's missing. Small-bay construction starts (5,000 to 25,000 SF multi-tenant flex and warehouse) totaled essentially zero across South Florida in Q1 2026. We tracked four small projects under 50,000 SF starting construction in the quarter, all built-to-suit for known users.

There is no spec small-bay pipeline. There hasn't been one in any of the last six quarters. The reasons are structural and durable:

• Construction lenders won't underwrite spec multi-tenant. The unit economics are too small, the lease-up risk is too distributed, and the senior-debt sizing math doesn't work for this product type at current rates.
• Institutional equity capital won't deploy operating capacity into a segment that requires 12+ tenant relationships per asset. The overhead screens institutional sponsors out.
• Local owner-operators who could theoretically build the product are largely sitting on existing inventory and watching the supply imbalance work in their favor.

"Big-box developers are still building into a softening tenant environment. Nobody is building small-bay at all. That's not a market — that's a structural supply shortage."

Implications for Vacancy & Rents.

Our base case for how the pipeline plays through:

• Aggregate vacancy peaks near 7.4% in Q2 or Q3 as remaining 2024-vintage spec product delivers. Then settles back below 7% by year-end as absorption catches up to the slowing delivery pace.
• Spec big-box rent concessions widen. We're already seeing 4–6 months of free rent on 10-year leases in the most exposed Miami-Dade submarkets. Q2/Q3 deliveries will face a tougher tenant environment.
• Small-bay rents continue to grow at 6–8% YoY, decoupled entirely from the aggregate pipeline dynamics because there is no aggregate pipeline in this segment.
• 2027 supply environment is tightening visibly. If new starts continue at their current ~700k SF quarterly pace, under-construction inventory falls below 3M SF by Q3 2026 and aggregate vacancy is structurally back below 6% by end of 2027.