Miami-Dade County's retail market continues to shine, demonstrating remarkable resilience in the face of changing dynamics. The region's retail sector maintains historically low vacancy rates, reflecting its attractiveness to retailers, while positive net absorption and robust retail sales underscore its adaptability and strength. In this blog post, we explore the current state of the South Florida retail market, leasing trends, challenges, and opportunities.
5 notable retail leases in South Florida during Q3 2023:
|
Submarket
|
Property Name
|
Property Address
|
Tenant
|
Square Feet
|
Landlord
|
|
Boca Raton West
|
Restaurant Row
|
5355 Town Center Rd
|
Fiolina Pasta House Boca Raton
|
7,000
|
PEBB Enterprises
|
|
Boynton/Lantana
|
Catalina Centre
|
1701-1797 N Congress Ave
|
Salons By JC
|
6,600
|
Roberts Equities, LLC
|
|
Brickell
|
Brickell City Centre
|
701 S Miami Ave
|
Motek
|
10,000
|
Northwood Investors LLC
|
|
Coral Gables
|
Miracle Mile
|
348 Miracle Mile
|
Eden Park Paris
|
5,702
|
Terranova Corporation
|
|
Delray Beach
|
Delray Corner
|
14802-14860 S Military Trl
|
Michaels
|
25,600
|
Berta Management of Florida Corp
|
These notable retail leases in South Florida represent a diverse range of submarkets, from the bustling streets of Boca Raton West to the vibrant culture of Brickell, each with its unique charm and appeal. The featured tenants, including Fiolina Pasta House Boca Raton, Salons By JC, Motek, Eden Park Paris, and Michaels, underscore the variety and vibrancy of South Florida's retail offerings. These leasing transactions exemplify the market's resilience and adaptability, even in the face of changing dynamics. By showcasing these leases, we aim to highlight the opportunities and challenges within the South Florida retail market, providing valuable insights for both investors and retailers looking to thrive in this dynamic region.
Market Overview
Despite a slight deceleration in leasing activity, South Florida's retail market remains a stronghold with historically low vacancy rates. The region's retail environment, particularly in Downtown Miami and Miami Beach, continues to thrive, attracting both residents and tourists with vibrant entertainment and outdoor attractions. Sales volume and pricing have experienced a temporary slowdown, but the market's resilience and appeal to a diverse consumer base remain unwavering.
Leasing Key Trends
The retail market in Miami-Dade County has maintained positive net absorption over the last 12 quarters, with a vacancy rate of around 3.0% as of Q3 2023. Looking ahead, vacancies are expected to increase slightly in Q1 2024 due to an elevated supply pipeline, concentrated in submarkets such as Miami Lakes, Downtown Miami, Northeast Dade, Coral Gables, and South Dade. However, Miami's retail vacancy rate is expected to remain the lowest in Florida, with anticipated absorption outpacing inventory additions.
Miami Submarket
Miami's retail submarket remains robust, with a low vacancy rate of 2.2%. Rents have steadily grown, and there's a minor expansion in retail space under construction. The submarket has seen an average price per square foot of $330, making it one of the most traded submarkets in the region.
Opportunity: Tenant Diversity
A notable trend in the South Florida retail market is the increasing presence of non-retail tenants. Gyms, co-working spaces, and medical practices are reshaping the brick-and-mortar retail landscape. These tenants not only generate off-peak traffic and reduce competition among retail tenants but also offer visitors a more immersive experience. Landlords benefit from increased optionality in tenant selection, enhancing the shopping center's overall appeal.
The result is a win-win-win situation, benefiting landlords, tenants, and visitors, and this trend is expected to continue as demand for space in top-tier centers increases.
New Format US Retailers
|
Store Type
|
Apparel
|
Home
|
Grocery
|
Drug & Beauty
|
Mass Merchant
|
Other
|
|
Larger stores
|
15.8
|
35.7
|
50
|
18.2
|
14.3
|
23.1
|
|
Smaller Stores
|
21.1
|
50
|
62.5
|
27.3
|
71.4
|
38.5
|
|
Stores in Different Locations
|
42.1
|
71.4
|
37.5
|
45.5
|
85.7
|
46.2
|
|
Automated Stores
|
31.6
|
28.6
|
75
|
36.4
|
28.6
|
23.1
|
|
Omni Channel Stores
|
57.9
|
78.6
|
62.5
|
90.9
|
71.4
|
53.8
|
|
New Layouts
|
47.4
|
42.9
|
62.5
|
45.5
|
57.1
|
46.2
|
|
New Technology Stores
|
15.8
|
50
|
37.5
|
72.7
|
28.6
|
15.4
|
This table showcases the changing formats US retailers are adopting. The flexibility in store size, the variety of products sold, and the locations are redefining the retail landscape.
Key Challenges
Despite the positive outlook, the US commercial leasing market faces significant challenges. These include uncertainties related to headcounts and space sizes due to changing work patterns, substantial interest rate increases disrupting capital markets, and the need for creative financing solutions. Higher interest rates are a top concern within the commercial real estate industry.
Key Takeaways
- Tenant Diversity: The South Florida retail market is evolving, with an increasing presence of non-retail tenants. This trend creates opportunities for landlords, tenants, and visitors, making shopping centers more immersive and appealing.
- Format Evolutions: Retail is becoming more flexible in terms of store size, product offerings, and locations. This flexibility empowers retailers to maximize the impact of each store and reach different audiences in premium locations.
- Migration: Understanding migration patterns allows companies to serve and develop relationships with recently migrated audiences, providing opportunities to address new needs.
- High Interest Rates: The commercial real estate market is closely monitoring interest rates, with their potential impact on financing and leasing decisions.
Miami Retail Capital Markets Statistics
Total Asset Value: $63.5B
12-Month Sales Volume: $1.5B
Average Market Cap Rate: 5.4%
12-Month Market Sale Price Change / SF: +4.7%
Miami Retail Real Estate Statistics: Leases, Sales, and Projects Under Construction – Q3 2023
In Q3 2023, Miami's retail market remains strong with a low vacancy rate and a growing presence of non-retail tenants. As the market evolves, retailers are embracing new formats and flexibilities to meet changing consumer demands.
Predictions for Q1 2024
The South Florida retail market is poised to maintain its resilience and continue attracting a diverse range of tenants. As the region evolves to meet changing consumer demands, the market is expected to adapt and thrive. This growth will be driven by the increasing presence of non-retail tenants, flexible store formats, and an overall positive outlook for the South Florida retail sector.
