Interior of Aventura Mall (Credit: Wikimedia Commons, Pixabay)
Who says brick and mortar retail is dead?
More than 2.8 million square feet of retail space are projected to be delivered this year in South Florida. And in Miami-Dade County alone, about 1.8 million square feet will open by year’s end, including several shopping centers that are more than 100,000 square feet, according to a report from Marcus & Millichap.
While traditional retail stores across most of the U.S. struggles to remain viable, and large retailers are downsizing their space from e-commerce pressures, in South Florida, the retail market seems to be doing well with growing rents and low vacancy rates. The report suggests that retail demand will continue to remain strong in South Florida as the local unemployment rate remains low and travelers recognize the region as haven for luxury shopping.
In 2018, vacancy rates for retail are projected to be 4.2 percent in Miami-Dade County, 3.4 percent in Broward County, and 3.8 percent in Palm Beach County.
The report also projects rents to increase to $37.40 per square foot in Miami (4.9 percent year-over-year), $22.50 square foot in Fort Lauderdale (2.8 percent year-over-year), and $24.65 per square foot in West Palm Beach (6.5 percent year-over-year).
Single tenant properties, as compared to multi-tenant properties in all three markets are seeing the biggest uptick in rents, according to Marcus & Millichap.
In Miami-Dade, average rent at single tenant properties rose 9.9 percent in the first quarter of 2018 compared to the same period last year, to $37.03 per square foot. Meanwhile, multi-tenant space recorded a 5.2 percent rise, to an average of $34.56 per square.
Demand was greatest in the Miami Airport submarket, where net absorption totaled 491,000 square feet, followed by Aventura with net absorption of 317,000 square feet.
In Fort Lauderdale, single-tenant space recorded a 6.6 percent increase to the average asking rent, rising to $23.31 per square foot in Q1 2018 on year over year basis. The multi-tenant segment increased 1.3 percent, ending the first quarter at $19.56 per square foot.
West Palm Beach saw the biggest increase in single-tenant rent in South Florida. The single-tenant segment rose 15.1 percent to $24.52 per square foot in Q1 2018, on a year-over-year basis. Multi-tenant space was up 0.6 percent to $22.09 per square foot during the same time period.