A flurry of grocery store-anchored shopping center deals is setting South Florida’s retail market on fire, fueled by investors seeking secure cash flow stability, experts say.
The most recent sales involve two retail properties in Broward County that sold for a combined $57 million.
“Grocery-anchored retail centers remain in very high demand from investors across the country, but specifically in high-growth Sun Belt markets, like South Florida,” Danny Finkle with JLL said via email. “It has been one of the best performing sectors over the past several years, and its outperformance through the pandemic has resulted in increased focus from investors, which in turn has driven pricing up for some.”
In Plantation, an affiliate of Barron Real Estate, founded by Charles Ladd, paid $38.4 million for Plantation Marketplace at 7023 West Broward Boulevard, according to a press release. The deal breaks down to $166 a square foot.
The seller, an affiliate of Miami Manager, a Sunrise-based real estate investment firm, paid $32.8 million for the property in 2015, records show. The retail center was built in 1979.
The 230,330-square-foot shopping center is anchored by a Food Fair store. Other tenants include Big Lots, CVS, Quest Diagnostics, Subway, Metro PCS and MD Now. At the time of sale, Plantation Marketplace was about 70 percent occupied, the release states.
In Deerfield Beach, JBL Asset Management, a Hollywood-based real estate investment firm led by Jacob Khotoveli, acquired Rivertowne Square at 1015 South Federal Highway for $18.7 million, according to a press release. The deal breaks down to $128 a square foot.
A JLL team led by Finkle and Eric Williams represented the seller, RPT Realty. It paid $8.6 million for the 13-acre property in 1996, records show. The retail center was built in 1980.
Rivertown Square is anchored by Winn-Dixie and Bealls Outlet, Finkle said. The 145,502-square-foot shopping center is 92 percent occupied, with other tenants including Hard Exercise Works, Nail Face Spa and Painting with a Twist. The deal also included two outparcels leased to Buffalo Wild Wings and Tijuana Taxi Co.
The sales of Plantation Marketplace and Rivertowne Square come on the heels of two other significant deals involving shopping centers anchored by grocery stores. In North Palm Beach, investors tied to the Ferreira construction and utility companies paid $36 million for Shoppes at City Centre, a 98,846-square-foot shopping center that is 96.8 percent leased and is anchored by West Marine and Doris Italian Market & Bakery.
In West Palm Beach, Publix paid $56.5 million for River Bridge Centre, a 299,781-square-foot retail site anchored by one of the Lakeland-based grocery chain’s stores. The deal also included nine outparcels. Publix paid $243 a square foot for the property.
Douglas Mandel, who led a Marcus & Millichap team that brokered the Shoppes at City Centre deal, said institutional investors tend to gravitate to grocery-anchored real estate assets because of the perceived tenant and income stability such properties offer.
“With the deal we just worked on, the buyers were looking for a generational hold,” Mandel said. “They liked this asset because of strong store sales and strong tenants. Grocers just bring a lot of traffic.”
Finkle, whose team also brokered the River Bridge Centre deal, said the pricing for grocery store-anchored retail properties has gone up in recent months. For instance, the $24.6 million sale in March of Shoppes at Palm Coast Plaza in West Palm Beach equated to $100 a square foot. That center is anchored by a Winn-Dixie.
In February, Shoppes at Cresthaven, another West Palm Beach shopping center anchored by a Presidente supermarket, sold for $20.7 million, or $120 a square foot.
“That being said, in many cases investors are still able to acquire these centers at prices that are below [building new ones],” Finkle said.
Claudio Mekler, founder and CEO of Miami Manager, said investor appetite for grocery store-anchored shopping centers remains strong despite higher interest rates and inflation.
“The economic uncertainty caused by inflation and rising interest rates is not yet hurting the valuation of grocery-anchored shopping centers like Plantation Marketplace,” Mekler said. “That may change in the fourth quarter.”