South Florida retail landlords continued jacking up asking rents in the first quarter, as tenants entered a market with limited supply, according to commercial brokers and property owners.
In Miami-Dade, Broward and Palm Beach counties, retail tenants paid $2 to $3 more per square foot in the first quarter, compared to the same period of last year, according to a recent Colliers report. The vacancy rate in the tri-county region fell below 4 percent, better than pre-pandemic levels. However, a lack of available space and minimal new construction drove down net absorption across South Florida.
“Retail leasing has been very strong,” said Todd Nepola, president of Hollywood-based real estate investment and management firm Current Capital. “We have very few vacancies, and rental rates are holding up very well.”
Landlords are pushing up rents due to tight supply of retail spaces, especially restaurants, said Jaime Sturgis with Fort Lauderdale-based Native Realty. “We have new tenants coming from across the country competing with local players looking to expand,” Sturgis said. “They are fighting for the limited opportunities that are available.”
In the first quarter, Native Realty signed deals on behalf of clothing boutiques; an international beauty supply company that is entering South Florida for the first time; a holistic cold plunge provider and a high-end sneaker shop, Sturgis said. “Rents have gone up by 5 [percent], 6 percent, year-over-year,” he said.
Miami-Dade County
In the first quarter, the average asking rent in Miami-Dade County hit $43.89 a square foot, roughly an 8 percent hike from $40.67 a square foot during the same period of last year, according to Colliers. The vacancy rate remained flat, year-over-year, at 3.3 percent, compared to 3.4 percent during 2022’s first quarter. And net absorption was extremely low at 2,080 square feet in the first quarter, compared to 194,036 square feet absorbed during the same period of last year.
In one of the biggest retail leases signed during the first quarter, Greek restaurant Avra Estiatorio plans to open its second South Florida outpost in Miami developer Harvey Hernandez’s Lofty Brickell condominium project. Avra is leasing more than 10,000 square feet.
Broward County
The average asking rent in Broward County rose by 7.5 percent in the first quarter to $27.11 per square foot, compared to $25.20 per square foot during the same period of last year, Colliers’ report shows. The vacancy rate dropped to 3.9 percent from 4.5 percent, year-over-year. The county’s net absorption was 35,961 square feet in the first quarter, compared to 237,634 square feet during the same period of last year.
In February, Walgreens completed leaseback deals involving two of its stores in Broward. The national retailer sold a Walgreens in Plantation for $7.2 million, and a store in Weston for $6 million. Walgreens signed five-year leases for both.
Palm Beach County
The average asking rent in Palm Beach County hit $30.40 a square foot in the first quarter, a 12 percent jump from $27.11 a square foot during the same period of last year, Colliers found.
The vacancy rate tumbled to 3.4 percent from 4.1 percent, year-over-year. And the county experienced a net absorption of 135,365 square feet in the first quarter, compared to 456,061 square feet during the same period of last year.