South Florida’s retail market weakens in Q3

South Florida’s retail real estate market weakened in the third quarter, with negative absorption across the region and higher vacancies, according to a recently released report.

Broward County had its highest vacancy rate since the third quarter of 2017 and a record high negative absorption rate, according to a report by Colliers International.

Miami-Dade’s vacancy rate tied with the record in 2018’s fourth quarter, and asking rents fell slightly, according to the report.

It’s an industry that dealt with government-mandated closings early on in the pandemic.

Here are other insights from the retail report.

Miami-Dade

Miami-Dade County saw the lowest vacancy rate among the three counties, at 4.5 percent for the quarter. That compares to 4.3 percent in the second quarter and the third quarter of 2019.

Downtown Miami had the highest vacancy rate in the county, at 21.5 percent. West Miami had the lowest, at 2.2 percent.

The county’s average asking rents were the highest in the region, at $35.93 per square foot, down from $36.11 per square foot the prior quarter and $38.80 per square foot in 2019’s third quarter.

The highest average asking rent in the county was in Miami Beach, at $76.64 a square foot. The lowest was in Miami Lakes at $22.55.

Miami-Dade had the most retail under construction during the quarter: 1.9 million square feet, the same as the prior quarter. Most of the construction was in Miami Beach, with 409,000 square feet.

The county had negative absorption of 120,934 square feet in the third quarter, down from negative absorption of 202,502 square feet in the second quarter. Thatcompares to positive absorption of 464,100 square feet in the third quarter of 2019.

Among the top sales in the county, two were for shopping centers, one was for a storefront, one was for an auto dealer and one was for a freestanding retail property. Four were in suburban markets and one was in the central business district.

The Taurus Investment Holdings purchase of Civica Center in Miami’s Health District, for $26 million, was the top sale of the quarter.

Amped Fitness Doral signed the largest lease of the quarter, 28,000 square feet at 818 Northwest 12th Street in Dania Beach.

Other notable leases included Happy Floor’s 11,000-square-foot lease at 180 Northwest 183rd Street in Miami; CANO Health’s 6,300 square feet at 11241-11381 Southwest 40th Street in Miami; Pilo’s Street Tacos for 5,000 square feet at 158 Northwest 24th Street in Wynwood and Marlen Cruz’s 4,800 square feet at 3800 Northwest 12th Avenue in Miami. All the leases were new.

Broward

Broward County saw the lowest average asking rent in the region, at $22.04 per square foot, down slightly from $22.22 in the prior quarter and $22.84 in the third quarter of 2019.

The highest average asking rent in Broward was in the southwestern part of the county at $32.44 per square foot The lowest was on Commercial Boulevard at $16.50 per square foot.

The vacancy rate was 5.1 percent, up from 4.7 percent in the second quarter and 4.1 percent in the third quarter of the previous year.

Broward had a record high negative absorption rate for the region, at 298,000 square feet, higher than the 199,000 square feet of negative absorption in the second quarter and 47,000 square feet of negative absorption in 2019’s third quarter.

The largest negative absorption was in Southwest Broward at 116,000 square feet. The largest positive absorption was in Pompano Beach at 51,000 square feet.

The county had the lowest amount of delivered retail space, at 33,000 square feet. All of that was in Pompano Beach.

The largest lease signed in the quarter was House of Teak for 16,000 square feet at 1920-1934 Stirling Road in Dania Beach.

Other notable leases include O’Reilly Auto Parts for 8,000 square feet at 2711 West Sunrise Road in Fort Lauderdale; A2L’s 6,000 square feet at 443-453 South State Road 7 in Plantation; Cilantro Asian Bistro’s 6,000 square feet at 11290-11584 West State Road 84 in Davie; and Pines Restaurant’s 5,200 square feet at University Marketplace at 8030-8384 North Pines Boulevard. All the leases were new.

Palm Beach

Palm Beach County had the highest vacancy rate of the three South Florida counties at 5.2 percent for the third quarter. The vacancy rate was 4.8 percent the prior quarter and 4.3 percent in the third quarter of 2019.

Boca Raton East had the highest vacancy rate within the county, at 8.8 percent. The West Palm Beach central business district had the lowest, at 0.8 percent.

While all three counties had negative absorption during the quarter, Palm Beach County had the lowest amount, with 49,000 square feet. The county had 260,000 square feet of negative absorption in the prior quarter and positive absorption rate of 329,000 square feet in 2019’s third quarter.

Most of the negative absorption during the quarter was in Boca Raton West, at 78,000 square feet. Delray Beach had the highest positive absorption rate in the county, at 151,000 square feet.

The county had most of the region’s newly delivered retail space, with 223,000 square feet, all tied to Grieco Automotive Group’s dealership at 2703 South Federal Highway in Delray Beach.

Palm Beach County had the least amount of retail space under construction, at 580,000 square feet. Most of that was in Delray Beach, with 171,000 square feet.

The largest sale of the quarter was Spirit Realty Capital’s purchase of an auto dealership portfolio — in both Broward and Palm Beach counties — for $80 million. Two of the largest sales were for auto dealers, one was for a restaurant, one was for a freestanding retail property and one was for a shopping center.

The largest lease in the county was 13,000 square feet signed by Guitar Center at Linton Commons in Delray Beach.