South Florida’s retail market rebounded from the pandemic-induced slump in the first quarter, as vacancies fell and rents rose, with Miami-Dade outperforming Broward and Palm Beach counties, according to a recently released report.
Miami-Dade County had the lowest vacancy rate and highest asking rent of the three counties in the quarter, according to Colliers. Still, Broward and Palm Beach counties also experienced healthy demand, allowing for higher rents. And Broward’s vacancy rate hit its lowest point since the start of the pandemic two years ago, the report shows.
Yet, despite showing “great resilience” to the pandemic, the market could face new headwinds, Colliers warned. Inflation and marketwide disruptions caused by Russia’s invasion of Ukraine could send shockwaves to South Florida retailers and landlords. The gas price hike and lack of government stimulus packages now, unlike during the pandemic, also could play a role, according to the report.
In Miami-Dade, leasing kept pace with new deliveries, allowing the vacancy rate to remain flat at 3.7 percent compared with the previous quarter, and drop, year-over-year, from 4.5 percent, the report shows.
Asking rents averaged $40.82 per square foot, up 11.4 percent from $36.65 in the first quarter of 2021.
In the biggest lease of the quarter, O’Reilly Auto Parts took out 43,000 square feet at Palm Spring Mile in Hialeah, according to Colliers. That was followed by CareMax’s 24,064-square-foot lease and Five Below’s 11,100-square-foot lease, both at the same plaza at 1001 West 49th Street in Hialeah.
Tenants and investors are increasingly focusing on areas with an expected boost in population, such as the county’s southernmost cities of Homestead and Florida City, as well as surrounding neighborhoods.
South Florida’s biggest deal was Eatontown, New Jersey-based Wharton Realty Group’s purchase of Homestead Pavilion shopping center for $82 million in January. A four-way joint venture of CREC Capital, Highline Real Estate Capital, MMG Equity Partners, and Lubert-Adler Real Estate Funds bought the retail center for $62.2 million in 2019, meaning they sold it for 32 percent more than their purchase price three years earlier. The sellers kept four outparcels they are building out, including for a Target, according to Colliers’ Alan Esquenazi.
Broward’s vacancy rate hit 4.7 percent, down from 4.9 percent in the previous quarter and 5.6 percent during the first quarter of 2021, the Colliers report shows.
Asking rents hit $25.15 per square foot, up from $24.35 in the previous quarter and $22.69 a year earlier. Landlords are ready to give concessions, such as tenant improvements and some free rent, but only to the “most credit-worthy tenants,” the report said.
Suburbs have become popular for leasing and purchasing.
Nutrition Smart took 12,702 square feet at The Shoppes at Heron Lakes at 5601-5791 Coral Ridge Drive in Coral Springs.
In the biggest sale, a Quebec-based entity led by Efstathios Tsatas bought several properties, although not all were retail, spanning a full city block on the southwest corner of East Atlantic Avenue and South Ocean Boulevard in Pompano Beach for $17.7 million in March. It’s likely the real estate will be redeveloped.
WeWork co-founder Adam Neumann, who is turning to real estate as his new venture, paid $17 million for the retail of Society Las Olas at 301 Southwest First Avenue in Fort Lauderdale, marking the second biggest Broward deal in the first quarter.
Palm Beach County
The vacancy rate dropped to 4.3 percent, down a full percentage point, year-over-year, and also marking the lowest rate since the first quarter of 2019, according to Colliers.
Asking rents rose to $27.26 per square foot, up from $23.69 in the first quarter of 2021.
Delray Beach, a waterfront city with a thriving downtown along Atlantic Avenue, has caught investors’ interest. Both the county’s biggest lease and sale were in Delray Beach.
Hobby Lobby signed a lease for 51,727 square feet at Delray Square, which spans multiple buildings at 14620 South Military Trail. In February, Jacksonville-based Sleiman Enterprises bought the Publix-anchored plaza for $48 million from an affiliate of The Keith Corporation, based in Charlotte, North Carolina.