South Florida retail vacancies drop, rents rise in the fourth quarter
Landlords are filling stores across the tri-county region, with vacancies in the low single digits
South Florida’s population growth is a boon to retail landlords, which again raised rents, as vacancies hit low single digits in the final quarter of last year, according to a recent Colliers report.
Outdoor shopping centers remained the top asset class for commercial investors in Miami-Dade and Broward counties. And Walgreens cashing out of two pharmacy properties represented the biggest trades in Palm Beach County, Colliers also found.
Miami-Dade County
In the fourth quarter, Miami-Dade experienced positive net absorption of 205,388 square feet, the highest of any quarter in 2022, the report states.
Leasing activity hit 1.8 million square feet for the entire year, contributing to a record low vacancy rate of 3.3 percent in last year’s fourth quarter. During the same period of 2021, the vacancy rate was 3.6 percent.
As a result, landlords increased the average asking rent to $44.16 a square foot in the fourth quarter of last year, representing a nearly 3 percent increase from the preceding quarter and an 11.9 percent jump compared to the same period in 2021, when the average asking rent was $39.45 a square foot.
The largest sale of the fourth quarter was Colonial Palms Plaza, a shopping center in Pinecrest featuring a Marshalls/Homegoods and a PetSmart. A joint venture between Limestone Asset Management and Orion Real Estate Group bought Colonial Palms for $70.5 million.
Broward County
The retail market in Broward saw positive net absorption of 365,000 square feet in the fourth quarter, ending the year with 1.4 million square feet absorbed, Colliers found. It outpaced new construction, which totaled 715,000 square feet for all of 2022.
Leasing activity hit 2.1 million square feet last year in Broward, pushing the vacancy rate down in the fourth quarter to 4 percent. During the same period of 2021, the vacancy rate was 4.7 percent, the report shows.
Landlords jacked up asking rents to $26.84 a square foot in last year’s fourth quarter, compared to $24.39 a square foot during the same period of 2021. That’s a 10 percent increase, year-over-year, Colliers found.
PGIM Real Estate’s $61.5 million acquisition of Monarch Town Center, a Publix-anchored shopping center in Miramar, represented Broward’s biggest retail deal of the fourth quarter.
Palm Beach County
The northernmost county in South Florida experienced net absorption of 82,400 square feet in the fourth quarter, ending the year with nearly 1 million square feet absorbed. That marked the highest amount absorbed since 2016, the report states.
Leasing activity in Palm Beach County’s retail sector hit 1.2 million square feet for all of 2022, resulting in a vacancy rate of 3.5 percent during the fourth quarter. That’s a drop from the 4.6 percent vacancy rate during the same period of 2021.
Following the trend in Miami-Dade and Broward, Palm Beach County landlords raised the asking rent to $29.16 a square foot, an increase of 4.1 percent from the preceding quarter. It’s also a nearly 9 percent hike compared to the same period in 2021, when the asking rent was $26.77 a square foot.
The two largest sales of the fourth quarter were two freestanding Walgreens stores, the report states. An entity managed by Joe Katz paid $11.2 million for a pharmacy in Jupiter, and Forest Hills Property Group picked up a Walgreens in Wellington for $8.2 million.