Retail rentals are growing in South Florida

Retail rentals are growing in South Florida

In the 3rd quarter of 2022, investors are actively buying outdoor retail spaces and shopping malls in southern parts of Florida.

The demand from tenants remains consistently high and investors seeking inflation-resistant assets have grown interested in shopping malls, according to a report by Colliers. Retail venues with a grocery store as the anchor tenant are particularly popular.

Owners of retail spaces started raising the rent, following landlords of industrial and office buildings. In three Florida counties, the rent increased by $3 per square foot or more (see the table below).

Retail rentals
Miami-DadeBrowardPalm Beach
Rent per square foot in Q3 2022 $43 $26.56 $28,02
Rent per square foot in Q3 2021 $38.85 $23.09 $24,94
Asking rent growth (year-on-year) 13% 15% 12,3%
Vacancy rate in Q3 2022 3.5% 4.3% 3,6%
Vacancy rate in Q3 2021 3.8% 5% 4,9%
Leased area (square feet) 422,000 523,000 412 000

According to experts’ forecasts, the situation in the retail space rental market in Miami-Dade County will remain stable until the end of the year. The investor RPT Realty has recently purchased Mary Brickell Village, a venue with restaurants and shops in the Brickell neighborhood, for $216 million ($855 per square foot).

In Broward County, the tenants’ demand surpasses the supply. According to the Colliers report, the 250,000 square feet of new retail space that will soon hit the market will be bought out immediately. Federal Realty Investment Group has recently spent $180.5 million to purchase the outdoor mall The Shoppes. It became the sector’s largest transaction of the third quarter.

Palm Beach County is thriving too. 339,000 square feet of retail space is currently under construction there but the completed properties are likely to be sold by the end of the year. The highest-value transaction in this county was $37.8 million paid by Kite Realty Trust for Palms Plaza, an outdoor shopping mall.

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