MIAMI-Cautiously optimistic about 2011. That’s how Brian Kosoy, CEO of the Sterling Organization, feels about Florida’s retail real estate industry.
Sterling owns, manages and operates several million square feet of retail space in Florida, and more than 6 million square feet throughout the country. As he sees it, South Florida is poised to become the most attractive market in the state for investors due to its relationship with South America, population density, and limited retail square footage per capita. He also expects investors to take advantage of opportunities to acquire deteriorated shopping centers with solid fundamentals in prime locations.
“Opportunities will exist for well-capitalized owners who can increase the amount and quality of cash flow overtime to reestablish an asset as investment-grade,” Kosoy says. “We also expect to see off-market transactions with developers who are looking for quick and quiet solutions. The focus should be on distressed owners rather than distressed assets.”
Within the retail real estate sector, Kosoy predicts Florida retail centers in solid infill areas will outperform fringe locations. Grocery-anchored neighborhood centers are anticipated to remain the most stable property type with fortress malls running a close second.
Kosoy expects investor confidence to continue in the face of improved corporate profits, fear of inflation, an overly-resilient stock market, and limited new supply of property. However, he adds, fear of continued tension in the Middle East and oil prices could potentially dampen this optimism.
Anthony Blanco, managing partner at Plaza Advisors, tells GlobeSt.com he agrees with Kosoy’s assessment and future outlook. South Florida, he says, is seeing a flight to quality by investors and lenders towards well-situated retail properties.
“As Mr. Kosoy accurately points out, South Florida's favorable population density to retail square footage has helped the area to achieve higher occupancy rates than other markets in the state,” Blanco says. “It is for this reason that investors, both domestic and foreign, as well as lenders, continue to be attracted to this region for retail investments.”
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