(Save the date: RealShare Industrial 2012 comes to The Bankers Club, Miami, December 5 - 6.)

MIAMI—Miami’s retail recovery will keep outpacing the nation as retailers occupy empty space even as most developers remain on the sidelines. So says Marcus & Millichap’s latest retail report.

The exception is necessity-based retail. Aldi, Publix, Whole Foods, and Sav-A-Lot are adding stories across the country. So too are discount retailers like Family Dollar and Walmart. MMG, which acquires and develops grocery-anchored retail, is a good example.

“The Miami-Dade retail market is strong, with low vacancy and the highest asking lease rates in Florida,” Gabriel Navarro, principal of MMG, tells GlobeSt. “Vacancies continue to decline slowly with current vacancy in the 5% range. Our Miami-Dade retail portfolio currently enjoys a vacancy rate of about 2%. Given this, we are coming out of the ground in the next 90 days on two new developments on parcels that we purchased a few years ago with both projects being about 70% pre-leased.”

M&M reports recent land purchases near downtown by retail developers are an indication that construction activity is likely to remain heightened in the years ahead. International investment activity will increase as foreign investors target Miami retail assets for safety plays.

Demand for these retail assets, however, outweighs the current supply of listings, placing upward pressure on prices, according to M&M. These single-tenant deals trade with average cap rates in the high-5% to high-6% range, depending on the rent increases stipulated in the lease.

“The biggest challenge for us on the acquisition side is the strong competition for class A South Florida assets,” Navarro says. “That is why we have shifted our focus to B-B+ assets where we can achieve our targeted returns.”