Downtown Miami Retail Market Blazing

Downtown Miami

MIAMI—Nearly $4.5 billion in revenue. That’s how much Downtown Miami generated in 2014—and that number is set to grow. The urban core will see 1.4 million square feet of new feet of leasable space hit the market over the next three years. Those statistics come from a new report by the Miami Downtown Development Authority (DDA). Megaprojects like Brickell City Centre, Miami Worldcenter and Miami Central will drive much of the retail growth with a 22% increase in available retail space in the district. “Demand still exceeds supply for multi-tenant retail product across all of South Florida,” Robert Granda, director of retail investment, tells GlobeSt.com. “Due to the lack of inventory, sellers are achieving pre-recession, top-of-the-market pricing for class A, well-located centers and continuing to experience cap rate compression.” Integra Realty Resources compiled the findings, which suggest an influx of both residents and visitors is creating pent up retail demand. In fact, the number of area residents have doubled since 2000 with an additional 39% growth in population expected over the next three to five years. What’s more, 30% of visitors to Miami-Dade County visited downtown Miami in 2014, reflecting an all-time record. This activity is fueling a rise in average leasing rates, with rents up 28% over the past two years. “Downtown Miami retailers are generating sales north of $500 per square foot—a figure that is raising eyebrows and capturing attention from major brands,” says Anthony Graziano , author of the report and executive director of Integra Realty Resource s. “Considering the substantial growth we have seen across the major demand drivers and the large-scale developments set to deliver, we expect these trend lines to hold steady.” According to the report, restaurateurs are among the market’s biggest winners. Restaurant profit margins increased by 78.4% from 2013 to 2014, signaling Downtown Miami’s emergence as a culinary epicenter. In 2015 alone, nearly 40 new restaurants opened in the downtown area.  More than a dozen high-end eateries are already expected to come online in 2016, including PB Station, an urban concept from the creators behind South Beach’s Pubbelly, and Laffa Kitchen, a new concept by the owners of My Ceviche. “In many ways we knew we were taking a risk when we opened our restaurant back in 2007,” says Juan Chipoco of CVI.CHE 105. “We wanted to create a gastronomic and service revolution but we also knew that a critical mass had yet to form downtown, this area was mostly office spaces with little resident or tourist flow. But as dozens of high-rise buildings and thousands of new residents poured in, we started to see a dramatic change in the volume of clients. It did not take long to realize we made the right choice as we were sitting on goldmine of opportunity.” Downtown’s historic Main Street is also getting a welcomed $13 million reboot. Flagler Street, home to the highest concentration of historic buildings in downtown, will soon come alive with enhanced pedestrian amenities thanks to a large scale revitalization project funded by the City of Miami in coordination with the Miami DDA.  The project coincides with significant private sector interest in the major downtown artery, including nearly 30 parcels secured by investor Moishe Mana. Some are wondering if Flagler Street could be the next Lincoln Road . “After years of planning, the pieces of downtown Miami’s retail market are painting a picture of diversity, with luxury brands, new-to-market retailers and homegrown entrepreneurs all looking to stake their claim in the urban core,” says City of Miami District 2 Commissioner and Miami DDA Chairman Ken Russell. “We are building a sustainable ecosystem and a livable urban community that can keep Miami on the map for decades to come.”