Retail Brokers Agree This Is A Huge Concern

Downtown Miami

MIAMI— Cap rate are down and polarization is a reality. Those are just two of the key takeaways from this year’s ICSC. GlobeSt.com caught up with Adam Lustig , a partner in Miami-based Bilzin Sumberg, to drill down into these themes in this exclusive interview. Stay tuned for part two later this week when Lustig will discuss how national brands are viewing Miami right now. GlobeSt.com: What were some of the biggest takeaways from this year’s ICSC?  Lustig: It was noted that average cap rates for retail property in Florida are down to 6.45%, which is below the previous record low in 2007. We are seeing a polarization of retail . Value and luxury retail are doing well but the middle level is struggling. Experiential retail is hot as are restaurants. Consumers are spending more money at restaurants than ever before as a percentage of household spending. GlobeSt.com: Was there an overarching issue or issues of concern that retail brokers are voicing?  Lustig: The digital revolution and the impact of Amazon and other online retailers on brick and mortar stores has been and continues to be a major concern. The vast majority of retail sales are still occurring in stores but the percentage of online sales continues to increase. Retailers have to figure out a way to keep customers coming to their stores. That challenge is exacerbated by the fact that Millennials now represent the largest demographic group in the United States and they are accustomed to doing everything online. GlobeSt.com: As the residential market continues to show signs of a cooldown, how is retail being impacted?  Lustig: I don’t think the retail market has been impacted yet by the cooldown of the residential market. The number of people living in Brickell, Downtown and Midtown has dramatically increased over the past several years. That trend will continue. Retailers are intently focused on the number of households within a certain mile radius of their stores. The demographics in and around Downtown Miami are great. If the cooldown of the residential market ultimately results in buildings being empty for a period of time or buildings not getting built during this cycle, that could have an impact on retail but we have not seen that impact yet. Want more ICSC insight? Read my exclusive column— JLL: Miami Retailers Have Drawn a Line In The Sand .