MIAMI—While the region's retail market is not without risk, the Miami-Dade vacancy rate for more than four years has continued to register below 4%.
MMG Equity Partners principal Gabriel Navarro tells Globest.com, “Despite headlines continuing to tout the great retail apocalypse, South Florida retail continued to fare well in the first quarter and into the start of the second quarter. While vacancy rates moved up slightly they remain notably low marking the 18th consecutive quarter with vacancy rates below 4%. We expect for the street's reaction to retail headline risks to continue to provide for select buying opportunities for experienced private capital.”
According to the Miami-based investment firm's latest retail real estate report for South Florida, Miami-Dade County's vacancy rate in the first quarter of 2018 rose slightly to 3.8% from 3.5% in the fourth quarter of 2017. The first quarter asking rental rate per-square-foot increased to an average of $39.59, up from $38.30 at the end of the fourth quarter of last year. The retail absorption rate in the first quarter in the region was a positive 232,303 square feet.
Vacancy rates in the South Florida retail market have stayed around 3%-4% consistently for the past three years, even with rental rates reaching historic highs. Miami-Dade County continues to lead rental rates in the area as opposed to Broward County at $22.77-per-square-foot and Palm Beach County at $21.11-per-square-foot.
There were no mega lease deals in the first quarter. The largest deal according to the report in the Miami-Dade market was TJ Maxx's 22,100-square-foot lease at Homestead Plaza in South Dade, followed by Total Bank's nearly 11,000-square-foot transaction at London Square in Kendall, Fl.
The South Florida retail market is strong on the investment side as well, according to the MMG Equity Partners report.
A significant deal in the first quarter was Atlanta-based Jamestown acquiring the 140,000-square-foot Doral Commons in Doral from Coconut Grove, FL-based Terra Group for $71.6 million. Another first quarter transaction of note was Crown Acquisitions' purchase of a 7,500-sf property at 947 Lincoln Road in Miami Beach for $25.6 million. That deal calculated out to an impressive $3,420-a-square-foot.
Jamestown's latest asset—Doral Commons—is 95% leased and is anchored by Publix and has a tenant roster that includes TJ Maxx, Citibank, GNC, AT&T Wireless, and McDonald's.
“Investor and retailer appetite for the South Florida commercial real estate market continues to be very positive,” Navarro says. “Strong demand from domestic and international investors for well-positioned South Florida grocery-anchored shopping centers, a limited supply, and historically low interest rates, are continuing to keep cap-rates at historically low levels.”
Publix-anchored retail centers led the top commercial real estate sales transactions with two of the top five sales in Miami-Dade County. MMG Equity points out this trend clearly illustrates that investors are still very much interested in retail, especially if the centers are grocery-anchored.
There are currently 55 retail properties under construction in the Miami market representing 2.04 million square feet of new product. The largest in development is the 450,00-square-foot Miami Worldcenter on NE 1st Avenue that is scheduled to be completed in June 2019. The IMC Group's 300,000-square-foot Gardens Promenade at 1800 NW 27th Ave. in Miami ranks as the second largest project in development and is slated to open its doors for the first time in July 2018.
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
