Retail in South Florida is defying the harsh reality facing the rest of the country.
Even with delivery of approximately 178K SF of new retail product in Q4 2019, vacancy rates remained at 4.5% in Miami-Dade County, same as the prior quarter, according to Colliers International research. Net absorption for the year was over 671K SF.
Dave Preston, Colliers executive managing director of retail services, marveled at the continuing strength of the sector. The average asking rent per SF was $38.18, up from $34.81 the year prior.
“Something at some point is going to have to give, but right now we’re still seeing upward trajectory,” he said.
Notable big-box leases included a 37K SF 24-Hour Fitness in the airport submarket, a 34K SF Ross Dress for Less in Downtown Miami and a 30K SF Pinstripes at The Plaza Coral Gables. Ross alone added 98 stores nationwide last year.
“Discount stores like Target, Marshalls and Ross Dress for Less continue to be thriving in today’s market and absorbing vacated box space,” Colliers officials wrote in the report. “Their business models have protected them from the threat of e-commerce, as well as their convenient location in busy grocery-anchored plazas.”
Colliers pointed out the strength of entertainment retail concepts, evidenced by the growth of Pinstripes, and also noted the record sale of The Shops at Merrick Park in Coral Gables — part of Brookfield’s acquisition of four top-tier malls across the country. Brookfield intends to redevelop surrounding land with complementary uses such as hotel, office and residential.
“I would say that, as usual, South Florida is doing a pretty good job bucking some national trends,” Preston said. Miami’s density, tourist dollars and foreign money make it so that “our market is a different animal in a lot of ways.”
“Your Ross or Marshalls in South Florida, a 20K or 30K SF space, will do anywhere between $6M to $15M-$20M in sales,” Preston said, adding that even though customers can now get nearly any product delivered to their door, “nobody wants to sit in the house day and night. People want get out of their houses for something.”
Stores like Marshalls, TJ Maxx and Yoyoso (a Chinese retailer that recently leased a prime 41K SF space on Lincoln Road) give shoppers a reason to return frequently because they offer high turnover of product.
“People want to be a little bit surprised,” he said. If and when the economy contracts, Preston said, weaker players may fall out, but he expects health and fitness to remain strong.
“If the sales are there, they’re opening more stores,” Preston said.