Commercial Real Estate, Capital, Insurance, Leasing & Management

High rent, lack of land constrict needed county retail growth

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Miami-Dade County’s retail vacancy rate is the lowest in the US, says Lisa Ferrazza.

High rents and lack of available land combine to put the pressure on retail in Miami-Dade County, observers say.

Even with the opening of Brickell City Centre’s retail component and expansions of both Bal Harbour Shops and Aventura Mall, “we are not over-retailed,” said Boris Kozylchyk, executive vice president of retail service at Colliers South Florida.  “Maybe soon, but not yet.”

Destination shopping areas continue to do well, he said.  A new Nike store just opened on Miami Beach’s Lincoln Road, along with a Marshalls.  “It’s a good retail destination, though as a market, rates have become prohibitive there.”

The Design District “is a work of progress,” he said.  “It’s hard to tell how successful it will be.  But it is a unique destination.”

He predicted redevelopment will breathe new life into CocoWalk, a 1990s shopping and entertainment complex in Coconut Grove.  “It has a personality, and there’s a very bohemian feel to the streets around it.  It’s not a Disney approach.”

As rents rise, “you move to the next space,” Mr. Kozylchyk said.  As Wynwood becomes too pricey, retailers will decamp for Little Haiti, just as many came to Biscayne Boulevard when Miami Beach got too expensive, he said.

But as the area’s population grows, so will opportunities for retailers, possibly in mixed-use developments that will spring up.  “I am optimistic retail will continue to be strong in Miami-Dade County,” he said.

At just 3.2%, Miami-Dade County’s retail vacancy rate is the lowest in the US, said Lisa Ferrazza, a retail specialist who is senior director at Franklin Street Real Estate Services.  In heavily populated Kendall, Vacancy stands at only 2.5% she said.

“The biggest downfall for retail in Miami-Dade County is lack of available land,” she said.  “For investors, it’s a good place to be if you’re already established, but it’s very difficult to break in.”

Retail in the Doral area “is extremely hot right now, and Aventura Mall is always important,” she said.  The mall is undergoing a $200 million vertical expansion that will add 315,000 square feet.

The opening of retail in Brickell City Centre, the Aventura expansion and the proposed American Dream mall in Northwest Miami-Dade all represent the trend toward more retail.

“We’ve seen tourism increase, and retail sales increase, and that is prompting more development,” Ms. Ferrazza said.  “But because of lack of land, there has been a slowdown.  It’s hard to keep up with demand.”

“One of the most coveted retail destinations in the world, Miami saw another strong year in retail sales, specifically in those made by visitors, as they spent more than $7.4 billion on shopping in 2015,” said JLL’s 2016 Florida retail report.

It put occupancy rates  in mid-2016 at 97% in Aventura and Kendall, 99% in Brickell, 96% in Miami Beach and 90% in downtown Miami.

“Retail spaces saw sales per square foot for Miami reach $768, higher than any other metro area in the US,” the report said.  “Landlords are taking advantage of the strong market, as the average rental rate rose to $26 per square foot in Miami-Dade County, the highest in the state.”

 
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