As Brickell, downtown Miami, the Design District and even Wynwood see a surge in retail, market dynamics are pushing demand to North Miami, Aventura and even into South Broward, observers say.
“We’re finding everything is progressing northward,” said Robert J. Granda, director of retail investment sales for Franklin Street.
The market in Miami hasn’t quite hit the peak levels of 2006-07 but has become extremely expensive, he said.
“Investors are not able to buy properties that yield the same type of return as they customarily did,” Mr. Granda said. “Miami is notoriously very difficult to enter from an inventory perspective.”
Investors now are “trying to look for land and buildings that are distressed or have not been developed to their highest and best use,” he said. An example might be a single-story structure that is better suited for a mid-level or high-rise, he added.
When they see such properties, “investors are saying, ‘Hey, we’re not far off mark here. Let’s go after some of these properties and start redeveloping them.'”
North Bay Village and North Miami Beach are about 10 minutes’ driving time (unless it is rush hour) from trendy Wynwood and the Design District. “Yet the prices you pay for housing are well beneath what you would pay further south,” which increases their demand among mid-tier buyers who will then frequent the retail shops in their neighborhood.
“As the population continues to push north, redevelopment and repositioning in this market will be highly attractive,” Mr. Granda said. “With a limited supply of properties in the market as well as limited available lease space and increasing rental rates, investors can expect a healthy growth factor moving forward through 2016 and into 2017.”
Aventura, he said, “has been amazing, and has seen a surge in interest from national retailers.” There is 4.3 million square feet of retail in the Aventura market with roughly 50,000 square feet of available space, he explained.
“As the Aventura Mall moves forward with the planned expansion – which will add an additional 315,000 square feet – this will strengthen the market and with new quality tenants, as well as increase traffic to the already-booming mall.”
“JLL has been active in deals in North Miami and North Miami Beach in the past six months,” said Scott M. Sheron, JLL vice president of retail brokerage. “I wouldn’t say it’s bargain-hunting, but motivated by these tenants’ desire to have access to the Aventura, Bal Harbour, North Miami, Hallandale and Hollywood markets.”
That said, the asking rents can be in the low $30s per square foot, rather than the$50s or $60s per square foot that they would pay in the central business district, the Design District, Midtown Miami or retail areas further south, he said. “They are definitely more affordable, and that has value for these tenants.”