South Florida retail rents continue to rise, but experts say permitting delays and supply-chain issues could hamper that growth, a Franklin Street broker told the Business Journal.
Carrie Smith, senior VP of retail of retail services at Franklin Street, said retail rental rates throughout South Florida increased between 5% to 8% year over year in the four quarter of 2021. By the time figures for the first quarter of 2022 are collected, Smith said rents are expected to be 8% to 12% higher year over year.
“There is a lot of international money and Northeast U.S. money that’s coming into South Florida that’s driving up rents across the board,” Smith said.
It’s also driving down vacancies.
“It’s getting very hard to find a space,” Smith said.
Miami-Dade had the highest average retail rental rate in the tri-county area, at $40.68 a square foot in the fourth quarter. That’s a 6.5% increase from the same quarter last year, according to a recent study from Franklin Street.
Broward’s rates to rent retail space increased 7.9% to $28.71 a square foot. It was the highest year-over-year hike out of the three counties during that time period.
Meanwhile, Palm Beach County’s average retail rental rate was $30.06 a square foot, a 5% year-over-year increase.
Due to the area’s status as a top global destination for tourists, “Miami-Dade tends to run ahead of the pack,” when it comes to rental rates, Smith said.
“We saw rents from $55 to $85 a foot in some places,” Smith said.
“Though I don’t know if they can go up much higher [in Broward],” Smith said.
Not that there are a lot of unclaimed storefronts in Broward, which had a vacancy rate of 4.4% in the fourth quarter of 2021. In comparison, Broward’s pre-pandemic vacancy rate in 2019 was 4.1%, according to Franklin Street.
Miami-Dade’s vacancy rate was 3.4% in the fourth quarter. That’s lower than the 4% vacancy rate the county had two years ago.
Palm Beach County’s vacancy rate during the same time period was 4.3%, which was the exact same rate the county had two years ago.
Smith said the demand for more retail is being driven by restaurant operators from around the world who are attracted to Miami’s popularity as a destination and Florida’s reputation as a business-friendly state with “year-round good weather.”
The state government’s reluctance to enact further Covid-19 shutdowns did a great deal to attract restaurants from New York and Los Angeles, too, even though those cities aren’t enacting pandemic restrictions anymore.