South Florida’s retail market is on a winning streak. For three consecutive quarters, the tri-county region experienced an overall vacancy rate of 3.5 percent, a historic low that is below the current national average of 4.2 percent, according to a recent Colliers report.
However, a lack of new construction is creating a demand versus supply gap, the first quarter report states.
“With only 9.6 million square feet of vacant retail space, tenants face limited options, and new construction will be key to accommodating future absorption,” Colliers said. “The shortage of space is likely to cap leasing activity in 2025 unless new development ramps up to meet ongoing tenant needs.”
Meanwhile, retail investors remained focused on grocery-anchored shopping centers in the first quarter, highlighted by Lakeland-based grocery chain Publix continuing its spree for retail sites either anchored by its stores or its standalone supermarkets. For instance, Publix dropped $25 million for a Fort Lauderdale store in March. A month earlier, Indianapolis-based Kite Realty Group picked up a Publix-anchored shopping center in West Palm Beach for $68 million.
Miami-Dade County
Retail space in Miami-Dade County remained tight, as the vacancy rate remained relatively unchanged at 2.9 percent, compared to 2.8 percent, year-over-year, the report states. The same can be said of new construction. In the first quarter, 730,000 square feet of new retail space was under construction, compared to 751,000 square feet during the same period of last year.
The average asking rent jumped by nearly $2.50 to $44.90 a square foot during the first three months of the year, compared to $42.43 a square foot during the same period of last year, Colliers found.
In the first quarter, Macy’s signed the largest lease for 31,296 square feet at Midway Crossings, a mall near Miami International Airport. LA Fitness came in second, renewing a lease at Kendall’s Miller Square shopping center for 27,680 square feet, the report states.
River Oaks Properties, an El Paso, Texas-based real estate firm, racked up the largest purchase of the first quarter. In March, River Oaks paid $28 million for a commercial building in Miami Beach that is leased to the restaurant Catch.
Broward County
Retail landlords in Broward County are also running out of available room. The vacancy rate remained steady at 3.8 percent in the first quarter, compared to 3.7 percent during the same period of last year, the report shows. The county had 326,000 square feet of new retail space under construction during the first three months of the year, compared to 515,000 square feet during the same period of last year.
As a result, the average asking rent rose slightly by 30 cents to $27.99 a square foot, compared to $27.69 a square foot, year-over-year, the report states.
Nordstrom Rack signed the largest lease in the first quarter for 27,600 square feet at Pompano Citi Centre in Pompano Beach. YouFit’s 20,359-square-foot lease in a standalone building in Plantation represented the second biggest signing of the first quarter.
Miami-based Gazit Horizons’ $35.4 million acquisition of Galt Ocean Marketplace, a Winn-Dixie-anchored shopping center in Fort Lauderdale, represented the largest deal of the first quarter. Gazit bought the property in March.
Palm Beach County
Compared to Broward and Miami-Dade, Palm Beach County took a small hit. The vacancy rate inched up to 4.1 percent in the first quarter, compared to 3.6 percent during the same period of last year, Colliers found. During the first three months of the year, 469,000 square feet of new retail space was under construction, down from 487,000 square feet during the same period of last year.
Still, the average asking rent climbed a few cents to $29.14 a square foot from $29.04 a square foot, year-over-year, the report shows.
BJ’s Wholesale Club signed the largest lease of the first quarter, committing to 53,065 square feet at Marketplace at Delray, a retail plaza in Delray Beach. In West Palm Beach, Beauty Master signed the second biggest lease for 47,209 square feet at Cross County Plaza shopping center.
Kite Realty’s acquisition of Village Commons was the largest deal in Palm Beach County during the first quarter. New York-based Acadia Realty Trust ranked second, paying $68 million for Pinewood Square, a shopping center and six outparcels in Lake Worth Beach.
