According to a CBRE Group researcher, South Florida’s retail rents will continue to climb astronomically until 2024.
Despite rising interest rates, according to Brandon Isner, head of retail research at CBRE Americas, rents in South Florida will rise more quickly than in other parts of the country due to a shortage of inventory and the area’s desirability as a place to live, work, and visit.
Like Las Vegas, Nashville, or New York, South Florida has a distinctive culture that is known throughout the world, according to Isner. “I believe it is what draws so many tourists here, and we are noticing considerable activity of companies relocating here,” the author continued.
According to data from CBRE, asking retail rents have increased dramatically since the epidemic in South Florida.
Net asking rentals for retail properties in Miami-Dade as of the second quarter average $41.67 per square foot, up 17% from 2019. Between 2019 and 2022, asking rent in Broward County increased by roughly 23% to $28.72 per square foot. They grew by nearly 26% to $29.16 per square foot in Palm Beach County.
According to CBRE Econometric Advisors, retail rents in Miami-Dade County are anticipated to increase by the end of 2022 by 4.8% in Miami-Dade, 6% in Broward, and 7% in Palm Beach County compared to the previous year. In contrast, it is anticipated that retail rents will increase 3.7% by year’s end countrywide.
After that, it is projected that retail rents in South Florida will increase more quickly than elsewhere in the country.
Retail rent increases year over year are anticipated to be 4% in Miami-Dade, 4.1% in Broward, and 3.9% in Palm Beach County by 2024. The predicted annual rise for the national average is 2.9%.
Isner claimed that since the pandemic, South Florida has seen a surge in individuals and out-of-state businesses, which is at least partially responsible for the rise in retail rentals.
“There is a lot of business relocation down here that involves offices. That is also somewhat unusual. Unlike other places where the office sector is failing, this one is growing “said Isner.
Companies opening branches and regional offices, particularly in high-demand locations like Miami’s Brickell Financial District and West Palm Beach’s core business district, are the main drivers of that office activity. But other businesses are shifting their corporate offices to South Florida, like the multibillion-dollar hedge fund Citadel, which is moving from Chicago to Brickell.
A growing number of tourists visiting South Florida will also be advantageous for South Florida’s retail real estate, according to Isner.
Hotel room occupancy in Miami-Dade County is anticipated to range from 73.5% to 76.5% between 2022 and 2024.
Broward hotel occupancy is expected to be between 71.1% and77.1%. Palm Beach County’s occupancyis expected to range from64.9% to 72.3%.
In contrast, the top 10 U.S. subway markets are expected to have anaverage hotel occupancy rate of73.3% to 76.5% between 2022 and2024, according to CBRE. These markets include Atlanta, Boston,Chicago,Dallas, Houston, Los Angeles, New York, Philadelphia,Phoenix and Washington, D.C.
There’s also evidence that restaurants in South Florida are doingbetter on the business front thanelsewhere in the U.S., which mayhelp business owners cope better with rising rents, Isner said.
“In South Florida, restaurant sales are down 30% or 40% from pre-pandemic levels, while in New Yorkthey’re still down 30% or 40%from current levels,” Isner said. said.
Isner said the difference in fortunes has to do with South Florida’sbusiness-friendly environment and outdoorseating almost year-round.
“One of the great things about being a restaurateur here, he said, isthat we have an oversized restaurant.” he said Isner.
According to his recent CBRE report, retail operations are also doingwell, with South Florida’s total salesreaching a record $9 billion in2021, up 7% year-on-year. Did. CBRE’s outlook is bright, but analystsatMyEListing, an Austin, Texas-based real estate technologycompany that lists commercial properties for saleor rent, recentlysaw rents for new retail space in Miami rise by as much as 25%.announced the results ofthe survey. A drop in the next few quartersis possible.
Nate Barber, Digital PR Specialist at MyEListing, says:
But if rents rise, “it could push potential renters out of the market and force them to look elsewhere,” Barber said.
Lawyers told Business Journal that some retail landlords are trying to squeeze out long-term tenants to secure more lucrative leases as out-of-state restaurants and businesses move into the area.
Still, CBRE’s Isner said he’s seeing increased demand for the space from restaurants, stores and other retailers. Unfortunately we don’t have enough space to accommodate them. Not just in South Florida, but most places in America.
“Since the global financial crisis, the last 10 years, he said, 12 years, there has been a marked shortage of [new retail store construction] in the United States,” Isner said. “We’ve created a market where retailers are in expansion mode, but it’s getting harder.”
As a result, Isner says landlords are in a better position to negotiate leases, especially in South Florida, where new land is scarce.
This fact has not escaped the attention of real estate investors. According to CBRE, retail real estate deals in 2021 will be worth US$3.4 billion, the highest annual transaction volume since 2015.
A CBRE spokesperson said, “This beats his 2021 cumulative pace by almost 150%. Even the rise of e-commerce hasn’t had a negative impact on retail demand, thanks to an influx of visitors and newcomers coming to South Florida, Isner said.
“I think it’s this unique culture that’s driving people to come here and experience it for themselves,” Isner said, adding, “Rents aren’t just for retail facilities, they’re for other All in all it was a very good time, in South Florida.”