Even South Florida can’t escape some of the challenges retail has faced nationwide.
South Florida has long outperformed other areas of the country when it comes to retail. The region’s malls, such as Aventura Mall and Sawgrass Mills, are ranked as some of the most trafficked and profitable malls in the country. But the struggles of retail shopping centers, coupled with new retail space delivered, drove vacancy rates up in the third quarter in Miami-Dade County, according to a report by Colliers International South Florida. Rates rose to 4.2 percent in the third quarter of 2018, up from 3.5 percent in the same period of last year.
With large distressed retailers such as Toys “R” Us closing, more than 800,000 square feet of retail space came to the market this year through the third quarter.
In total, the county saw negative 291,415 square feet of retail space absorbed. Retail rental rates averaged $36.86 per square foot in the third quarter, up from $34.47 per square foot in the previous year.
In the most recent quarter, the biggest retail sale in Miami-Dade was Asana Partners’ purchase of the Sunset Harbour Shops in the Miami Beach. The seven-building, 61,400 square foot retail portfolio sold for $68.75 million or $1,120 per square foot.
In Broward, vacancy rates also increased as new retail properties were delivered. Vacancy rates increased to 4 percent in the third quarter of 2018 from 3.5 percent in the same period of the previous year. Nearly 500,000 square feet of retail was delivered year-to-date through the third quarter.
Rents increased 8.5 percent year-over-year and currently average $21.00 per square foot.
In Palm Beach County, vacancy rates held steady at 4.3 percent. The county saw more retail under construction during the third quarter than during any other quarter in the past three years. More than 668,250 square feet of retail is currently under construction, according to Colliers’ report. Retail rental rates rose more than 17 percent over the past year to $23.76 per square foot and hit a post-recession high.
While only 13,000 square feet of new retail space was delivered in Palm Beach County in the third quarter, a total of 236,150 square feet of space was absorbed. The biggest sale in the county was Kroger’s purchase of the 73,840-square-foot shopping center Delray Commons and the 4,824-square-foot bank branch adjacent to the center. The portfolio was purchased for $17 million.