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MARKET VIEW | RETAIL | SOUTH FLORIDA MIAMI-DADE | BROWARD | PALM BEACH

Q4 2017

ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | RETAIL | Q4 2017


MIAMI’S RETAIL MARKET

MARKET TRENDS

CONTINUES TO SHOW STRENGTH

Q4 2017 RETAIL REPORT

WITH RENTS IN HIGH-PRICED MARKETS SOFTENING

EXECUTIVE SUMMARY As the nation’s retail segment is challenged by a changing landscape mainly caused by growing e-commerce, Miami’s retail segment thrives. Retailers have learned to cope with a shift in consumer needs and is starting to introduce new experiential concepts. In the last quarter, rental rates increased by 3.33 % to $37.91 per SF. At the same time, vacancies decreased by 9 basis-points, while absorption rates were increasing to 384,167 SF. Investment increased in the last quarter to $187 million. Construction in the retail segment is currently 2.4 million SF, with a massive 1.3 million SF scheduled to be delivered in Q1 2018.

OUTLOOK The Miami retail market remains prone to shifts undergoing in the national brick and mortar business. The rise of e-commerce can be seen as ongoing process of weaker physical stores falling victim to more innovative retailers. The delivery of 450,000 SF Miami Worldcenter retail portion and 130,000 SF in Miami Central, will mark a milestone in downtowns retail landscape. Due to the anticipated delivery of about 1.3 million SF in the next quarter, rents are expected to increase with increasing vacancy rates.

Q4 2017

Q3 2017

FORECAST

3.37%

i

h

384,167

h

h

2,368,775

i

i

COMPLETIONS SF

200,905

i

h

ASKING RENT NNN

37.91

h

h

VACANCY

NET ABSORPTION SF

CONSTRUCTION SF

RELATIVE TO PRIOR PERIOD | SOURCE: COSTAR PROPERTY®

ECONOMIC OVERVIEW 1 YR CHANGE

Q4 2017

CHANGE

UNEMPLOYMENT RATE

4.6%

- 16.4%

POPULATION GROWTH

2,770,020

+ 1.41%

MEDIAN HOUSEHOLD INCOME

47,346

+ 2.36%

LABOR FORCE

1,181,950

+ 1.31%

CHANGE AS PER YEAR-TO-DATE | SOURCE: US DEPARTMENT OF LABOR STATISTICS

MARKET ACTIVITY About 384,167 SF of retail space were absorbed in the past quarter and 200,905 SF of new supply added to the market. Miami-Dade’s vacancy dropped slightly to 3.37% from the previous period with NNN asking rents increasing by 3.33 % to $37.91 per SF. As the nation’s retail segment is challenged by a changing landscape mainly caused by growing e-commerce, Miami’s retail segment thrives. Retailers have learned to cope with a shift in consumer needs and is starting to introduce new experiential concepts. Consumer more and more value experience over possession. Forward-thinking shopping centers are responding by reinventing the brick-and-mortar shopping experience with innovations aimed at mobile-enabled, experience-driven shoppers — including incorporating non-traditional anchor stores, introducing new open-air mall formats with parklike atmospheres and offering shoppers a hyperlocal mobile retail experience that increases their connection to real-time mall benefits and personalized retailer offerings. Dying department stores, such as Sears, Macy’s and Kmart are divided into smaller spaces and leased to innovative retail concepts a term being referred to as rightsizing. This concept has been proven successful for landlord’s as they manage to increase rental income through higher rates and decrease risk of a tenant vacating, as it is easier to fill up smaller spaces than large big boxes. 45

ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | RETAIL | Q4 2017


Not only landlord’s, also developers have responded to this new trend by introducing new mixed-use concepts, often in urban settings. As of now there are about 2.4 million SF under construction in Miami-Dade County. The most active area is Downtown Miami, which houses two signature projects soont to be completed. Currently there are about 450,000 SF of high-street developed at the Miami Worldcenter project and about 130,000 SF at Miami Central, a development by All Aboard Florida in combination with the $6.0 billion Brightline train. Investor interest in Miami’s retail market continues as Miami benefits from strong population growth and tourism. A total of $187 million were sold in Q4 2017, which marked a significant increase from the previous quarter. The largest transaction was a Bed Bath & Beyond in Doral, which sold $38.3 million and was acquired by Schmier & Feurring Properties. Doral is one of the fastest growing areas within the Miami MSA, with major developments such as Codina Partners’ Downtown Doral, Related Group and Shoma Homes’ CityPlace Doral and JQ Group of Companies and Optimus Developers’ Midtown Doral.

COMPLETIONS, ABSORPTION AND VACANCY TRENDS COMPLETIONS

ABSORBTION

VACANCY

SOURCE: COSTAR PROPERTY®

1.2M

6.00%

1M

5.00%

800K

4.00%

600K 3.00% 400K 2.00%

200K

1.00%

0 -200K

0.00%

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

AVERAGE ASKING RENTS TRENDS GENERAL RETAIL

MALL

SHOPPING CENTER

TOTAL

SOURCE: COSTAR PROPERTY®

120

100

80

60

40

20

0

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

PRICE TRENDS CAP RATE

$/SF

SOURCE: REAL CAPITAL ANALYTICS

550

7.50%

500

7.00%

450

6.50%

400

6.00% 5.50%

350

5.00%

300

4.50%

250 200

4.00% Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2014

46 ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | RETAIL | Q4 2017


RETAIL STATISTICS SUBMARKET

TYPE

TOTAL INVENTORY (SF)

VACANCY (%)

YTD NET ABSORBTION

YTD DELIVERIES UNDER CONSTRUCTION QUOTED RATES NNN

(SF)

(SF)

(SF)

Aventura

Total              6,320,862 

0.92%      (11,155)            69,617                    321,400               37.05 

General Retail                 791,827 

1.07%      (60,622)            21,485                               -                 48.34 

Mall              3,350,166 

0.14%        (4,850)                      -                      315,000                      -   

Shopping Center              1,787,873 

2.52%        54,317             48,132                        6,400               34.82 

Biscayne Corridor

Total              2,452,119 

11.29%   (133,964)                      -                        90,565               35.51 

General Retail              1,907,498 

12.96%   (127,588)                      -                        90,565               41.40 

Mall                             -   

0.00%                 -                         -                                 -                        -   

Shopping Center                 544,621 

5.43%        (6,376)                      -                                 -                 18.06 

Brickell

Total              1,754,283 

9.93%      174,336                       -                        56,750               71.23 

General Retail              1,089,819 

4.57%        (9,065)                      -                        56,750               66.90 

Mall                 505,000 

23.95%      179,968                       -                                 -                        -   

Shopping Center                 159,464 

2.13%          3,433                       -                                 -                 95.02 

Coconut Grove

Total              1,835,804 

4.01%        29,140             39,034                               -                 52.88 

General Retail              1,102,928 

4.88%        22,266             39,034                               -                 43.81 

Mall                 199,683 

3.51%        12,407                       -                                 -                        -   

Shopping Center                 533,193 

2.39%        (5,533)                      -                                 -                 57.15 

Coral Gables

Total              4,376,138 

2.46%      (34,712)                      -                        19,571               42.74 

General Retail              2,942,823 

3.41%      (29,339)                      -                        19,571               42.29 

Mall              1,046,671 

0.00%              700                       -                                 -                        -   

Shopping Center                 386,644 

1.92%        (6,073)                      -                                 -                 46.12 

Coral Way

Total              2,649,845 

1.27%        17,138                3,500                      49,557               30.27 

General Retail              1,960,749 

1.34%        11,914                3,500                      49,557               30.83 

Mall                             -   

0.00%                 -                         -                                 -                        -   

Shopping Center                 447,824 

0.66%          5,224                       -                                 -                 30.88 

Downtown Miami

Total              2,868,292 

8.73%        52,051                       -                      702,508               35.56 

General Retail              2,521,970 

9.60%        50,151                       -                      252,508               35.35 

Mall                 213,438 

0.00%                 -                         -                      450,000                      -   

Shopping Center                 132,884 

6.10%          1,900                       -                                 -                 40.00 

Hialeah Gardens

Total              3,081,799 

2.55%        39,423             19,682                    323,789               19.42 

General Retail              1,536,297 

1.97%        17,034             19,682                    309,660               20.17 

Mall                 463,690 

3.10%      (14,385)                      -                                 -                        -   

Shopping Center              1,081,812 

3.15%        36,774                       -                        14,129               18.40 

Kendall

Total           19,623,634 

2.76%        79,189             33,569                      66,620               31.23 

General Retail              6,265,312 

2.02%        89,822             33,569                      66,620               29.47 

Mall              3,339,116 

1.44%      (20,314)                      -                                 -                 36.15 

Shopping Center              9,656,713 

3.80%          9,681                       -                                 -                 31.54 

Medley/Hialeah

Total           13,069,243 

1.62%      196,882           109,988                      39,085               29.52 

General Retail              5,792,453 

0.38%        64,324             27,500                      33,085               23.14 

Mall                 882,422 

2.57%        44,597             67,248                               -                 48.34 

Shopping Center              5,620,289 

2.97%        80,895             15,240                        6,000               26.85 

Miami

Total           14,849,931 

5.36%      135,379           146,026                    235,231               44.52 

General Retail           12,069,019 

5.41%        78,063           118,526                    235,231               46.15 

Mall                    37,019 

0.00%                 -                         -                                 -                        -   

Shopping Center              2,285,428 

5.93%        24,236             27,500                               -                 24.74 

Miami Airport

Total           16,630,307 

1.89%      459,350           450,642                    189,247               28.79 

General Retail              5,179,849 

1.06%        21,937                9,075                    189,247               28.57 

Mall              4,103,970 

2.60%      427,376           432,001                               -                   7.71 

Shopping Center              6,328,454 

2.40%        10,037                9,566                               -                 30.12 

Miami Beach

Total              8,503,783 

5.13%      114,365           166,901                      67,591               80.16 

General Retail              6,142,550 

4.55%        81,818             92,199                      67,591               61.76 

Mall              1,659,167 

8.69%        23,945             74,702                               -               142.25 

Shopping Center                 522,066 

2.36%          8,602                       -                                 -                 41.81 

Miami Lakes

Total              4,933,807 

4.80%      (65,546)            67,699                               -                 24.30 

General Retail              2,055,383 

0.49%        41,566             43,966                               -                 17.95 

Mall                             -   

0.00%                 -                         -                                 -                        -   

Shopping Center              2,878,424 

7.88%   (107,112)            23,733                               -                 24.87 

Source: CoStar Property®

g ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | RETAIL | Q4 2017


RETAIL STATISTICS SUBMARKET

TYPE

TOTAL INVENTORY (SF)

VACANCY (%)

YTD NET ABSORBTION

YTD DELIVERIES UNDER CONSTRUCTION QUOTED RATES NNN

(SF)

(SF)

(SF)

Northeast Dade

Total           12,405,692 

2.71%      404,460           422,526                    116,287               29.50 

General Retail              6,003,899 

1.56%      367,030           371,786                    112,787               26.28 

Mall                 681,469 

5.55%          1,200                       -                                 -                        -   

Shopping Center              5,720,324 

3.59%        36,230             50,740                        3,500               30.95 

Outlying Miami-Dade

Total                 306,066 

3.22%          5,304                       -                                 -                 23.54 

General Retail                    97,235 

0.00%                 -                         -                                 -                        -   

Mall                             -   

0.00%                 -                         -                                 -                        -   

Shopping Center                 208,831 

4.72%          5,304                       -                                 -                 23.54 

South Dade

Total           11,636,022 

3.85%      (87,041)          116,892                      87,934               21.64 

General Retail              5,453,377 

1.60%      (24,918)            39,793                      87,934               19.68 

Mall                 983,031 

13.82%   (120,495)                      -                                 -                        -   

Shopping Center              4,596,415 

2.93%        82,276             77,099                               -                 23.48 

West Miami

Total              6,685,295 

2.04%        70,968             54,951                        2,640               25.25 

General Retail              2,492,437 

0.91%        20,835             30,772                        2,640               31.81 

Mall                             -   

0.00%                 -                         -                                 -                        -   

Shopping Center              4,192,858 

2.72%        50,133             24,179                               -                 23.50 

Total         133,982,922 

3.37%  1,445,567       1,701,027                2,368,775               37.91 

General Retail           65,405,425 

3.22%      615,228           850,887                1,573,746               40.16 

Mall           17,464,842 

3.68%      530,149           573,951                    765,000               87.43 

Shopping Center           47,084,117 

3.54%      283,948           276,189                      30,029               28.95

Source: CoStar Property®

ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | RETAIL | Q4 2017


SIGNIFICANT LEASE TRANSACTIONS PROPERTY ADDRESS

TENANT NAME

SIZE

LEASE TYPE

LEASE RATE SUBMARKET

3580 W 18th Ave

floor & Décor Outlets-America                    57,307 

New

$20 NNN Hialeah

1205-1425 NE 163rd St

Ibiley Uniforms and More                    36,172 

New

N/A

N. Miami Beach

701 S Miami Ave

CMX cinemas                    35,759 

New

N/A

Miami

3800 NE Miami Ct

Poltrona Frau                    23,000 

New

N/A

Miami

370-3704 NE 2nd Ave

Institute of Centemporary Art Institute                    21,957 

New

$65 NNN Miami

SIGNIFICANT SALES TRANSACTIONS PROPERTY ADDRESS

BUYER NAME

SIZE

SALES PRICE $

$/SF

SUBMARKET

Bed Bath & Beyond Plaza

Schmier & Feurring Props                    97,496             38,300,000                393 

Doral

Country Club Plaza

Jamestown                 116,940             34,250,000                293 

Hialeah

Old Cutler Town Center

COFE Properties                 106,424             31,500,000                296 

Cutler Bay

Ross Dress for Less

Premier Asset Mgmt                    27,380             16,384,000                598 

Miami

Ulta at South Beach

Aurora Cap Assocs                    15,000             15,000,000            1,000 

Miami Beach

MAJOR DEVELOPMENT PIPELINE PROPERTY ADDRESS

COMPLETION

SIZE

DEVELOPER

Miami Worldcenter

Q4 2017                 450,000  Miami Worldcenter

Downtown

Avntura Mal Expansion

Q1 2018                 315,000  N/A

Aventura

Gardens Promenade

Q1 2018                 130,000  IMC Equity Corp

Downtown

Miami Central

Q1 2018                 130,000  All Aboard Florida

Downtown

Met Square

Q4 2017                 113,508  ZOM

Downtown

ONE COMMERCIAL REAL ESTATE | MIAMI-DADE | RETAIL | Q4 2017

SUBMARKET


BROWARD’S RETAIL SEGMENT

MARKET TRENDS

REMAINS A BRIGHT SPOT AND

Q4 2017 RETAIL REPORT

CONTINUES TO BE RESILIENT

EXECUTIVE SUMMARY

Q4 2017

Q3 2017

FORECAST

3.33%

i

g

NET ABSORPTION SF

387,515

h

h

CONSTRUCTION SF

716,646

i

g

COMPLETIONS SF

296,687

h

i

ASKING RENT NNN

21.09

h

h

VACANCY

As the nation’s retail segment is challenged by a changing landscape mainly caused by growing e-commerce, Broward’s retail segment proves to be resilient. Development especially in urban areas is booming, as some markets, which have long been overlooked, such as Downtown Fort Lauderdale and Pompano Beach experience elevated development activity and are transforming into a vibrant and urban retail landscape. In the last quarter, rental rates increased by 3.63 % to $21.09 per SF. At the same time, vacancies decreased by 6 basis-points, while absorption rates were increasing to 296,687 SF. Construction in the retail segment is currently 716,545 SF, with 156,300 SF being delivered in the next quarter.

OUTLOOK The retail market has proven it’s resiliency, despite the shifts undergoing in the brick and mortar business. Broward’s retail market is on the rise, with areas such as Downtown Fort Lauderdale and Pompano Beach converging into hip and trendy neighborhoods. Even though vacancies are at record lows, construction activity has not significantly picked up yet. Deliveries in the next quarter will be moderate, which will further tighten vacancy rates and pushing rents higher.

ONE COMMERCIAL REAL ESTATE | BROWARD | RETAIL | Q4 2017

RELATIVE TO PRIOR PERIOD | SOURCE: COSTAR PROPERTY®

ECONOMIC OVERVIEW 1 YR CHANGE

Q4 2017

CHANGE

UNEMPLOYMENT RATE

3.8%

- 13.6%

POPULATION GROWTH

1,952,630

+ 1.81%

MEDIAN HOUSEHOLD INCOME

57,958

+ 3.99%

LABOR FORCE

845,000

+ 3.29%

CHANGE AS PER YEAR-TO-DATE | SOURCE: US DEPARTMENT OF LABOR STATISTICS

MARKET ACTIVITY About 387,515 SF of retail space were absorbed in the past quarter and 296,687 SF of new supply added to the market. Broward’s vacancy dropped slightly to 3.33% from the previous period with NNN asking rents increasing by 3.63% to $21.09 per SF. As the nation’s retail segment is challenged by a changing landscape mainly caused by growing e-commerce, Broward’s retail segment thrives. Retailers have learned to cope with a shift in consumer needs and is starting to introduce new experiential concepts. Consumer more and more value experience over possession. Forward-thinking shopping centers are responding by reinventing the brick-and-mortar shopping experience with innovations aimed at mobile-enabled, experience-driven shoppers — including incorporating non-traditional anchor stores, introducing new open-air mall formats with parklike atmospheres and offering shoppers a hyperlocal mobile retail experience that increases their connection to real-time mall benefits and personalized retailer offerings. Dying department stores, such as Sears, Macy’s and Kmart are divided into smaller spaces and leased to innovative retail concepts a term being referred to as rightsizing. This concept has been proven successful for landlord’s as they manage to increase rental income through higher rates and decrease risk of a tenant vacating, as it is easier to fill up smaller spaces than large big boxes.


Even with an emerging e-commerce Broward’s retail sector continued to perform well. Vacancies are at record lows, while rents are increasing. Especially some markets, which have long been overlooked, such as Downtown Fort Lauderdale and Pompano Beach experience elevated development activity and are transforming into a vibrant and urban retail landscape. Currently there are about 716,545 SF under construction in Broward. The largest project is Plaza at Davie, which hosts 125,342 SF of retail and will be completed by the end of the year. One of the most transformative areas is Pompano Beach, where an innovation district is brining trendy startups, hip restaurants and breweries along with it. Investor interest in Broward’s retail market continues as the area benefits from strong population growth and tourism. A total of $235 million where sold in Q4 2017, with Flamingo Plaza in Pembroke Pines marking the largest transaction. Real estate investment trust Weingarten Realty Investors sold Walmart-anchored shopping center for $33.2 million (238 PSF). The shopping plaza was nearly 100% leased to Florida Technical College, USPS, Goodwill, Mattress Firm, Honey Baked Ham, State Farm, Sunrise Medical Group and other tenants. The Walmart was not part of the deal.

COMPLETIONS, ABSORPTION AND VACANCY TRENDS COMPLETIONS

ABSORBTION

VACANCY

SOURCE: COSTAR PROPERTY®

700K

6.00%

600K

5.00%

500K

4.00%

400K 3.00%

300K

2.00%

200K

1.00%

100K 0

0.00%

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

AVERAGE ASKING RENTS TRENDS GENERAL RETAIL

MALL

SHOPPING CENTER

TOTAL

SOURCE: COSTAR PROPERTY®

30

25

20

15

10

5

0

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

PRICE TRENDS CAP RATE

$/SF

SOURCE: REAL CAPITAL ANALYTICS

330

7.00%

300

6.50%

270

6.00%

240 5.50% 210 5.00%

180

4.50%

150 120

4.00% Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2014

ONE COMMERCIAL REAL ESTATE | BROWARD | RETAIL | Q4 2017


RETAIL STATISTICS SUBMARKET

TYPE

TOTAL INVENTORY (SF)

VACANCY (%)

YTD NET ABSORBTION (SF)

YTD DELIVERIES UNDER CONSTRUCTION QUOTED RATES NNN (SF)

(SF)

Commercial Blvd

Total

1,548,764

4.06%

(14,154)

-

-

15.49

General Retail

495,716

3.31%

(7,648)

-

-

15.00

Mall

-

0.00%

-

-

-

-

Shopping Center

816,237

4.00%

9,751

-

-

15.45

Cypress Creek

Total

2,645,116

4.23%

39,779

6,500

1,750

18.26

General Retail

1,054,253

2.25%

19,913

6,500

-

17.94

Mall

-

0.00%

-

-

-

-

Shopping Center

1,608,285

4.96%

9,506

-

1,750

19.24

Downtown Fort Lauderdale

Total

4,707,007

3.24%

(36,664)

48,656

77,645

35.26

General Retail

2,637,249

4.91%

(223,463)

48,656

77,645

33.47

Mall

978,568

0.00%

160,000

-

-

-

Shopping Center

1,091,390

1.32%

35,365

-

-

40.98

Fort Lauderdale

Total

19,189,920

4.08%

72,122

138,080

94,776

19.99

General Retail

11,467,521

3.31%

99,691

114,080

30,616

25.94

Mall

854,634

5.68%

(1,892)

-

-

6.95

Shopping Center

6,261,873

5.94%

(29,416)

24,000

89,160

21.26

Hallandale

Total

4,630,145

2.02%

54,802

-

99,035

24.03

General Retail

1,939,054

0.99%

38,074

-

65,216

22.17

Mall

535,717

0.00%

-

-

33,819

30.00

Shopping Center

1,806,968

3.85%

21,308

-

-

23.43

Hollywood

Total

11,912,270

2.93%

266,199

80,118

87,805

21.95

General Retail

4,650,050

1.83%

14,761

-

79,005

24.81

Mall

163,179

10.02%

45,946

-

-

-

Shopping Center

5,051,096

5.27%

111,789

60,118

15,300

19.81

NW Broward/Coral Springs

Total

13,622,619

3.81%

196,411

61,257

5,166

19.57

General Retail

4,224,608

2.21%

57,463

61,257

-

21.43

Mall

1,037,203

0.00%

-

-

-

-

Shopping Center

8,362,750

5.52%

107,072

-

3,500

19.48

Outlying Broward County

Total

466,019

2.94%

21,059

8,400

-

24.52

General Retail

18,738

0.00%

12,845

8,400

-

-

Mall

-

0.00%

-

-

-

-

Shopping Center

447,281

3.63%

5,698

-

-

25.33

Plantation

Total

11,901,453

3.70%

319,798

48,856

25,532

20.59

General Retail

3,081,723

2.38%

80,942

41,356

15,532

24.49

Mall

1,033,788

0.00%

5,377

-

-

-

Shopping Center

6,773,828

5.10%

161,516

-

-

18.88

Pompano Beach

Total

16,195,644

3.61%

146,680

116,154

105,484

18.61

General Retail

6,684,537

1.48%

563

21,377

97,084

20.70

Mall

227,798

8.85%

251

-

-

-

Shopping Center

7,891,387

4.62%

80,778

6,750

16,400

17.48

Sawgrass Park

Total

4,716,646

0.52%

3,156

5,632

-

27.80

General Retail

1,056,249

0.31%

2,319

5,632

-

39.65

Mall

2,534,115

0.00%

-

-

-

-

Shopping Center

1,126,282

1.74%

2,435

-

-

27.04

Southwest Broward

Total

15,305,175

2.74%

251,797

143,553

219,352

24.97

General Retail

5,016,369

1.26%

68,974

70,843

140,441

23.67

Mall

1,263,263

2.99%

(1,840)

-

-

-

Shopping Center

7,905,798

3.58%

146,910

19,210

71,500

23.63

Total

106,840,778

3.33%

1,320,985

657,206

716,545

21.09

General Retail

42,326,067

2.33%

164,434

378,101

505,539

24.49

Mall

8,628,265

1.42%

207,842

-

33,819

7.73

Shopping Center

49,143,175

4.73%

662,712

110,078

197,610

20.35

Source: CoStar Property® ONE COMMERCIAL REAL ESTATE | BROWARD | RETAIL | Q4 2017


SIGNIFICANT LEASE TRANSACTIONS PROPERTY ADDRESS

TENANT NAME

SIZE

LEASE TYPE

LEASE RATE

SUBMARKET

1829-1835 W Hillsboro

N/A

25,600

New

$ 12 NNN

Deerfield Beach

1909 Tyler Street

N/A

17,463

New

$45 FS

Hollywood

19550 Pines Blvd

N/A

14,380

New

$24 NNN

Hollywood

2520 S Miami Rd

N/A

11,889

New

$25.23 NNN Fort Lauderdale

5149 Powerline Rd

N/A

10,000

New

$10 NNN

Fort Lauderdale

SIGNIFICANT SALES TRANSACTIONS PROPERTY ADDRESS

BUYER NAME

SIZE

SALES PRICE $

$/SF

SUBMARKET

Flamingo Pines Plaza

JBL Asset Management

139,462

33,200,000

238

Pembroke Pines

Lakeview Center

Publix

79,000

25,450,000

322

Pompano Beach

Miramar Town Center

IMC Equity Group

127,000

24,800,000

195

Miramar

University Park Plaza

HCA

169,381

22,000,100

130

Davie

Ridge Plaza

Continental Realty

155,204

21,300,000

137

Davie

MAJOR DEVELOPMENT PIPELINE PROPERTY ADDRESS

COMPLETION

Plaza at Davie

Q4 2018

Seneca Town Center

Q2 2018

1776 Polk St

SIZE

DEVELOPER

SUBMARKET

125,342

Konover South

Southwest Broward

64,240

East Coast Invest

Hallandale

Q1 2018

52,000

Gold Coast Florida Regional Center

Fort Lauderdale

Miramar Central Plaza

Q1 2018

50,000

Master Development

Hollywood

Tlantic Village

Q1 2018

43,000

Avanti Way Realty

Southwest Broward

ONE COMMERCIAL REAL ESTATE | BROWARD | RETAIL | Q4 2017


PALM BEACH ENDS YEAR ON

MARKET TRENDS

A POSITIVE NOTE AND SHOWS

Q4 2017 RETAIL REPORT

POSITIVE OUTLOOK FOR 2018

EXECUTIVE SUMMARY The Palm Beach retail market experiences continuous growth with new development, declining vacancy rates and growing rental rates. In the last quarter, NNN rental rates increased by 2.54 % to $22.32 per SF. At the same time, vacancies decreased by 17 basis-points, while absorption rates were increasing to 269,509 SF. Investment activity rose to $144 million and shows large demand for anchored well managed shopping centers, which command premium prices. Construction in the retail segment is currently 657,821 SF, with 69,009 SF being delivered in the next quarter, which marks a decrease from this quarter’s 143,993 SF.

OUTLOOK Palm Beach continues to remain prone to the changes currently undergoing in the retail segment. With more baby boomers, who are entering retirement age traditional retail is likely to perform in the future. The majority of the new supply is attributed to the 356,089 SF development of Braman Motorcars. The project is anticipated for Q2 2018 and already fully leased. As there are hardly any other significant projects in the pipeline vacancies are expected to drop further with rising rental rates. Together with the growing population, those are perfect conditions for more development.

Q4 2017

Q3 2017

FORECAST

4.05%

i

h

NET ABSORPTION SF

269,509

h

g

CONSTRUCTION SF

657,821

i

h

COMPLETIONS SF

143,933

i

i

ASKING RENT NNN

22.32

h

h

VACANCY

RELATIVE TO PRIOR PERIOD | SOURCE: COSTAR PROPERTY®

ECONOMIC OVERVIEW 1 YR CHANGE

Q4 2017

CHANGE

UNEMPLOYMENT RATE

3.6%

- 23.4%

POPULATION GROWTH

1,503,310

+ 2.76%

MEDIAN HOUSEHOLD INCOME

59,355

+ 2.25%

LABOR FORCE

626,120

+ 1.63%

CHANGE AS PER YEAR-TO-DATE | SOURCE: US DEPARTMENT OF LABOR STATISTICS

MARKET ACTIVITY About 269,509 SF of retail space were absorbed in the past quarter and 143,993 SF of new supply added to the market. Palm Beach’s vacancy dropped slightly to 4.05% from the previous period with NNN asking increasing by 2.54 % to $22.32 per SF. As the nation’s retail segment is challenged by a changing landscape mainly caused by growing e-commerce, Palm Beach’s retail segment thrives. Retailers have learned to cope with a shift in consumer needs and is starting to introduce new experiential concepts. Consumer more and more value experience over possession. Forward-thinking shopping centers are responding by reinventing the brick-and-mortar shopping experience with innovations aimed at mobile-enabled, experience-driven shoppers — including incorporating non-traditional anchor stores, introducing new open-air mall formats with park-like atmospheres and offering shoppers a hyperlocal mobile retail experience that increases their connection to real-time mall benefits and personalized retailer offerings. Dying department stores, such as Sears, Macy’s and Kmart are divided into smaller spaces and leased to innovative retail concepts a term being referred to as rightsizing. This concept has been proven successful for landlord’s as they manage to increase rental income through higher rates and decrease risk of a tenant vacating, as it is easier to fill up smaller spaces than large big boxes. 54

ONE COMMERCIAL REAL ESTATE | PALM BEACH | RETAIL | Q4 2017


As Palm Beach retail segment shows continuous strengths with low vacancy rates and an increasing population. Developers have responded by providing new inventory. Currently there are 657,821 SF under construction of which the 356,089 SF development for Braman Motorcars marks the largest project. Construction is underway for a five-story parking garage and four new dealership locations: Porsche, Bentley, Rolls Royce and Pre-Owned. Investment Sales rose in the fourth quarter to about $144 million. The largest transaction marked the sale of the Mirasol Walk Shopping Plaza an 82,375 SF Publix anchored shopping center for $49.0 million at $570 PSF. The asset was 99 %leased at the time of the sale with national tenants including Walgreens, Bank of America, SunTrust, Starbucks, GNC and Orange Theory Fitness.

COMPLETIONS, ABSORPTION AND VACANCY TRENDS COMPLETIONS

ABSORBTION

VACANCY

SOURCE: COSTAR PROPERTY®

600K

7.00%

500K

6.00%

400K

5.00%

300K

4.00%

200K

3.00%

100K

2.00%

0

1.00%

-100K

0.00%

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

AVERAGE ASKING RENTS TRENDS GENERAL RETAIL

MALL

SHOPPING CENTER

TOTAL

SOURCE: COSTAR PROPERTY®

60

50

40

30

20

10

0

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

PRICE TRENDS CAP RATE

$/SF

SOURCE: REAL CAPITAL ANALYTICS

280

7.40%

260

7.20%

240

7.00%

220

6.80%

200

6.60%

180

6.40%

160

6.20%

140

6.00% Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2014

55 ONE COMMERCIAL REAL ESTATE | PALM BEACH | RETAIL | Q4 2017


RETAIL STATISTICS SUBMARKET

TYPE

TOTAL INVENTORY (SF)

VACANCY (%)

YTD NET ABSORBTION

YTD DELIVERIES UNDER CONSTRUCTION QUOTED RATES NNN

(SF)

(SF)

(SF)

Boca Raton East

Total              3,827,248 

2.89%        56,314             49,354                               -                 31.39 

General Retail              1,507,162 

3.26%        20,487             49,354                               -                 36.50 

Mall                 317,695 

0.52%          3,354                       -                                 -                 38.97 

Shopping Center              2,002,391 

2.99%        32,473                       -                                 -                 26.17 

Boca Raton North

Total                 721,774 

1.41%        38,304             32,000                        3,783               39.41 

General Retail                 549,518 

0.37%                 -                         -                          3,783                      -   

Mall                             -   

0.00%                 -                         -                                 -                        -   

Shopping Center                 172,256 

4.72%        38,304             32,000                               -                 39.41 

Boca Raton West

Total              6,139,563 

1.93%        55,888             46,400                      48,999               32.34 

General Retail                 862,838 

0.58%                 -                         -                          7,000               45.26 

Mall              2,132,968 

0.55%        (3,772)                      -                                 -                 50.00 

Shopping Center              2,914,478 

3.03%        59,660             46,400                      41,999               27.47 

Boynton/Lantana

Total           10,782,785 

4.18%      158,248             16,873                      18,040               19.17 

General Retail              2,955,422 

0.93%        26,544                5,731                        4,000               25.96 

Mall              1,286,134 

0.18%        (2,267)                      -                                 -                        -   

Shopping Center              5,225,169 

5.68%        97,472             11,142                               -                 20.26 

Delray Beach

Total              7,868,739 

5.84%      (13,194)            10,384                    159,222               27.79 

General Retail              3,380,337 

2.32%        18,173                8,284                      22,184               53.97 

Mall                 259,753 

0.00%                 -                         -                                 -                 40.61 

Shopping Center              3,235,387 

11.47%      (26,217)               2,100                    137,038               19.68 

Jupiter

Total              4,367,386 

2.76%        19,737             34,726                               -                 24.44 

General Retail              1,400,217 

3.45%        36,268             34,726                               -                 24.92 

Mall                 162,296 

9.89%      (16,052)                      -                                 -                 31.10 

Shopping Center              2,804,873 

2.01%            (479)                      -                                 -                 22.87 

North Palm Beach

Total           10,920,287 

3.65%        40,596             15,751                               -                 29.11 

General Retail              4,657,163 

3.01%        81,586             11,751                               -                 25.31 

Mall              1,821,902 

0.37%          6,765                       -                                 -                 32.07 

Shopping Center              4,019,737 

5.56%      (35,667)               4,000                               -                 26.91 

Palm Bch Cty Outlying

Total              3,969,732 

5.22%          8,442             36,170                               -                 15.82 

General Retail              1,386,434 

2.83%        23,328             31,170                               -                 14.16 

Mall                             -   

0.00%                 -                         -                                 -                        -   

Shopping Center              2,583,298 

6.50%      (14,886)               5,000                               -                 16.25 

Palm Beach

Total                 983,216 

4.46%      (16,231)                      -                                 -                 74.93 

General Retail                 707,205 

4.82%        (6,531)                      -                                 -                 74.93 

Mall                 153,526 

0.00%                 -                         -                                 -                        -   

Shopping Center                 122,485 

7.92%        (9,700)                      -                                 -                        -   

Palm Springs/Lake Worth

Total              2,770,661 

2.09%        28,300             10,078                      34,286               18.88 

General Retail              1,484,915 

1.60%          8,675             10,078                      34,286               25.69 

Mall                             -   

0.00%                 -                         -                                 -                        -   

Shopping Center              1,285,746 

2.66%        19,625                       -                                 -                 14.83 

Royal Palm Bch/Wellington

Total              7,829,387 

3.57%      119,864                5,427                      13,015               20.09 

General Retail              1,267,414 

0.19%        29,027                5,427                      13,015               28.79 

Mall              1,964,806 

0.43%          8,507                       -                                 -                        -   

Shopping Center              3,773,548 

4.82%        57,490                       -                                 -                 19.58 

West Palm Beach

Total           16,224,118 

5.60%          8,658           152,343                    380,476               15.97 

General Retail              7,595,537 

2.57%      127,956           135,932                    380,476               19.52 

Mall                             -   

0.00%                 -                         -                                 -                        -   

Shopping Center              7,803,575 

8.55%      (79,033)            16,411                               -                 14.99 

West Palm Beach CBD

Total              3,518,879 

2.10%        88,002             51,000                               -                 23.01 

General Retail              2,247,315 

3.23%        88,002             51,000                               -                 23.74 

Mall              1,209,527 

0.00%                 -                         -                                 -                        -   

Shopping Center                    62,037 

2.06%                 -                         -                                 -                 13.00 

Total           79,923,775 

4.05%      592,928           460,506                    657,821               22.32 

General Retail           30,001,477 

2.39%      453,515           343,453                    464,744               30.93 

Mall              9,308,607 

0.51%        (3,465)                      -                                 -                 36.77 

Shopping Center           36,004,980 

6.02%      139,042           117,053                    179,037               19.53

Source: CoStar Property® ONE COMMERCIAL REAL ESTATE | PALM BEACH | RETAIL | Q4 2017


SIGNIFICANT LEASE TRANSACTIONS PROPERTY ADDRESS

TENANT NAME

SIZE

LEASE TYPE

LEASE RATE SUBMARKET

2154 N Military Trl

Nino Associates LLC                    16,143 

New

$10 NNN West Palm Beach

314 Clematis St

City of West Palm Beach                    10,000 

New

$30 NNN West Palm Beach

9040 Kimberly Blvd

N/A                      6,000 

New

$24 NNN Boca Raton

SIGNIFICANT SALES TRANSACTIONS PROPERTY ADDRESS

BUYER NAME

SIZE

SALES PRICE $

$/SF

SUBMARKET

Mirasol Walk

Publix Supermarket                    82,375             47,000,000                571 

Palm Beach Gardens

Village of Oriole Plaza

Myron D Vogel                 155,752             31,745,000                204 

Boca Raton

302 East Atlantic Ave

Canyon-Johnson Urban Fund                    13,902             18,010,000            1,295 

Boca Raton

Meadows Square

MMG Equity Partners                 106,224             17,000,000                160 

Boynton Beach

TD Bank

Adrienne Greenfield                      3,953                4,490,000            1,136 

West Palm Beach

MAJOR DEVELOPMENT PIPELINE PROPERTY ADDRESS

COMPLETION

SIZE

DEVELOPER

2901 Okeechbee Rd

Q2 2018                 356,089  Hedrick Brothers

West Palm Beach

Midtown Delray 1

Q3 2018                    70,069  N/A

Delray Beach

Midtown Delray 2

Q3 2018                    37,282  N/A

Delray Beach

LA Fitness

Q1 2018                    37,000  N/A

Boca Raton

1 S Palmway

Q2 2018                    19,886  N/A

Palm Springs

ONE COMMERCIAL REAL ESTATE | PALM BEACH | RETAIL | Q4 2017

SUBMARKET


STEVEN NOSTRAND President & COO ONE Commercial Real Estate

PALM BEACH

snostrand@onecommercialre.com

JULIAN SCHEEFF Director of Intelligence ONE Commercial Real Estate jscheeff@onecommercialre.com

ALEX MAKKI Marketing Coordinator ONE Commercial Real Estate amakki@onecommercialre.com

BROWARD MIAMI-DADE

ONE Commercial Real Estate 1000 Brickell Avenue, Suite 500 Miami, FL 33131 305.704.9787

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

Q4 Market View | Retail  
Q4 Market View | Retail  
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