MARKET REPORT
SOUTH FLORIDA | RETAIL
Q4 23
1
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023
A BOUTIQUE BROKERAGE WITH INSTITUTIONAL QUALITY SUPPORT ONE Commercial Real Estate was born from a commitment to be a change agent for clients and industry professionals. Founded by Daniel de la Vega, the President of ONE Sotheby’s International Realty, we offer superior results to owners, occupiers, and developers of commercial real estate by obtaining and sharing intelligence as well as applying our knowledge, experience, competence and technical skills. Our team members have experienced several cycles that have taught valuable lessons. We have decades of on-the-ground experience and market knowledge in South Florida advising clients in all aspects of commercial real estate. We provide the insight necessary to lead informed and efficient decision making. The commercial real estate landscape has changed. Florida is impacted by global economic and political events more than most. Capital is forming new markets, redefining old ones, and continues to shape the fabric of our ever-growing landscape. Understanding these changes allows us to continue serving our clients and communities. By embracing the data and analytics we can identify movements, address obstacles, forecast challenges, and secure a vision for the future. This edition of the ONE Commercial Market Report examines the retail markets in Miami-Dade, Broward, and Palm Beach counties.
Daniel de la Vega Chief Executive Officer ONE Commercial Real Estate
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023
2
Miami-Dade County Q4 2023 | RETAIL REPORT MIAMI RETAIL LEASING SLOWS, TIGHT VACANCIES DRIVE POSITIVE NET ABSORPTION, HIGH DEMAND CONTINUES DESPITE HIGHER INTEREST RATES
EXECUTIVE SUMMARY Miami retail leasing activity has slowed over the past 12 months, with over 2.9 million SF leased, down from peak levels of over 3.5 million SF leased as of the fourth quarter of 2021. This slowdown in
1 YEAR AGO
CURRENT
INVENTORY SF
145,305,127
146,614,492
UNDER CONSTR SF
2,440,354
1,321,068
12 MO NET ABSORP SF
1,358,765
1,208,108
leasing activity is mainly driven by a lack of available
VACANCY RATE
2.88%
2.93%
space, as total leased SF now makes up over 13%
MARKET RENT/SF
$45.03
$47.23
of available space, up from around 10% on average
MARKET SALE PRICE/SF
$428
$443
from 2015 through 2019. Healthy leasing activity has
MARKET CAP RATE
5.40%
5.40%
continued to result in positive annual net absorption
SOURCE: COSTAR
of 1.2 million SF, helping drive the availability rate to lows of 3.7% as of the first quarter of 2024, well below the five-year average availability rate of 4.4%. With tenant move-outs remaining below the fiveyear historical average and limited supply additions, space availability is expected to remain tight, well below the U.S. average for the foreseeable future. The largest leases in 2023 have been signed by sport goods retailers, entertainment venues, home furnishing stores and pharmacies including Dick’s
CHANGE
average of 3.5%. In fact, the Miami retail vacancy rate is the lowest across Florida markets with over 50 million SF in retail inventory. Going forward, higher interest rates as well as elevated land values will weigh on developer activity in the market, with construction starts already slowing in 2023. Limited supply additions in the coming years will help to bolster retail fundamentals further, despite slowing consumer spending, with retail vacancies remaining tight, well below the national average vacancy rate.
Sporting Goods, Flying Squirrel Sports, At Home,
Annual transaction volume has moderated after two years of
Club Studio, and Walgreens.
above-average activity, totaling $1.2 billion in trades over the
The influx of high-net-worth individuals over the past few years, along with the recent recovery in international in-migration and travel, continues to further bolster Miami resident and tourism spending. Elevated retail sales have helped drive strong rent gains for retail space in the area, with annual growth
past 12 months. This is down to half the levels seen in 2022 and 2021 of $2.6 billion and $2.1 billion, respectively, and remains below the five-year annual average of $1.5 billion. Despite strong fundamentals of tight vacancies and healthy rent gains, higher interest rates, which are driving cap rates higher, are resulting in a drop in pricing.
at 4.9%, though this has slowed from peak levels
Annual transaction cap rates have risen slightly relative to
of 7.9% at the beginning of 2022. Despite around
one year ago, to 5.6%, though these have moved higher in
1.3 million SF delivered in 2023, in line with 10-year
recent months, with average quarterly cap rates increasing
average annual supply additions, retail vacancies
to around 6% through the second half of 2023. Additionally,
remain tight at 2.9%, below the 10-year historical
transaction sizes have shrunk as institutional players
3
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023
MARKET REPORT
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023
4
SALES VOLUME & MARKET SALE PRICE PER SF $550
remain less active. Going forward, rent growth will
$1.4B
FORECAST
$500
$1.2B
$450
$1B
$400
$800M
$350
$600M
$300
$400M
$250
$200M
continue to moderate as softer demand, driven by Despite this, the market’s increased attractiveness, coupled with a lack of available space, should drive an SALES VOLUME
MARKET SALE PRICE/SF
slowing consumption growth, meets limited inventory.
21
22
23
SALES VOLUME
24
25
26
MARKET ACTIVITY Transaction volume has moderated after two years of over the past 12 months. This is down to half the levels
PRICE/SF UNITED STATES
PRICE/SF
the national average.
above-average activity, totaling $1.2 billion in trades
$0
$200
outperformance in rent gains and values compared to
seen in 2022 and 2021 and remains below the five-year annual average of $1.5 billion. Despite this slowdown,
MARKET CAP RATE
annual sales volume has remained consistent with
8.5%
levels seen from 2017 through 2020. Five large deals
FORECAST
have driven a rebound in volume in the third quarter of
8.0%
2023, which accounts for about 40% of total volume 7.5%
for the year, though fourth quarter volume returned to pre-pandemic trend.
7.0%
6.5%
An influx of high-net-worth capital over the past few years has improved demographics in Miami, with
6.0%
consumer buying power increasing at an above-average
5.5%
pace relative to the rest of the nation. This new wealth 5.0%
has translated into a few sizable transactions for luxury
4.5% MALL
21
22
POWER CENTER
NEIGHBORHOOD CENTER
23
24
25 GENERAL RETAIL
STRIP CENTER
car dealerships, as Miami is a car-centric market.
26 MIAMI
OTHER RETAIL
USA
Unsurprisingly, the largest trade of 2023 was the portfolio sale of four properties located in Coral Gables
MARKET RENT PER SF
and Cutler Bay. The deal involved over 488,000 SF of
$80
retail space and 22,000 SF of industrial space, with the retail selling for over $145 million for an average price of $297/SF. Dream Motor Group acquired the retail
$70
properties from Bill Ussery Motors Inc in July. $60
Additionally, deals involving assumable debt have also helped drive volume, with the second-largest trade
$50
of the year concerning a debt assumption. The deal $40
involved a two-property portfolio including an 84,000SF office tower and a 135,000-SF neighborhood
$30
center in Kendall built in the 1980s. The property was acquired by Orion Real Estate Group from Cofe
$20 21 MALL
5
POWER CENTER
22
23
NEIGHBORHOOD CENTER
24 STRIP CENTER
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023
25 GENERAL RETAIL
26 OTHER RETAIL
MIAMI
USA
Properties for a combined total of $58 million in
RETAIL | MIAMI-DADE
TOP BUYERS LAST 12 MONTHS centers continue to trade, as well. One of the largest
DREAM MOTOR GROUP
sales of the year involves the Trail Plaza Community
ORION REAL ESTATE GROUP
Center in the West Miami Submarket. The 181,000-SF
LONGPOINT REALTY PARTNERS
community center was purchased by Longpoint Realty
ELYSEE INVESTMENTS
Partners in an all-cash transaction from MetLife for $49
BOMNIN AUTOMOTIVE LLC
million, or $271/SF, in October. The transaction fits into Longpoint’s strategy of acquiring grocery-anchored
MOUNT SINAI MEDICAL CENTER
assets; it acquired two such assets in 2022, one in
SUNSHINE GASOLINE DISTRIBUTORS, INC.
Hialeah and one in Orlando.
FONTAINEBLEAU DEVELOPMENT BELLA + CANVAS
OUTLOOK
AMAZON $20M
$40M
$60M
$80M
$100M
$120M
$140M
$160M
$180M
SALES VOLUME - PAST 1 YEAR
Going forward, economic headwinds and higher cap rates should result in slower transaction activity and
September. The buyer assumed the existing debt with an outstanding balance of $39 million from JPMorgan Chase. The new owner plans to reinvigorate the tenant roster to add new value to the property.
pricing gains. In fact, average transaction cap rates have expanded by over 100 basis points from the low-5% range to the mid-6% range over the past year. Transaction cap rates for larger deals of over $10 million have increased from lows in the mid-4% range in 2022
Continuing pre-pandemic trends, grocery-anchored
to over 6% today. Smaller deals have seen a similar rise
SUBMARKET SALES TRANSACTIONS PAST 12 MONTHS SUBMARKET
SALES VOLUME
TRANSACTIONS
TRANSACTED SF
AVERAGE SF
MARKET CAP RATE
MARKET SALE PRICE/SF
SOUTH DADE
$153,442,172
46
459,862
9,997
5.7%
$351
KENDALL
$149,446,662
27
434,627
16,097
5.5%
$412
WEST MIAMI
$111,355,266
19
306,423
16,128
5.3%
$447
CORAL GABLES
$110,187,416
7
356,188
50,884
5.2%
$518
MIAMI AIRPORT
$98,520,562
21
347,368
16,541
5.3%
$452
MIAMI BEACH
$94,004,750
11
124,391
11,308
5.1%
$757
MIAMI
$84,837,337
88
349,772
3,975
5.3%
$391
NORTHEAST DADE
$81,538,000
35
210,224
6,006
5.4%
$388
HIALEAH
$79,336,479
34
403,938
11,881
5.5%
$352
WYNWOOD-DESIGN DISTRICT
$76,538,980
10
82,517
8,252
4.8%
$792
DOWNTOWN MIAMI
$53,785,000
4
329,328
82,332
5.5%
$370
COCONUT GROVE
$26,060,000
4
33,355
8,339
5.2%
$591
BISCAYNE CORRIDOR
$23,855,000
9
57,285
6,365
5.2%
$560
CORAL WAY
$21,668,870
11
81,232
7,385
5.2%
$501
MIAMI LAKES
$14,345,000
5
147,457
29,491
5.7%
$331
MIAMI GARDENS/OPA LOCKA
$10,992,600
15
66,156
4,410
5.9%
$388
OUTLYING MIAMI-DADE CNTY
$7,876,727
2
13,705
6,853
5.2%
$461
-
2
252,649
126,325
5.3%
$587
BRICKELL SOURCE: COSTAR
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023
6
RECENT SIGNIFICANT SALES 300 ALMERIA AVENUE Coral Gables Submarket | Coral Gables, FL 33134 SALE DATE
Jul 2023
BUYER
Dream Motor Group (USA)
SALE PRICE
$55M ($383/SF)
SELLER
Bill Ussery Motors Inc (USA)
LEASED
100%
SALE TYPE
Investment
HOLD PERIOD
138 Months
SALE COND
Bulk/Portfolio Sale
RBA
143,716 SF
YEAR BUILT
2012
10701 SW 211TH STREET South Dade Submarket | Cutler Bay, FL 33189 SALE DATE
Jul 2023
BUYER
Dream Motor Group (USA)
SALE PRICE
$45M ($289/SF)
SELLER
Bill Ussery Motors Inc (USA)
LEASED
100%
SALE TYPE
Investment
HOLD PERIOD
186 Months
SALE COND
Bulk/Portfolio Sale
RBA
155,837 SF
YEAR BUILT
2008
2801 SALZEDO STREET Coral Gables Submarket | Coral Gables, FL 33134 SALE DATE
Jul 2023
BUYER
Dream Motor Group (USA)
SALE PRICE
$45M ($236/SF)
SELLER
Bill Ussery Motors Inc (USA)
LEASED
100%
SALE TYPE
Investment
HOLD PERIOD
18 Months
SALE COND
Bulk/Portfolio Sale
RBA
190,678 SF
YEAR BUILT
2022
7702-7770 N KENDALL DRIVE | GREENERY MALL Kendall Submarket | Miami, FL 33156 SALE DATE
Sep 2023
BUYER
Orion Real Estate Group (USA)
SALE PRICE
$38.8M ($287/SF)
BROKER
Avison Young
LEASED
90%
SELLER
CoFe Properties (USA)
HOLD PERIOD
110 Months
BROKER
Avison Young
RBA
135,290 SF
SALE TYPE
Investment
YEAR BUILT
1983 (Reno 1989)
SALE COND
Debt Assumption
900-1190 SW 67TH AVENUE | TRAIL PLAZA West Miami Submarket | Miami, FL 33144 SALE DATE
Oct 2023
BUYER
Longpoint Realty Partners (USA)
SALE PRICE
$36.8M ($219/SF)
SELLER
MetLife, Inc (USA)
LEASED
93%
BROKER
CBRE
HOLD PERIOD
20+ Years
SALE TYPE
Investment
RBA
168,000 SF
YEAR BUILT
1987 SOURCE: COSTAR
in cap rates, but from lows of around 5% in 2022. Smaller volume deals make up a greater share of activity this year, with sales for less than $15 million making up over 70% of volume, up from 60% in the past two years. Smaller NNN deals have also been on the rise, making up 15% of volume, up from 10% in the prior two years. Cap rates for NNN deals have risen from 5% in the prior two years to close to 6% in 2023. That said, Miami retail continues to see healthy demand in the face of limited supply. A rise in new wealth in the area has resulted in strong income growth, which has driven household buying power higher, rising 51% for Miami versus 38% for the U.S. average over the past decade. These gains have resulted in gross real retail sales gains in Miami-Dade County, growing by 10% in the rolling 12-month period through October 2023 versus December 2019. Despite elevated sales, real retail sales growth has slowed in recent months from peak annual growth of 16% in the first quarter of 2022, contracting 2.2% in October 2023, as inflation and higher interest rates weigh on consumer demand. Office-using sectors have been a bright spot in Miami’s economic recovery, with employment remaining well above pre-pandemic levels in the professional and business services and financial activities sectors. Miami attracted a number of banks and securities firms during the pandemic, including Citadel, GMC Capital, Melvin Capital, and tech venture capital firm Andreessen Horowitz, to name a few. Overall, Miami’s office sector had job growth of 7.2% in 2022, though gains have slowed through the second half of 2023 to 5.0%. Oxford’s baseline forecast calls for average annual growth of 0.7% in office jobs from 2024 to 2028. Miami’s startup ecosystem, fueled by strong in-migration, a nation-leading higher education system and a competitive tax structure, will continue to be an important driver of job growth going forward. According to Startup Genome’s Global Startup Ecosystem ranking for 2023, Miami was ranked 23rd in the world, an eight-spot improvement from 2022. Dozens of venture capital funds have offices in the city, and Miami has added more than 20 venture capital funds in the pandemic era. With its probusiness atmosphere, Miami is poised to continue its recent ascension as a fast-growing venture capital center going forward.
Broward County Q4 2023 | RETAIL REPORT BROWARD RETAIL BRACES AGAINST ECONOMIC HEADWINDS AND SHIFTING INVESTOR DYNAMICS
EXECUTIVE SUMMARY Broward’s transaction volume has slowed, with just over $692 million in trades over the past 12 months, below the five-year annual average of $1.0 billion. In comparison, over $1.5 billion traded in both 2021 and 2022. When looking at a longer horizon, Fort Lauderdale has been an active market in terms of retail investment sales activity, with average annual transaction volume of $1.0 billion over the past 10 years. After pricing appreciation of around 30% since 2019, price growth has begun to slow since the second quarter of 2023. Economic headwinds impacting investment activity should further slow pricing gains in the near term as higher interest rates drive an expansion in cap rates. Average transaction cap rates expanded by 100 basis points, from the mid-5% range to the mid-6%
1 YEAR AGO
CURRENT
113,564,777
113,941,305
UNDER CONSTR SF
662,734
597,151
12 MO NET ABSORP SF
851,842
377,217
VACANCY RATE
3.47%
3.46%
MARKET RENT/SF
$33.08
$34.58
MARKET SALE PRICE/SF
$317
$335
MARKET CAP RATE
5.79%
5.73%
INVENTORY SF
CHANGE
SOURCE: COSTAR
SF Community Center located at 16000 Pines Blvd. in Pembroke Pines. Apollo Global Management purchased the center from Terra Group in August for over $523/SF at a 6% cap rate. The property was 98% occupied when sold and is anchored by a Publix supermarket and Burlington. Other tenants include Crunch Fitness, Verizon Wireless, First Watch Café, Tropical Smoothie Café, Jersey Mike’s Subs, and Cheddar’s Scratch Kitchen.
range, through 2023. Additionally, the average
Another large transaction involved the sale of University
transaction size has fallen by 20% from elevated
Commons, an 88,000-SF shopping center located at 6702-
levels in 2021, as large institutional buyers
6852 N University Dr. in Tamarac. In August 2023, Fouerti
increasingly remain on the sidelines relative to
Realty acquired the property for over $14 million, or over
prior levels of activity.
$184/SF, from Bar Invest Group. The actual cap rate was 8%,
Despite a slowdown in large transactions of more than $20 million from double digits in 2021 and 2022, 2023 had a few large trades, which are indicative of market pricing. These large transactions are composed of grocery anchored centers, which highlight a continuation of prepandemic trends favoring this retail subtype.
which equates to an actual NOI of $1.2 million. The property was 97% occupied at the time of sale, anchored by a Quince Supermarket and shadow anchored by a CVS. The property last sold in July 2015 for $10.7 million at a 7.2% cap rate when it was generating NOI of $770,000. This represents a compound annual growth rate of over 4% in value from 2015 through 2023.
The largest single property trade for the year
Wrapping up 2023, a large sale involving the 87,000-
totaled over $56 million for an over 106,000-
SF Cypress Run Marketplace continues to highlight the
9
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023
MARKET REPORT
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023 10
SALES VOLUME & MARKET SALE PRICE PER SF $360
favored grocery-anchored subtype. QVH Corporation
$1.6B
FORECAST
$340
$1.4B
$320
$1.2B
$300
$1B
$280
$800M
$260
$600M
$240
$400M
$220
$200M
$200
$0
purchased the property from Continental Realty Cypress Run Marketplace sits on 9 acres of land in Broward County. The Center is anchored by Walmart SALES VOLUME
MARKET SALE PRICE/SF
Corporation for over $21 million, or over $242/SF.
Neighborhood Market. The property was fully leased at the time of sale, with long-term lease renewals with existing tenants. The last trade of the asset was in 2015 and totaled over $13 million, or over $154/SF, indicating an over 5% CAGR for the investment. Going forward, a slowing economy and higher interest rates,
21
22
23
24
SALES VOLUME
25
resulting in a near-term pricing correction, will likely
26
continue to drive slower transaction activity relative to
PRICE/SF UNITED STATES
PRICE/SF
the boom in 2021 and 2022. Higher cap rates, coupled with softening fundamentals, will likely remain a drag
MARKET CAP RATE
to market activity at least until an eventual loosening
8.5%
FORECAST
of financial conditions occurs.
8.0%
MARKET ACTIVITY
7.5%
Fort Lauderdale’s retail construction pipeline 7.0%
remains limited, as there has been a notable drop in construction starts since 2019. That said, there is
6.5%
currently 597,151 SF of new retail space underway, 6.0%
and 380,000 SF has delivered over the past 12 months. Limited construction activity will result in
5.5%
few deliveries over the next few years, with inventory 5.0% MALL
21 POWER CENTER
22
23
NEIGHBORHOOD CENTER
24 STRIP CENTER
GENERAL RETAIL
25
26
OTHER RETAIL
FORT LAUDERDALE
additions staying below the 10-year historical average USA
of 530,000 SF through at least 2025. Healthy demand through the near-term forecast
MARKET RENT PER SF
should help keep vacancies in check, well below the
$55
U.S. average. That said, net absorption is expected to
FORECAST
slow through the next few years, largely due to the lack
$50
of available space for lease-up. $45
Since 2020, retail development has significantly expanded in the Southwest Broward, Fort Lauderdale,
$40
Plantation, and Hallandale submarkets, each seeing
$35
inventory growth of over 530,000 SF, 317,000 SF, 139,000 SF, and 122,000 SF, respectively. Current
$30
construction, representing over 70% of activity in the $25
Fort Lauderdale market, is concentrated in Hallandale, Southwest Broward, and Plantation submarkets
$20 21 MALL
11
POWER CENTER
22 NEIGHBORHOOD CENTER
23 STRIP CENTER
24 GENERAL RETAIL
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023
25
26
OTHER RETAIL
FORT LAUDERDALE
USA
RETAIL | BROWARD
TOP BUYERS LAST 12 MONTHS
center at 98% occupancy.
APOLLO GLOBAL MANAGEMENT
The three largest projects underway include more than 140,000 SF of retail space at 777 Isle of Capri Blvd.
MORGAN AUTO GROUP
in Pompano, 130,000 SF Seneca Town Center in the
YAMATA USA, INC.
Hallandale Submarket, and 78,000 SF at the Davie
RK CENTERS
Promenade. All three properties are expected to deliver
QVH CORPORATION
in 2025 and have seen healthy pre-leasing.
PHILLIPS EDISON & COMPANY FOUERTI REALTY
OUTLOOK
KASSIS MANAGEMENT, INC
With its higher concentration of finance, professional
BASS PRO SHOPS
and business services, and information employment,
KAY PROPERTIES $10M
$20M
$30M
$40M
$50M
$60M
$70M
SALES VOLUME - PAST 1 YEAR
Fort Lauderdale boasts higher median incomes, at 11% over Miami incomes and the fifth highest in the state. A
with around 190,000 SF, 100,000 SF, and 85,000 SF underway, respectively.
tight labor market, with an unemployment rate below the U.S. average, at 2.9%, has resulted in recent wage growth outperformance with median incomes rising
Four large scale retail developments have delivered
faster than the U.S. average over the past two years.
since 2019. The largest delivery has been a 210,000-
Despite a recent slowdown in job growth, total nonfarm
SF auto dealership in the Downtown Fort Lauderdale
employment in the metro area remains over 5% higher
Submarket, followed by a 157,000-SF freestanding
than pre-pandemic max levels, a total of over 49,000
property that houses a Costco in the NW Broward/Coral
more jobs.
Springs Submarket, a 151,000-SF community center in the Southwest Broward Submarket, and a 110,000-SF neighborhood center in NW Broward/Coral Springs. All of these properties are fully leased, with the community
Over the past 12 months, job gains have been led by professional and business services, education and health services, leisure and hospitality, and financial
SUBMARKET SALES TRANSACTIONS PAST 12 MONTHS SUBMARKET
SALES VOLUME
TRANSACTIONS
TRANSACTED SF
AVERAGE SF
MARKET CAP RATE
MARKET SALE PRICE/SF
FORT LAUDERDALE
$188,218,945
98
765,515
7,811
5.7%
$342
NW BROWARD/CORAL SPRINGS
$114,720,042
31
493,174
15,909
5.8%
$308
SOUTHWEST BROWARD
$109,160,001
20
292,213
14,611
5.8%
$358
POMPANO BEACH
$107,902,563
45
392,131
8,714
5.7%
$324
HOLLYWOOD
$65,209,118
39
214,347
5,496
5.6%
$351
PLANTATION
$33,578,791
17
96,813
5,695
5.8%
$294
HALLANDALE
$30,171,500
30
82,922
2,764
5.8%
$362
SAWGRASS PARK
$18,425,000
2
66,375
33,188
5.7%
$310
DOWNTOWN FORT LAUDERDALE
$17,640,000
9
47,991
5,332
5.4%
$436
CYPRESS CREEK
$11,738,668
6
46,434
7,739
5.7%
$297
COMMERCIAL BLVD
-
1
8,181
8,181
6.2%
$255
SOURCE: COSTAR
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023 12
RECENT SIGNIFICANT SALES 16000 PINES BLVD | 16000 PINES MARKET S.W. Broward Submarket | Pembroke Pines, FL 33082 SALE DATE
Aug 2023
BUYER
Apollo Global Management (USA)
SALE PRICE
$43.9M ($507/SF)
SELLER
Terra Group (USA)
CAP RATE
6.0% (Actual)
BROKER
Cushman & Wakefield
LEASED
98%
SALE TYPE
Investment
HOLD PERIOD
31 Months
SALE COND
Bulk/Portfolio Sale
RBA
86,573 SF
YEAR BUILT
2021
5401 W SAMPLE ROAD | AL HENDRICKSON TOYOTA Pompano Beach Submarket | Coconut Creek, FL 33073 SALE DATE
Jun 2023
BUYER
Morgan Auto Group (USA)
SALE PRICE
$24.9M ($716/SF)
SELLER
Alfred E. Hendrickson, Jr. (USA)
LEASED
100%
BROKER
Haig Partners
HOLD PERIOD
56 Months
SALE TYPE
Investment
RBA
34,715 SF
YEAR BUILT
1988
10599-10667 W ATLANTIC BLVD | CYPRESS RUN MARKETPLACE N.W. Broward/Coral Springs Submarket | Coral Springs, FL 33071 SALE DATE
Dec 2023
BUYER
QVH Corporation (USA)
SALE PRICE
$21.3M ($243/SF)
SELLER
LEASED
100%
Continental Realty Corporation (USA)
HOLD PERIOD
99 Months
BROKER
CBRE
RBA
87,817 SF
SALE TYPE
Investment
YEAR BUILT
1989
1540 N FEDERAL HWY | NORDSTROM RACK Fort Lauderdale Submarket | Fort Lauderdale, FL 33304 SALE DATE
Dec 2023
BUYER
RK Center (USA)
SALE PRICE
$19.5M ($542/SF)
SELLER
PGIM, Inc. (USA)
LEASED
100%
BROKER
CBRE
HOLD PERIOD
78 Months
SALE TYPE
Investment
RBA
36,000 SF
SALE COND
Bulk/Portfolio Sale
YEAR BUILT
2016
5201 W SAMPLE ROAD | AL HENDRICKSON TOYOTA Pompano Beach Submarker | Coconut Creek, FL 33073 SALE DATE
Jun 2023
BUYER
Morgan Auto Group (USA)
SALE PRICE
$17.1M ($408/SF)
SELLER
Alfred E. Hendrickson, Jr (USA)
LEASED
100%
BROKER
Haig Partners
HOLD PERIOD
170 Months
SALE TYPE
Investment
RBA
41,985 SF
YEAR BUILT
1990 SOURCE: COSTAR
activities each growing by over 4%. More specifically, the financial activities and professional and business services sectors have been the primary drivers of job growth over the past few years, making up over 41,000 new jobs in the area since 2020 or over 60% of new total nonfarm jobs. With an average annual salary of over $86,000 for the financial activities sector in Broward County, 16% higher than the area’s median household income of over $75,000, employment gains in this sector have largely driven income growth. Office-using sectors have been a bright spot in Fort Lauderdale’s economic recovery. Office-using employment is 13% above pre-pandemic levels, equating to over 30,000 more jobs, though gains are beginning to slow. Despite a nearterm economic slowdown impacting interest rate sensitive sectors such as construction, finance, and information, Fort Lauderdale’s strong workforce, business friendly environment, international presence, and quality of life will likely continue to draw corporate relocations. Strong household and income growth has resulted in real household buying power growth of over 41% for Fort Lauderdale, versus 38% for the U.S. average from 2010 through 2021. Demographic growth along with the return of tourists has resulted in gross real retail sales gains in Broward County, growing by over 8.3% in the rolling 12-month period through October 2023 versus December 2019 levels. Despite still elevated sales, real retail sales growth has slowed in recent months from peak annual growth of over 19% seen in the first quarter of 2022, contracting 1.3% in October 2023, as inflation and higher interest rates weigh on consumer demand.
Palm Beach County Q4 2023 | RETAIL REPORT PALM BEACH CONTINUES TO ACHIEVE YEAR-OVERYEAR RENT GROWTH OF OVER 6% THROUGH THE END OF Q4 2023
EXECUTIVE SUMMARY Palm Beach Retail transaction volume has slowed, with $687 million in trades for 2023, below the long-term average of $923 million over the past 10 years. When looking at a longer horizon, Palm Beach has been an active market in terms of retail investment sales activity, with 2022 volume reaching record levels of over $1.37 billion, beating the prior record of $1.3 billion in 2015. After average annual transaction pricing appreciation of around 40% since 2019, price growth has begun to slow since the second quarter of 2023. Economic headwinds impacting
1 YEAR AGO
CURRENT
81,993,941
82,301,736
UNDER CONSTR SF
574,818
676,553
12 MO NET ABSORP SF
854,030
104,441
VACANCY RATE
3.08%
3.32%
MARKET RENT/SF
$32.69
$35.02
MARKET SALE PRICE/SF
$340
$367
MARKET CAP RATE
5.70%
5.57%
INVENTORY SF
CHANGE
SOURCE: COSTAR
project delivered in 2021, and the Stiles Retail Group sold the property to Yevgeniy Yermakov in February 2023. The properties were fully leased at sale and anchored by a Publix.
investment activity should further slow pricing
Another large transaction, also for a grocery-anchored
gains in the near term as higher interest rates
center, involved the sale of two retail properties totaling
drive an expansion in cap rates. Average
over 120,000 SF located at 4050 and 4302 S U.S. Highway
transaction cap rates have expanded by over 100
1 in Jupiter in July 2023. The shopping center called Bluffs
basis points from the low-5% range to the mid-6%
Square Shoppes sold for over $39 million, or over $315/SF.
range through 2023.
These Class B retail buildings, delivered in 1986, are 98%
Grocery anchored centers composed a large share of trades in 2023, following pre-pandemic trends, which favor this subtype. One of the largest property trades over the past 12 months totaled $41 million, or over $520/SF, for the over 72,000SF retail center located at 11300 S Military Trail and the 6,000-SF retail center located at 11266 S Military Trail in the Boynton/Lantana Submarket. The well-anchored center, which is located in a
leased to Publix; Walgreens; and national and local tenants including Uncle Eddie’s, Anthony’s Women Apparel, Goodwill, UPS, Toojay’s Deli, and Café Sole. The buyer BPS Partners LLC is a regional developer/owner headquartered in Palm Beach. Despite being well anchored, also by a Publix, the property traded at a discount to the sale located in Boynton/ Lantana, as this shopping center is older and traded in the latter half of the year, when yields had already risen significantly.
high-income area where households make over
Additionally, a major portfolio of 12 retail properties located
$120,000/year, traded for a significant premium
in Boca Raton traded in August of this year. Terranova
over average annual transaction prices, which
Corporation sold the Shadowwood Square shopping center
hover at around $380/SF in Palm Beach. The
to Edens for over $88 million, or $372/SF. The shopping
15
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023
MARKET REPORT
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023 16
SALES VOLUME & MARKET SALE PRICE PER SF $900M
center, built in 1982 and renovated in 1996, totals over
$360
$800M
237,000 SF and is located on the Eastern edge of the
$340
$700M
Mission Bay neighborhood, which houses high median
$320
$600M
$300
$500M
$280
$400M
$260
$300M
$240
$200M
$220
$100M
FORECAST
income households. The center is anchored by Sprouts Farmers Market, along with Walgreens and Old Navy. SALES VOLUME
MARKET SALE PRICE/SF
$380
21
22
23
SALES VOLUME
24
25
rates, resulting in a near-term pricing correction, will likely continue to drive slower transaction activity relative to the boom in 2021 and 2022. Higher cap
26
rates, coupled with softening fundamentals, will likely
PRICE/SF UNITED STATES
PRICE/SF
by Regal Cinema and Bed Bath & Beyond. Going forward, a slowing economy and higher interest
$0
$200
There are two vacant anchor spaces formerly occupied
remain a drag on market activity at least until an eventual loosening of financial conditions occurs.
MARKET CAP RATE 8.5%
MARKET ACTIVITY
FORECAST
8.0%
Palm Beach’s retail construction pipeline remains limited, as
7.5%
construction starts have remained at or below the 10-year
7.0%
average of around 600,000 SF since 2016. That said, there is
6.5%
currently around 680,000 SF of new retail space underway, and around 310,000 SF has delivered in the past 12 months.
6.0%
Limited construction activity will result in limited deliveries 5.5%
over the next few years, with 2024 forecast inventory
5.0%
additions remaining below the 10-year historical average of
4.5%
around 400,000 SF.
4.0% MALL
21 POWER CENTER
22
23
NEIGHBORHOOD CENTER
STRIP CENTER
24
25
GENERAL RETAIL
OTHER RETAIL
26 PALM BEACH
Healthy demand through the near-term forecast should help USA
keep vacancies in check, well below the U.S. average. That said, net absorption is expected to moderate in 2024, largely
MARKET RENT PER SF
due to the lack of available space for lease-up.
$50
FORECAST
Since 2020 retail development has been concentrated in the Delray Beach, Boynton/Lantana, and North Palm Beach
$45
Submarkets, seeing inventory growth of over 400,000 SF, 300,000 SF, and 280,000 SF, respectively. Over 60% of
$40
current construction activity is concentrated in the Palm Beach, Boynton/Lantana, and West Palm Beach submarkets,
$35
with around 200,000 SF, more than 110,000 SF, and more than 100,000 SF underway, respectively.
$30
Three large-scale retail developments have delivered since
$25
2019, with one currently underway. The largest delivery since $20
21 MALL
17
POWER CENTER
22
23
NEIGHBORHOOD CENTER
24 STRIP CENTER
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023
25 GENERAL RETAIL
2019 has been a 220,000-SF auto dealership in the Delray
26 OTHER RETAIL
MIAMI
USA
RETAIL | PALM BEACH
TOP BUYERS LAST 12 MONTHS Beach has the second-highest retail rents across all Florida
EDENS
markets, after Miami. Rent growth remains strong in the first
YEVGENIY YERMAKOV
quarter of 2024, with annual gains at around 7.1%, well above BPS PARTNERS LLC
the five-year historical average growth of 5.9%. Rent growth
SOLOVIEV GROUP
outperformance has resulted in a widening rent premium
BENDERSON DEVELOPMENT COMPANY, INC.
relative to U.S. average asking rents, from around 26% higher
BUCKSBAUM PROPERTIES, LLC
in 2020 to over 40% higher today.
CHRIST FELLOWSHIP CHURCH
General retail, strip centers and neighborhood centers have
THE BREAKERS
driven this rent growth outperformance, with rent gains
INTEGRA SOLUTIONS, LLC
exceeding 27% since the end of 2020. Annual rent growth
GRIECO AUTOMOTIVE GROUP $10M
for these centers moderated in 2023, yet these continue $20M
$30M
$40M
$50M
$60M
$70M
$80M
$90M $100M $110M
SALES VOLUME - PAST 1 YEAR
to perform well with gains exceeding 7%, above their respective five year average annual rent gains. The remaining
Beach Submarket, followed by a 119,000-SF community center that houses a Home Depot in the Palm Beach Submarket, and a 116,000-SF lifestyle center that houses a Life Time Fitness in the Palm Beach Submarket. All of these properties are fully leased. The largest project currently underway includes a 140,000-SF retail property in the Palm Beach County Outlying Submarket. The project, located at 0
subtypes, also saw gains of over 8% in 2023, above their respective five year annual averages of between 5% and 6%. The limited supply of well-located retail space, due to positive net absorption over the past 12 quarters, coupled with the market’s land constraints, will continue to bolster fundamentals across all market segments.
Seminole Pratt Whitney Road, is 100% pre-leased and is set to
OUTLOOK
deliver in 2024.
With the fourth-highest personal income in Florida, over
At around $35.00/SF as of the first quarter of 2024, Palm
60% higher than the state average, Palm Beach is one of the wealthiest counties in the state and country. The area’s
SUBMARKET SALES TRANSACTIONS PAST 12 MONTHS SUBMARKET
SALES VOLUME
TRANSACTIONS
TRANSACTED SF
AVERAGE SF
MARKET CAP RATE
MARKET SALE PRICE/SF
BOCA RATON WEST
$125,459,337
16
331,049
20,691
5.6%
$397
JUPITER
$98,951,001
17
314,688
18,511
5.4%
$372
DELRAY BEACH
$85,800,000
25
416,701
16,668
5.4%
$417
WEST PALM BEACH
$82,040,523
46
282,148
6,134
5.6%
$333
BOYNTON/LANTANA
$80,421,880
20
260,745
13,037
5.6%
$350
NORTH PALM BEACH
$59,580,926
32
207,281
6,478
5.6%
$361
ROYAL PALM BCH/WELLINGTON
$45,459,905
10
73,828
7,383
5.6%
$357
PALM BCH CTY OUTLYING
$38,297,585
33
519,774
15,751
5.8%
$323
BOCA RATON EAST
$36,187,861
12
257,938
21,495
5.3%
$403
WEST PALM BEACH CBD
$22,000,000
7
40,246
5,749
5.4%
$406
PALM BEACH
$20,850,000
2
8,384
4,192
5.2%
$642
PALM SPRINGS/LAKE WORTH
$12,730,295
11
68,334
6,212
5.7%
$301
BOCA RATON NORTH
$5,275,000
2
7,621
3,811
5.5%
$521
SOURCE: COSTAR
ONE COMMERCIAL REAL ESTATE | RETAIL | Q4 2023 18
RECENT SIGNIFICANT SALES 11200-11300 S MILITARY TRAIL Boynton/Lantana Submarket | Golf, FL 33436 SALE DATE
Feb 2023
BUYER
Yevgeniy Yermakov (USA)
SALE PRICE
$38.1M ($781/SF)
SELLER
Stiles Retail Group (USA)
LEASED
97%
BROKER
Cushman & Wakefield
HOLD PERIOD
25 Months
SALE TYPE
Investment
RBA
48,821 SF
YEAR BUILT
2021
4050 S US HIGHWAY 1 Jupiter Submarket | Jupiter, FL 33477 SALE DATE
Jul 2023
BUYER
BPS Partners LLC (USA)
SALE PRICE
$29.6M ($248/SF)
SELLER
Sterling Organization (USA)
LEASED
96%
BROKER
JLL
HOLD PERIOD
45 Months
SALE TYPE
Investment
RBA
119,117 SF
YEAR BUILT
1986
9339 GLADES ROAD Boca Raton West Submarket | Boca Raton, FL 33434 SALE DATE SALE PRICE LEASED HOLD PERIOD RBA YEAR BUILT
Jan 2024 $23.5M ($341/SF) 100%
BUYER SELLER SALE TYPE
Christ Fellowship Church (USA) Macy’s, Inc. (USA) Investment
20+ Years 68,996 SF 1999
510 LINTON BLVD | NEW CENTURY COMMONS Delray Beach Submarket | Delray Beach, FL 33444 SALE DATE
Nov 2023
SALE PRICE
$22.1M ($298/SF)
BUYER
Benderson Development Company (USA)
LEASED
100%
SELLER
Menin Development, Inc. (USA)
HOLD PERIOD
89 Months
SALE TYPE
Investment
RBA
73,935 SF
YEAR BUILT
1990 (Reno 2008)
9789-9889 GLADES ROAD | SHADOWOOD SQUARE Boca Raton West Submarket | Boca Raton, FL 33434 SALE DATE SALE PRICE LEASED HOLD PERIOD RBA YEAR BUILT
Aug 2023 $14.6M ($257/SF) 89% 20+ Years 56,657 SF
BUYER SELLER BROKER SALE TYPE SALE COND
EDENS (USA) Terranova Corporation (USA) Cushman & Wakefield Investment Bulk/Portfolio Sale
1982 (Reno 1996) SOURCE: COSTAR
outsized concentration of financial activities and professional and business services jobs helps drives higher median household income levels relative to its southern neighbors of Fort Lauderdale and Miami. The county also boasts the third-largest population in the state, after Miami-Dade and Broward County, with over 1.5 million residents. From April 2020 through July 2022 both international and domestic migration have driven population growth in the county, which has risen by over 26,000 residents over that time period, the tenth largest increase across counties in Florida and higher than Miami-Dade and Broward County. New residents to the South Florida region have brought in an estimated $23 billion in adjusted household gross with Palm Beach County seeing the most gains, with over $14 billion in household income growth since 2019. Strong household and income growth has resulted in real household buying power growth of over 67% for Palm Beach, versus 38% for the U.S. average from 2010 through 2021. This growth has resulted in gross real retail sales gains in Palm Beach County of over 18% in the rolling 12-month period through October 2023 versus December 2019 levels. Despite still elevated sales, real retail sales growth has slowed in recent months. That said, new company moves into the area including Goldman Sachs and Elliot Management have earned West Palm Beach a new moniker as the “Wall Street of the South.” The newly built 360 Rosemary office building, in downtown West Palm Beach, houses these and other financial services firms which have recently moved to the area. The building sits within The Square, a new neighborhood development by the Related companies which includes apartments, retail and mixed-use space. Several New York restaurants have also opened up new locations in the area including Milos, Felice and Harry’s. According to a recent report by Henley & Partners, West Palm Beach is the 4th fastest growing in the world for millionaires over the past ten years, with 90% more millionaires today than a decade ago. This influx of wealth has attracted developers and businesses to the area, a trend that will likely continue over the next few years.
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