SOUTHEAST SNAPSHOT, JANUARY 2007

Miami Retail Market

Strong population growth in the Miami and Fort Lauderdale, Florida, area has led to a strong retail market with low vacancy and a recent rise in rental rates. Supply remains relatively stable with retail construction checking in at similar rate for the past 2 years in Miami.

That construction has included some major retail projects that are underway or are planned for the near future. Gables Station and Fifth & Alton are both vertical retail projects that are being developed by Berkowitz Development. Gables Station is a 550,000-square-foot mixed-use development that will include 300,000 square feet of retail space, located adjacent to The Village at Merrick Park, developed by Rouse Development, in Coral Gables. Groundbreaking for Gables Station will take place this year. Meanwhile, Fifth & Alton is being developed at the main entrance to South Beach and will include 185,000 square feet of retail space.

Much like Gables Station, The Shops at Midtown Miami, developed by Developers Diversified Realty, is the 645,000-square-foot retail portion of the mixed-use development Midtown Miami. Target, Linens ‘n Things, Circuit City and PetsMart are announced anchors for The Shops at Midtown Miami.

The 125,000-square-foot Downtown Dadeland neighborhood center was completed early last year in Miami’s Kendall submarket. Proposed development in the area includes a 100,000-square-foot neighborhood center in Hialeah and the 450,000-square-foot Kendall Town Center, which is situated on a 160-acre lifestyle property that will feature a residential component. 

Woolbright Development continues its interaction in the South Florida market with the development of Carter Square and London Square in the West Kendall area. Carter Square will replace the former Don Carter bowling alley and will include 70,000 square feet of retail space, located at the intersection of Kendall Drive and S.W. 137th Avenue. Meanwhile, London Square will be a 300,000-square-foot retail power center, shadow-anchored by Costco Wholesale Club at the intersection of S.W. 120th Street and S.W. 137th Avenue. These Woolbright projects will be delivered this year.

Low vacancy supported a rise in rental rates in 2006 for Miami’s retail sector. Rental rates stayed above $22 for most of last year. Rental rates remain the highest in the Coral Gables/Kendall area as the rapidly growing population of the submarket pushed the demand for retail. The downtown submarket in areas like Brickell and the central business district witnessed population growth as well, leading to 1.2 million square feet of retail space in the planning pipeline for the retail sector downtown.

In Miami, retailer space demand remains competitive. So, single-tenant retail properties as well as multi-tenant retail properties are expected to perform well this year as some owners of strip centers and storefronts even report a waiting list for their retail space. Investors continue to focus on these strip centers and storefronts, but neighborhood and community centers are what is being built, which could lead them to be traded at a faster pace this year. Successful formats in Miami include mixed-use centers, vertical retail construction and power strip centers.

As the influx of people continues in the Miami area, retail developers will continue to build as fast as they can to keep up with demand. Miami’s retail has been resilient through economic downturns in the past. So, with the local economy looking up, Miami’s retail is primed for a tremendous year. The intense demand that is present in the market, along with the chasing supply, should keep the market strong. 

— Daniel Beaird

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