Robust consumer spending and low availability expected to continue.
Retail market dynamics in South Florida point to rising rents as available space continues to become harder to find.
Vigorous tourism, including the return of international visitors, and consumer spending that is outpacing the national average are driving the market, with demand for space outstripping supply.
Retail rental rates have increased in South Florida nearly 5% so far this year, while the vacancy rate is 2.8%, according to CoStar data. Meanwhile, the shortage of commercial space continues to increase, with almost 95% of new construction in the area pre-leased before handover.
The limited availability of premium commercial spaces with high visibility, favorable co-leasing and ample parking is limiting leasing volume while increasing tenant ownership preferences, according to a report from RE Business.
The gap between supply and demand and the expectation that asking rates will continue to increase during the second half of the year are driving a trend toward owner-occupant commercial spaces in South Florida as financially capable tenants explore ownership options, according to the report.
Retail project under construction in South Florida in the first quarter of 2024 totaled 2.3 million square feet, up from 3.6 million square feet in a year-over-year comparison. Net absorption has exceeded deliveries in each of the last three years, according to a report by Lee & Associates.
The vacancy rate fell 30 basis points to a record low of 2.7% in Miami-Dade County in the first quarter, the lowest level in the last decade.
Despite the addition of more than 396,000 square feet of new retail space, net absorption in the first quarter outpaced new supply, with nearly 663,000 square feet removed from the Miami-Dade market at the end of the quarter, according to a market report by Colliers.
According to data from Visit Florida, Florida maintained its position as the top domestic tourist destination in the US in 2023, with 123 million visitors, while attracting 12 million international visitors.
Earlier this month, Florida announced record tourism numbers for the first quarter of 2024, with international visitor totals approaching pre-pandemic levels, KeynoteUSA reported.
An estimated 37 million people traveled to Florida from other states in the first quarter, the most ever recorded in a single quarter, according to the report. More than 2 million foreign travelers arrived in the Sunshine State in the first quarter, as well as nearly 1.3 million visitors from Canada. In the first quarter of 2019, a total of 2.28 million foreign visitors arrived in Florida.
Keynote USA
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