Monthly Archives : July 2015

Escalating Shopping Center Rents Show No Signs of Abating
Miami Today  |  By Catherine Lackner

Retail and shopping-center space in Miami-Dade County is fetching escalating rental rates that show no signs of abating, said Steven Henenfeld (pictured), Vice President of Continental Real Estate Companies (CREC). Vacancy rates are “touching historic lows,” he added.

“Leasing is doing extremely well,” with overall vacancy rates in Kendall standing at only 3%, though there may be individual variations. Some centers in Doral are fully leased, he added.

The area east of I-95 is exploding with high-end retailers paying high-end rents, Mr. Henenfeld said. Brickell, the Design District, Miami Beach – as well as retail planned for Miami Worldcenter – “all is becoming Bal Harbour,” he said.

In Wynwood, retail space is going for more than $50 per square foot, in Brickell for $80-$100 per square foot, in excess of $100 per square foot in the Design District, and higher than $300 per square foot on Lincoln Road, “and these are triple-net leases,” he said.

On the west side of I-95, a tenant could expect to pay “in the high teens into the $20s for a junior big-box” of about 25,000 square feet in Kendall, in the high $30-$40s per square foot in East Kendall, and in the $50 per square foot range in Doral.

“In these markets, even when things were booming in the past, we didn’t see rents like these,” Mr. Henenfeld said.

The reason? “Simple economics – supply and demand,” he said. “There’s a land shortage, and no more places to grow.”

There havs been an explosion of residential development, which creates more demand for retail, he added. The growing economy also provides fuel, he said. “People think the economy is doing extremely well right now, and it reflects their optimism.”

At Dolphin Mall, it’s not only the strength of the American economy, but also Miami’s appeal to international shoppers that has not only kept the mall healthy but triggered a recent expansion that will add five new restaurants, a new valet service and a 1,300-space parking garage.

The mall, which bills itself as Miami-Dade’s largest outlet mall, with 240 stores in 1.4 million square feet, draws a combination of locals as well as domestic and international tourists, said Pete Marrero, mall general manager.

“We have a diversity of customers, with the vast majority of international tourists coming from South America,” he said. For an international destination, South Florida is under-retailed, he said. “I don’t think we have reached the saturation point.”

Even if more retail were to be added, “it might hurt us in the short-term, but on a long-term basis it will only help bring in that many more tourists.”

Investors and lenders have noticed retail’s robust growth, said Jason Shapiro managing director of the Aztec Group.

“We’ve seen a fair amount of transactions happening, both on the investment and financing sides. Lenders are increasing their loan-to-cost or loan-to-value spread.”

For example, on a recent Miami-Dade construction-loan transaction for a center anchored by a Publix, during the pre-leasing process rents rose dramatically, he said. “Over a span of three to six months overall, on average, rents were 20% higher toward the end of the cycle. That supports the positive nature of the things that are going on in retail.”

A number of factors are responsible, he said. “The economy continues to improve in Miami-Dade County and there are unique global sources of capital coming in all the time, seeking investments of this type. There’s only so much land available.”

Future forward movement “depends on interest rates,” he said, “But in the short term I expect it to continue.”

Orlando Retail and Office Spiking

With Central Florida retail and office transaction activity spiking – and more regional and national businesses and retailers expanding – it’s a good time for brokers doing business in the region. CREC is one player that’s seeing traction.

CREC just inked 11 new leases and sales assignments across Central and North Florida. The deals add over 924,000-sqft of leasable space to its office and retail portfolio. CREC vice President, Joshua Busby, and Senior Leasing Associate, Nathan Cutchin, will lead leasing and sales efforts.

“The retail market in Central Florida is extremely strong right now,” Busby tells “Numerous shopping centers are under development around Central Florida and the demand for quality space is driving rents to levels that we have not seen in years. Retail Sales are strong and tenants are now renewing early and exercising options, rather than terminating their lease or opting to miss the option notice to renegotiate the lease.”

CREC’s new retail and office assignments include: Magic Place is a retail and residential mega center with infill retail space, outparcels and seven high-rise condos and time share residences on US Highway 192 in Kissimmee, FL; DuPont Station, which spans 87,099-sqft with three fully built-out restaurant spaces and a 19,982-sqft former grocer space available for lease in Jacksonville.

CREC is also leasing World golf Village in St. Augustine, FL; the 92,180-sqft Steeplechase Plaza in Ocala, FL; the 73,619-sqft shopping complex Homosassa Plaza in Homosassa, FL; Semoran Plaza and Colonial Shoppes in Orlando; and Malabar Commons in Palm Bay, FL; Heritage Plaza, a 40,000-sqft Class A office building in Lakeland, FL; and Oakridge Office Park in Orlando.

Built in 2011, Former Rec Warehouse for sale. The 14,400-sqft, bank-owned warehouse sits on 1.61 acres at 8134 North US Hwy 98 in Lakeland, FL. The list price is $694,000. The warehouse is one mile from Northside Village, which is poised to become the premier multi-use development on Lakeland’s north side.

Job growth in Orlando will be healthy this year as 44,000 positions are created, expanding headcounts by 3.9%, according to Marcus & Millichap. In 2014, employment grew 4.5%. New jobs will be led by the leisure and hospitality sector.

Retail vacancy will fall 60 basis points to 6.2% in 2015, the firm predicted, despite the influx of new construction as retail spending increases throughout the metro. This will advance last year’s 60-basis-point drop.

The big winners in South Florida

The South Florida market is playing favorites again: used to be favoring tenants, now it’s landlords, says CREC associate VP Rafael Romero. Either way, rents continue to rise. Rafael adds that New Yorkers are coming down in droves, looking at South Florida as a second chance…

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