Miami-Dade County Retail Fundamentals Largely Unchanged Despite Coronavirus

The Miami-Dade County retail market fared well in the first quarter of this year even though the coronavirus pandemic had set in by then and prompted massive business closures, a study found.

COVID-19 cases already were confirmed in other parts of the US as early as late last year but the pandemic became an issue in South Florida in mid-March when the state and county issued emergency orders, closing non-essential businesses.

The economic shutdown had little impact on Miami-Dade retail during the first quarter as the lockdown was imposed at the tail end of this time frame.

This made for little deviation in market fundamentals as the vacancy rate remained flat at 4.4% and an asking rental rate of $38.33 per square foot was a mere 0.2% lower than in last year’s fourth quarter, according to a Colliers International retail research and forecast report.

The net absorption and deliveries show the market was balanced market as each was just over 1 million square feet. Both the absorption and completion were at their 10-year high.

Leasing was at 420,000 square feet, roughly 100,000 square feet less than the quarterly average, according to Colliers’ report.

The study issued in late May also said that despite the flat fundamentals, the pandemic quickly put a chilling effect on sale and lease transactions once the lockdown was imposed in March’s second half.

“There has been a slowing in deals as consumer confidence in the market decreased with widespread stay-at-home orders and decision makers, in the leasing and sales market, pausing deals to understand the implications of the virus,” the report says.

Still, retail deals continued to trickle in during the first quarter, including in March when the coronavirus had set in.

Before the coronavirus pandemic overhauled shopping and dining, Miami-Dade was experiencing two major retail trends. One was the growing popularity of entertainment-experiential concept. The other was more investor attention to shopping plazas with discount retailers, especially ones with grocery stores.

The Colliers report says it’s expected the latter trend to continue in the current times when COVID-19 continues to be a threat. Shopping plazas not only are anchored by essential businesses immune to government-mandated closures but they also have a variety of tenants making them more resilient to market changes.

In mid-March, real estate firm Core Investment Management LLC in Miami bought Palmetto Plaza in Miami Gardens for $33 million in the biggest retail deal in the county during the first quarter. The 186,000-square-foot shopping center has two off-price tenants, the discount grocery store Aldi and a Dollar Tree.

Miami-Dade has cautiously and slowly started reopening non-essential businesses allowing restaurants to operate at half capacity. Eateries and other businesses have imposed safety measures, including providing hand sanitizer and wipes as well as mandating customers wear masks.

Consumer attitudes also have shifted and many of the changes in the way people shop and dine likely are here to stay, according to Colliers. This could make for a growth in e-commerce specifically for groceries, a retail segment that previously wasn’t popular for online shopping.

“The views people once had on online shopping may have changed and could continue once regulations are lifted,” the report says. “The virus has changed operations and habits forcing a transformation upon the retail market which will continue to play out through the rest of 2020.”