Florida Retail: Officially a Seller's Market

MIAMI—Demand for retail properties in Florida grew significantly in 2012, fueled by an abundance of capital in the market seeking to purchase shopping centers. So says a new report from Colliers International.

According to Colliers' "Florida Shopping Center Sale Activity for 2011 and 2012," high demand along with low interest rates has resulted in compressed cap rates, giving sellers the best pricing in three years.

“What we are seeing through increased demand for shopping centers is that the retail investment market in Florida is alive and doing very well,” Mike Milano, managing director of Retail Services for Colliers International Tampa Bay, Central & Southwest Florida, tells GlobeSt.com.

“Investors buying retail properties are bullish, particular about neighborhood centers anchored by 'necessity retailers,' in particular grocers. Well-located, desirable centers are trading at premium prices and favorable cap rates."

The state of the Florida retail market—combined with low interest rates and compressed cap rates—has narrowed the bid-to-ask gap between sellers and buyers. According to the report, sellers are responding favorably to the heightened demand and are putting more properties on the market. It is now officially a seller's market.

“There is a tremendous amount of capital looking for retail deals in Florida, and I think this speaks to an overall improvement in the economy,” Milano says. “That said, this is very location-sensitive. For a retail property to be extremely attractive, it must have a good location, have quality tenants, or both.”