MIAMI—While the multifamily market was the first to pick up steam in the commercial real estate market recovery in Miami, retail is now a darling. And that makes sense, considering that retail follows rooftops.
GlobeSt.com caught up with Paco Diaz, a senior vice president with CBRE in Miami, to get his take on the boom in the local retail market in this exclusive interview. Read on for insights and be sure to sound off in the comment box below if you have a different perspective.
GlobeSt.com: Miami is experiencing a retail boom. Give me an overview of the market?
Diaz: Miami is now considered a “global city,” and as a result, there is tremendous interest from both investors and tenants. Accordingly, the vacancy rate dropped to 3.9% in the second quarter of 2014. That's the lowest I've ever seen it in my 38 years in the business.
Interestingly, most of the development action is in the urban core, where there are four mega- projects under construction and two in the final planning stages that will bring around 1.8 million square feet of new retail to the city. Those projects are Brickell City Centre, the Design District, The Mall at Miami Worldcenter, and MiamiCentral.
GlobeSt.com: Which of these developments are you most closely tracking?
Diaz: All of them are significant but I believe MiamiCentral, the 2.5-million-square-foot mixed-use transit-oriented development by Florida East Coast Industries, has the potential to be the most transformative. It will have about 185,000 square feet of retail space—which is slightly less than some of the other mega-projects—but because it will be the nexus for all the public transportation in the city, including the new All Aboard Florida high-speed passenger rail, some 12 million commuters are expected to pass through every year. That's a huge opportunity for retailers.
GlobeSt.com: So it's a landlord's market in Miami, even in the suburbs?
Diaz: It's definitely a landlord-driven business based on the low vacancy. Rents are going up and the value of land has skyrocketed. Even in places like Pinecrest, which is a bit south of the city center, rents that used to be $35 are now coming in at $50. Rents in the Design District have gone from $65 to $150 in the past two years. Rents in Wynwood have also doubled in that same time.
GlobeSt.com: What trends are you seeing in terms of new retailers moving into the market?
Diaz: Miami is very glitzy, so there's a lot of high-end, luxury retail, especially in the Design District. In terms of new categories, the coffee category is heating up—Juan Valdez from Colombia just entered the market. A homegrown coffee shop that started in Wynwood, Panther Coffee, is opening in Miami Beach and Coconut Grove. Restaurants are also big. There's been an influx of New York eateries. And then convenience stores like Wawa, RaceTrack and Cumberland Farms are all eying South Florida for expansions.
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