Amid the Boom, Florida Faces Retail Challenges

MIAMI—How will the retail real estate investment climate in Florida to change over the course of 2015? What challenges are retail real estate investors facing in the current climate?

GlobeSt.com caught up with JLL managing director Carson Good to get his take on these and other questions about Florida retail in part two of this exclusive interview. If you missed it, you can still read part one: JLL Pegs Florida's Hottest Retail Markets.

GlobeSt.com: How do you anticipate the retail real estate investment climate in Florida to change over in 2015?

Good: If you look back two to three years, only institutional quality product in Dade and Broward County traded. Then investors moved out the risk spectrum to Tampa, Orlando, Palm Beach areas, and we're now seeing B and C quality product come to market in tier three and four cities.

Cities like Jacksonville, Naples, Tallahassee and Sarasota are also seeing retail product coming online. In 2015 we expect REITs to continue to prune the bottom portion of their portfolios, even though we've seen less pruning in Florida. Funds and REITs will become more interest in 2015 in retirement communities, because although small they have incredible growth prospects and with very steady consumer incomes. 

GlobeSt.com: What challenges are retail real estate investors facing in the current climate?

Good: Rising interest rates, lack of “values add” investment opportunities, continued cap rate compression are some of the challenges facing the retail market in Florida. Retail real estate investors and occupiers will continue to face pressure from the Internet, but integrating an online presence with in-store strategies is the optimal combination for success. The increased pace of change and the need for instant consumer gratification will only enhance the vitality of retail places and malls—and creating an experience in for shoppers will further centers' performance.