Economic uncertainty has caused unease at times for retail this year — but South Florida continues to show resiliency, as the area enjoys a population boom from the pandemic.
Recent reports from Colliers found that the second quarter vacancy rates in Miami-Dade County and Broward County were only 3.2 percent and 4.1 percent, respectively. For context, the brokerage's national average was 4.3 percent during the second quarter.
POPULATION BOOM CONTINUES TO PAY DIVIDENDS
The firm's Senior Vice President Zach Feldman, who focuses on South Florida, highlighted the population growth as a big factor in why the CRE retail fundamentals continue to hold strong in the region.
"You're seeing neighborhoods, multifamily users, developers coming to South Florida [and] continuing to make a huge push," he told GlobeSt.
"Single family homes are continuing to pop up all over the Palm Beach, Tri-County market."
During 2020 and 2024, Miami's residency base grew by 325,000, according to Census Bureau data. Additionally, over the past five years, Fort Lauderdale has seen about 94,000 new residents, while West Palm Beach has added about 88,000. Feldman noted that South Florida migrants are unsurprisingly attracted to the warm climate and the income tax-free environment.
Plus, the return to office mandates are adding another dynamic.
"You're seeing a lot of people and a lot of companies bringing people back to the office. That is driving the daytime population, which is helping sales for retailers, QSR, restaurants and so forth," Feldman explained.
SOUTH FLORIDA RETAIL STRONGER THAN EVER DESPITE NATIONAL UNCERTAINTY
Interestingly, the South Florida retail sector appears to be as strong as ever, at least in Feldman's point of view, even as the nation deals with economic uncertainty mainly due to federal trade policy. He attributes this again to the population growth.
"South Florida, particularly, I think, is pushing through a lot of that (the uncertainty) just because of the [population growth] in all markets, he said.
"Restaurants that were struggling before are now much stronger within this market, just because of the high population growth."
Particularly, there has been a wealth migration to South Florida, which is also having some influence on retail in the region.
CREATIVE DEVELOPERS WILL FIND RETAIL OPPORTUNITIES
Looking ahead, Feldman thinks there will be plenty of investment opportunities in the retail space in South Florida due to the limited supply and high demand in the area. Particularly, he predicts this will create room for retail developers to make plays, as he sees construction costs starting to stabilize in the area despite them rising in recent years.
"I think there's going to be a lot of opportunity with getting creative with site plans and changing the dynamic of [a] project," Feldman anticipates.
"I'm seeing that there is upside when it comes to rents. You can buy an asset where the rent might only be x per square foot and you're able to put a substantial increase on that just due to the strength of the market."
In addition to retail, Feldman sees, currently, a robust market for CRE in general in South Florida. This includes "a huge uptick" in deal flow and "extremely high demand."
Whether that continues in the coming months with national economic uncertainty remains to be seen. But as of now — business is booming in South Florida.
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