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MIAMI-Sales of South Florida shopping centers achieved record levels in 2003–surpassing $1.1 billion–and the market is expected to remain robust this year, according to a new report by Marcus & Millichap Real Estate Investment Brokerage Co.The company’s Retail Research Report for the South Florida market shows that the growing population and improving economy in the area will maintain investor interest in retail properties. According to Gene A. Berman, senior vice president and regional manager of Encino, CA-based Marcus & Millichap’s Fort Lauderdale, FL, office, in the last few years, the local economy outperformed most regions nationwide. “Demographic trends indicate that the market’s resilience is likely to continue,” Berman states in the report. “Retail investors have taken notice and poured large amounts of capital into the market, pursuing the limited supply of available single-tenant assets as well as shopping centers.”

Sales activity was particularly strong last year with neighborhood and community retail centers, the report says. The median price per sf for these properties last year was $126, down from $129 per sf the year before, as the properties traded were older. However, overall, the median price per sf for shopping centers rose from $99 per sf in 2002 to $108 per sf last year. Fairly inexpensive financing is expected to result in an active market again this year. The report also states about three million sf of new retail space is expected to be delivered this year. Even more–four million sf–was completed last year, with 1.8 million sf of that, including five supermarkets, in the Palm Beach market. An extra 1.4 million sf of retail space was completed in Fort Lauderdale in 2003, while 800,000 sf was completed in Miami. The new space this year should be pretty equal in the three metropolitan service areas.

In addition, retail property owners should expect vacancy rates to decrease and rents to increase. The vacancy at neighborhood and community centers is anticipated to drop from 6% last year to 5.7% this year. Rental rates are expected to grow by 2.5% to $17.78 per sf this year, while effective rents are expected to rise by 1.6% from $15.92 per sf to $16.17 per sf.

The report also forecasts that South Florida will add 45,000 new jobs this year, up from the 37,000 new positions added last year. Last year, the strongest employment figures were reported in Palm Beach, which gained 18,500 new jobs. And 14,000 more positions are expected to be added there this year.

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