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FORT LAUDERDALE, FL-Demand for retail space is outpacing supply in Broward County, a trend that is likely to continue into 2007, according to a new report from the local office of CB Richard Ellis. The overall retail vacancy dropped to 4.7% as all submarkets experienced strong positive absorption. The vacancy rate does not include leases committed but not yet signed. Asking lease rates rose to an average of $18.12 per sf countywide and to $21.04 per sf in Southeast Broward.

“Lesser quality tenants are being turned away in favor of well-established businesses seeking prime locations,” CBRE analysts report. The condition is a consequence of a population explosion and increased tourism, which combine with a scarcity of land. In addition, “the thirst for luxury goods continues to rise,” according to the report, “due to the multicultural makeup of South Florida and the amount of money flowing into the area.” It says luxury sales are up an average of 6.9% and tourism-related spending alone in 2004 added $56.6 billion to the state’s economy.

There is, according to CBRE, “tremendous demand for infill areas,…but essentially no available space for lease.” Investor demand for retail product will continue to remain unsatisfied, the report predicts. “With no end in sight, commercial developers see the need to buy now and build later by purchasing older centers on well located land with an eye for redevelopment.”

As land becomes scarcer, the redevelopment of existing centers will continue. “Older centers are being demolished…in order to offer more to the consumer. Demand will be strong enough to absorb new space, and vacancy rates will remain stable or decline,” the report concludes.

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