Originally struggling due to the COVID-19 pandemic, Miami retail has bounced back with a vengeance. Out-of-state investors, specifically from New York and California are driving activity throughout the metro and the state. The returned demand for retail space has helped Miami lower its vacancy rate to a healthy 3.4 percent in the past few quarters. Rent growth, recorded at 6.3 percent, is surpassing the national average as owners take advantage of the hot market and raise rents. The major metro is experiencing a strong development pipeline, but many of the spaces are pre-leased, leaving the fundamentals of the retail market to stay the same. One of the largest developments in the work is a mixed-use building, Miami Worldcenter. The property will include a boutique hotel and around 2,000 residential units, and 300,000 square feet of retail space.
Transactions have picked up during the past few quarters after a slight slowdown at the start of the pandemic. Although active, Miami is one of the most expensive retail markets in the U.S., compressing cap rates well below the national average at 5.6 percent and an average market price of $400 per square foot. The largest deal of the year was Westland Mall, a 315,983 square foot building that closed at over $149 million. Low cap rates can also be attributed to the rapid appreciation of Miami assets.