Fort Lauderdale, Florida Retail Market Report
Market Overview
Fort Lauderdale’s retail market reflects a complex landscape influenced by household dynamics, tourism, and construction activity. Leasing activity has slowed down, with a decrease in the amount of space leased compared to previous years. However, positive net absorption has contributed to a decline in vacancies, which are currently lower than the five-year average. Given that tenant departures are staying at or below the historical average over the long term and with only a limited increase in available properties, the vacancy rate is anticipated to continue to be low for the next several years.
Highlights
- The combination of robust household expansion and increased income has led to a growth in purchasing power for Fort Lauderdale, surpassing 41%.
- Retail sales have seen robust growth over the last 12 months for bakeries, general merchandise stores, and restaurants.
- The 12-month sales volume for the Fort Lauderdale retail market is $838 million.
- Most of the construction activity in the past 12 months has been focused in the NW Broward/Coral Springs and Southwest Broward Submarkets.
Rents | Vacancy | Construction
As of Q4 2023, Fort Lauderdale boasts the third-highest retail rental rates among all the markets in Florida, trailing only behind Miami and Palm Beach.
Net absorption continues to be strong, with approximately 200,000 square feet absorbed by the end of Q2 2023, following the absorption of over 150,000 square feet in Q1 2023. Due to this absorption trend, vacancy rates are anticipated to stay low, with an increase of less than 0.5% projected for most submarkets and approximately 0.3% for the entire Fort Lauderdale market. The 12-month vacancy rate currently stands at 3.3%. Rent increases in the retail sector surged into double digits starting from Q2 2022 and extended into Q1 2023. However, the increase rate has decelerated to approximately 6.8% annually, which remains notably higher than the five-year historical average growth rate of 6.1%.
The retail construction activity in Fort Lauderdale continues to be constrained, primarily due to a significant decline in new construction projects since 2019. Approximately 540,000 square feet of new retail space are in progress, with more than 220,000 square feet completed in the past year. This limited construction activity is expected to lead to a low number of new retail property completions over the next few years, keeping the additions to the inventory below the 10-year historical average of approximately 670,000 square feet, at least until 2025.
Sales
Fort Lauderdale, by the Numbers in the Last 12 Months
Source: CoStar Group
- Sales Volume: $838M
- Vacancy Rate: 3.3%
- Deliveries in SF: 303K
- Net Absorption in SF: 759K
- Rent Growth: 6.8%
Investments in the Fort Lauderdale retail market have experienced a slowdown, with the market totaling slightly more than $420 million in transactions yearto-date. This is a notable drop compared to H1 2022 when the market witnessed over $735 million in trading activity. Taking a broader view, Fort Lauderdale has historically been a vibrant market for retail investment sales, as evidenced by the record-breaking volume in 2022, which surpassed $1.55 billion, surpassing the previous record of $1.54 billion set in 2021.
