South Florida Shopping Center Market Report
South Florida Market Overview
South Florida’s retail market is characterized by strong rental performance and healthy absorption rates in various submarkets. Broward County boasts competitive retail rents and decreased vacancies, while construction activity remains active with several retail properties underway. Palm Beach follows closely with impressive rent growth. The vacancy rate is low, with limited supply additions contributing to a promising near-term outlook. Martin and Port St. Lucie submarkets have also seen rent growth and reduced vacancies. Sales activity has been robust, with Broward County and Palm Beach attracting significant investment.
Highlights
- There are currently 480,000 square feet under construction in the Broward County market.
- Despite having the fifth-largest supply pipeline among all Florida markets, Palm Beach’s retail vacancy rate is the fourth lowest across the state.
- The 12-month sales volume for Martin is $28.8 million.
- The market cap rate for Port St. Lucie currently stands at 6.6%, the lowest cap rate recorded in the submarket in the past five years.
Broward County
Vacancy | Rent | Construction
Broward County has the third-highest retail rents across all Florida markets, with rents standing over $34 as of Q3 2023. Downtown Fort Lauderdale carries the highest rents, followed by Southwest Broward and Hallandale. Vacancies have decreased in the past year to a current rate of 3.3%. Net absorption in the market remains healthy, with over 250,000 square feet absorbed in Q2 2023. Currently, there are 25 retail properties under construction, and over the past year, more than 220,000 square feet have been delivered.
Sales
Broward County has been an active market for retail investment sales, reaching $1.1 billion in sales volume in the last 12 months. However, after experiencing pricing appreciation of over 30% since 2019, price growth started to slow in Q2 2023. So far, the largest property traded this year was the 72,282 square feet Publix-anchored stables in the village of Golf, which was sold for over $38 million.
Palm Beach
Vacancy | Rent | Construction
Palm Beach has the second-highest retail rents across all Florida markets, after Miami, at around $35 per square foot as of Q3 2023. Rent growth remains strong, with annual gains at around 9.4%, exceeding the five-year historical average growth of 5.7%. The current vacancy rate is 3.6% and will most likely remain below 4% in the near-term forecast due to limited supply additions. There is approximately 490,000 square feet of new retail space underway, and around 400,000 square feet has been delivered in the last 12 months. Construction activity is mainly concentrated in the Palm Beach and Boynton/Lantana submarkets.
Sales
There has been notable investment activity in Palm Beach, with a 12-month sales volume of $622 million. Pricing appreciation in the market has been significant, with prices increasing over 37% from 2019 through Q2 2023. The largest property trade in the last 12 months involved a 72,000 square feet retail center located in the Boynton/Lantana Submarket. The combined trade totaled $41 million.
Martin
Vacancy | Rent | Construction
Rents in the Martin retail submarket are approximately $21 per square foot, indicating a 4.6% increase from 2022. Vacancies are currently at 3.1%, showing a decrease of 0.6% over the past 12 months. During this period, 69,000 square feet has been absorbed, and 43,000 square feet of new retail space has been delivered. Currently, there are around 29,000 square feet of retail space under construction in Martin, representing a minor 0.7% expansion of the inventory.
Sales
Martin is a popular choice for retail investors, with the recorded transaction volume reaching $29.1 million in the past year. The general retail sector drove a majority of the volume. In the past 12 months, there have been 15 sales in Martin, with an average sales price of $500 per square foot. The estimated market price for the submarket is $253 per square foot. The market cap rate for Martin is 6.4%, which is slightly below its trailing three-year average of 6.6%.
Port St. Lucie
Vacancy | Rent | Construction
Rents in the Port St. Lucie retail submarket have increased by 4.7% in the last 12 months to a current rate of $22 per square foot. Vacancy in the Port St. Lucie retail submarket is currently at 4.5%, showing a decrease of 0.5% over the past 12 months. During this period, 53,000 square feet has been absorbed, and the total availability, including sublease space, is 5.3% of all inventory. There are 29,000 square feet of retail space in the construction pipeline.
Sales
Port St. Lucie has been an active and heavily traded submarket in the region, attracting significant interest from investors. In the past year, the recorded transaction volume amounted to $61.7 million. There have also been 36 sales in the Port St. Lucie submarket in the last 12 months, with an average sales price of $122 per square foot. The estimated value for the entire submarket is $225 per square foot. The market cap rate for the submarket is 6.6%, which is slightly below its trailing three-year average of 6.8%.
