By Barbra Murray, Contributing Editor
A new Miami Downtown Development Authority report proves it’s clear the sun is shining on Downtown Miami’s retail market, and the numbers—like the $4.5 billion in revenue in 2014—tell the story.
Miami DDA tapped Integra Realty Resources to conduct the study, and the findings are good news for the local retail real estate sector. There are three strong demand drivers behind the market’s success, one of which is residential growth. Greater Downtown Miami’s population has doubled since 2000 and is expected to increase 39 percent over the next three to five years. Additionally, employment is on the upswing, spurring demand for additional services. And visitation continues to increase. In 2014, Miami-Dade County saw a record number of tourists, 30 percent of whom visited the downtown area, setting another record.
With strong demand drivers in place, developers are eager to capitalize on Downtown Miami’s retail market, as evidenced by the 1.4 million square feet of new space scheduled for construction within the next three years. It’s a fine time to own retail space in the area. Rents have increased a remarkable 28 percent over the last two years, with the asking rate reaching an average $37 to $39 per square foot in late 2015.
Recent retail transactions in Greater Downtown Miami have also been traded at cap rates below 4.5 percent on average, showing the increasing investor interest in urban and high-street retails as well as the expectation in the market of the upside potential due to improving fundamentals and opportunistic investment, the report said.
With a consistently rising number of residents, jobs and visitors, it’s a perfect storm for the Downtown Miami retail market’s continued success.
“Downtown Miami retailers are generating sales north of $500 per square-foot—a figure that is raising eyebrows and capturing attention from major brands. Considering the substantial growth we have seen across the major demand drivers and the large-scale developments set to deliver, we expect these trend lines to hold steady,” said Anthony Graziano, author of the report and executive director of IRR.