Why South Florida Retail is Like Jennifer Lawrence
Unlike the actress, South Florida retail isn’t merely hot, CBRE managing director Ken Krasnow tells us. “It’s on fire.” (It also lacks the appendages and dexterity to stop, drop, or roll.) Retailers want to be here, developers want to develop, and lenders want to lend to make it happen.
There’s an influx of new national tenants which, combined with regional and local tenants, makes for a very dynamic market, says Ken (who'll be a panelist at Bisnow’s South Florida Retail & Hospitality Summit at the InterContinental Miami on April 1). Miami’s urban core is attracting a lot of high-end, luxury retailers, while all around South Florida there are a lot of new restaurant concepts, grocery stores, and food retailers; health/wellness centers and specialty gyms; and a ton of new medical users, or “Med-tail” tenants. “Retailers that sell an experience, not just a product, are the ones that are thriving in this cycle and will do well in the foreseeable future,” he predicts. Ken's snapped at a recent Build Day event, a partnership between CBRE Cares and Rebuilding Together.
The heat is bringing in buyers looking for stable, unlevered, high-quality assets with solid demographics, CBRE’s Casey Rosen says. Properties like 4650 University Dr in Coral Springs, anchored by Walmart, which Income Real Estate Trust recently acquired from Dizengoff Group for $11M. Casey and colleague Dennis Carson repped the seller in the deal, along with Avison Young.
The heat has lenders eager for retail deals, too—a 180-degree turnaround from only a few years ago—with the money flowing to meet the demand among investors. “The volume of retail acquisitions in Miami is robust right now, particularly in urban areas,” Metro 1 Commercial CEO Tony Cho tells us. “There’s been a lot of action from New York buyers lately, and we’re seeing retail filling in around many new development projects in anticipation of new residents.” (New Yorkers don't just like to retire here, they work to make it a healthy, robust, dynamic market... so they can retire here.)
Metro 1 Commercial’s debt and equity division, M1 Capital, recently closed on its first venture finance transaction, a credit facility to provide acquisition and term financing for the buyers of Hibiscus Plaza in Miami’s Palmetto Bay neighborhood. The transaction included a 32k SF main building, 1,730 SF outparcel, a 7,220 SF rentable land parcel, and almost three acres. M1 Capital’s Alex Rey repped the buyer to secure financing though Mercantil Commercebank.
Another measure of the retail heat in South Florida: well-established upscale retailers are having no trouble competing with the influx of new retailers eager to tunnel into upmarket pocketbooks. Bal Harbour Shops operating partner Matthew Lazenby tells us that 2013 was yet another record-breaking year for the property, with sales increasing 7.4% over 2012, which, until 2013, had been its best year ever. Neiman Marcus and Saks Fifth Avenue enjoyed double digits for the year (we have the scarves to prove it), and so did the restaurants, with some individual restaurants up over 35% year-over-year. “Even our service businesses were up over 20%," says Matthew.
Finally, not all retail is bricks-and-mortar anymore, but it turns out that e-commerce companies need space—office space (the Internet needs people to take care of it)—and South Florida is beginning to attract these retailers. They’re looking for flexible use space for the development of new programs and services, and also centrally located space that’s convenient to transportation and their peers, Charles Cohen tells us. Charles owns the Design Center of the Americas in Fort Lauderdale, where Chewy.com, an online pet food and supplies retailer recently leased 15k SF for its corporate offices. JLL repped the tenant, while Cushman & Wakefield of Florida’s John Criddle and Marc Horowitz of Cohen Brothers Realty, repped the landlord. (Wanna learn more? Please join us for Bisnow's South Florida Retail & Hospitality Summit at the InterContinental Miami on April 1.)