One of South Florida’s strengths is its retail market.
Before COVID-A9 hit, our retail vacancy rate was just 4.5%, one of the lowest in the nation. While the closing of big-box retailers often made negative headlines, the reality was that many other retailers were waiting for the space to be subdivided so they could fill the spaces with more contemporary concepts. The average asking rent was $38.18 in 2019, up from $34.81 the previous year.
But South Florida was hit hard by the pandemic and here were I and my colleagues at Urban-X Group opening a two million sq. ft. project with 346,000 sq. ft. of retail in 2020. River Landing Shops & Residences is a sparkling, eight-acre development on the Miami River, just three miles from the Brickell Financial District and 15 minutes from Miami airport. It has 135,000 sq. ft. of office, more than 500 market-rate apartments, and five marinas with water taxis that ferry residents downtown.
During the economic shutdown, we were anxious about whether our retail tenants would open as planned in the third quarter. To our surprise, 90% of them, including Publix, Burlington, Hobby Lobby, Ross Stores, Old Navy, Five Below, AT&T, and Chase Bank have moved forward and opened in the last few weeks. Their sales are exceeding their expectations under COVID-19 conditions and we continue to sign new leases. Planet Fitness, TJ Maxx, and Chick-Fil-A will open soon and, despite the continuing deleterious effects of the pandemic, we have been able to lease 81% of the retail space.
Miami’s retail fundamentals were strong before the crisis and they will be strong once the market is able to fully rebound and tourism returns. The demand for shopping, dining out, and entertainment will continue to be there for our domestic and international audiences. Consumers are adapting to a new normal of wearing masks and keeping their distance. Nothing can stop Floridians’ social nature. We are already experiencing healthy demand for shopping at River Landing Shops & Residence, which offers a modern urban lifestyle environment with views of the river and the city skyline.
Even though COVID continues to be hard to control, retail tenants keep reaching out to our leasing agents. They are scouting locations for restaurants and waterfront retail spaces to expand their footprints in the region or enter the Miami market in 2021. It’s refreshing to hear that retailers remain bullish on Miami because they have seen how strong we tend to come back after facing adversity.
In the 80s, Miami became the preferred playground for drug dealers and their money-laundering deals. In the 90s, it was forced to rebuild following the destructive effects of Hurricane Andrew. Later, we became the nation’s Ground Zero for home foreclosures and unsold condos languishing in the market.
Every time we’ve faced hard times, South Floridians have been able to overcome our challenges and grow stronger. Resiliency has become our nature. Not only will the market endure this crisis, but I believe that the new lessons being learned will make it stronger than ever.
Andrew B. Hellinger is CEO and co-principal of Urban-X Group, a real estate development and advisory company based in Coral Gables, Fla.