Miami’s retail market is booming. Beyond Lincoln Road and the suburbs, Downtown Miami’s retail market is blazing, with $4.5 billion in revenue in 2014, according to the Miami Downtown Development Authority.
Demand still exceeds supply for multi-tenant retail from the across Miami-Dade County. The lack of inventory is driving new development, driving up investment prices and impacting rents. Indeed, many are taking a second look at Miami’s retail market.
These were some of the insights shared during the fifth annual University of Miami Real Estate Impact Conference, hosted by the School of Architecture and the School of Business Administration in February 2016. In a talk entitled “A Fresh Look at Retail,” The Witkoff Group’s CEO, Steve Witkoff, interviewed Donald Wood, president and CEO of Federal Realty Investment Trust, who discussed topics ranging from open air and closed mall development, targeting cities or suburbs and public versus private ownership.
Witkoff kicked off the interview with a broad brush of global realities: “We’re seeing U.S. GDP growth. The dollar is strong. Many economists talk about the U.S. consumer as being the difference between 2 percent GDP growth and a possible recession. Some are saying the likelihood of a recession has risen to 30 percent in 2016.”
Federal Realty Investment Trust has made big bets on South Florida. In partnership with Grass River Property and Comras Company, Federal acquired the iconic CocoWalk asset for $87.5 million last May. The 198,000-square-foot lifestyle center is a close commute to Miami’s Brickell, Downtown, Coral Gables, and Key Biscayne neighborhoods. Coconut Grove has a daytime population with over 1 million square feet of office space within walking distance, five existing and three planned hotels, a number of schools, and one of Miami’s strongest residential markets.
In October, the firm partnered with Grass River and Comras to buy an 85% interest in The Shops at Sunset Place, a 515,000-square-foot, mixed-use center in South Miami. Sitting on about 10 acres at the intersection of US1, Red Road and Sunset, The Shops at Sunset Place lies at ‘main and main’ within the thriving South Miami commercial district. About 100,000 people reside within three miles of the property, with an average household income of $120,000.
With big deals like these, Wood is not looking at 2016 as much as he’s looking at 2023 and 2028. That’s because the capital his firm deploys on any project or initiative isn’t influenced as much by what is happening in the economy today as much as it is on cycles, location and product.
“What we are seeing suggests a continued migration to urban areas from suburban and more rural areas,” Wood said. “Everybody has a different definition of urban. For some it means downtown—ground zero. For others it means Coconut Grove or South Miami. Consumers, from our view, are clearly coming in closer.”