Several factors, including the economy’s overall health, consumer spending patterns, and the availability of retail space, can influence the retail real estate market. In addition, in recent years, the rise of e-commerce and consumer behavior changes have also significantly impacted the retail real estate market. This is no different for Miami’s performance.
According to CBRE’S Miami Q2 Retail Report, in the second half of 2022, retail sales in Miami increased by 6%.
Despite an uptick in vacancies, average retail space rentals in Miami increased by 1%.
We expect the number of square feet leased in new projects to be 25 percent less than last quarter.
Retail Performance in Miami
Miami’s retail market performed well during the second half of 2022. As a result, sales increased from the previous period and 2019.
Rising inflation affected the economy, with prices increasing for goods and services.
We expect Miami’s commercial real estate market to keep performing well, even though inflation has slowed down its positive growth.
Retail sales in Miami grew by 3.4 percent over the previous quarter and 6 percent compared to last year’s results. These increases were primarily due to solid performances in the apparel, home furnishing, and electronic sectors.
Despite a strong demand for commercial real estate, average retail space rents in Miami grew at an annual rate of 2.5%. However, rising inflationary pressures are beginning to affect the sector.
Therefore, we expect slow growth for the retail industry during the next six months.
Renting retail space in Miami has become increasingly tricky
According to MyEListings.com commercial retail listing data for Miami, average retail space rents increased significantly during the second half of 2022 compared to the first half of 2022.
This rise may be attributed to the continued growth of retail sectors in Miami, which has been experiencing strong performance in recent times.
Inflation has also been a significant factor in retail rents in Miami, as costs for items and services have risen.
We expect Miami retail space rents to increase at a moderate rate as the local economy grows slightly below inflationary pressure.
What is inflation doing to Miami’s retail sector?
Inflation has affected Miami’s retail industry by inflating the cost of living.
- Increasing the price of goods leads to higher consumer prices.
- Cutting back on wages, squeezing consumers’ wallets.
- As a result, it is difficult for retailers to hire employees, as people are increasingly unable to afford them.
- Restricting access to new locations or expanding existing ones.
- As a result, retailers are often forced to sell products at discounted prices to remain profitable.
Despite this inflationary pressure and lower purchasing power, the Miami retail industry grew well in Q2 2022, and we anticipate it to continue expanding moderately in the year’s remaining months.
Miami’s Retail Occupancy
During the second quarter of 20202, Miami’s commercial real estate market saw its occupancy rates drop slightly from the previous quarter.
The drop in business can be attributed to rising inflation, which has caused some firms to increase their price.
Despite the decline in hotel room rates, retail sales in Miami rose by 3.4 percent in the second quarter.
This could be because there has been an increase in tourists and people having more disposable income.
Miami Retail Space Investor Final Thoughts
Despite inflationary pressures, rising rates, and economic uncertainty, the retail industry in Miami is doing reasonably well.
- Miami’s real estate market saw second-quarter solid results in 2022, with increases across the board.
- Rents in Miami continue to climb as demand for prime real estate increases.
- As inflation continues to increase, so has its effect on Miami’s retail industry.
- Retailers should consider opening stores in Miami because the city has a prime location for growth.