Broward County & Palm Beach County Shopping Center Market Report
Market Overview
Palm Beach County, Florida, is renowned for its small-town charm and exceptional quality of life, making it an attractive location for new and expanding shopping centers. Similarly, Broward County is an appealing market for general retailers because of its close proximity to the beach. The slight decrease in space availability in both submarkets indicates high demand and room for growth in the near future.
Palm Beach County by the Numbers
- Deliveries (SF): 262,000
- Net absorption (SF): 80,500
- Vacancy rate: 3.4%
- Rent growth: 6.6%
- Sales volume: $581M
Last 12 Months | Source: CoStar Group
Palm Beach Submarket Performance
Due to a lack of available space, retail leasing has slowed in the past 12 months. As of Q2 2024, the availability rate is 4.7%, still below the five-year average of 5%. Over 1.8 million square feet were leased through Q1 2024, down from the recent peak of over 2.4 million square feet as of Q3 2021. Retail space availability will remain tight over the next few years with minimal supply additions and below-average moveout rates.
A notable decrease in space availability with muted construction efforts resulted in a market supply decrease. Annual net absorption is at -81,000 square feet, below the five-year average of 470,000 square feet. As the market sees a slowdown in immigration and job growth after the elevated levels in Q1 2022, it is expected to see a normalization in net absorption after its peak of 1.5 million square feet in Q1 2022. General retail and neighborhood centers are seen to make up the majority of retail inventory in the market. As tenant moveouts remain minimal and space availability remains low, an increase in availability is unlikely.
Palm Beach County’s high net-worth area attracts and influences resident spending, resulting in a 6.6% annual increase in rent for retail spaces, although this number has slowed since Q3 2023. High interest rates and elevated land values also slow construction steadily.
Vacancies are expected to remain tight, expanding around 0.3% for Palm Beach County through 2025. With an overall healthy labor market, Palm Beach County continues to foster a drive in consumer spending. They are maintaining a slow, yet healthy, absorption rate in the area, considering the available space in the market. In the near future, the historically tight vacancy rate of less than 4% is expected to continue.
Palm Beach County Sales
Transaction value in Palm Beach County has slowed over the last year, with $589 million in trades, which falls below the $924 million documented over the past 10 years. This is also a comedown from the record in 2022 of over $1.37 million in retail investment sales.
Since 2019, the average yearly transaction appreciation has been about 40%. However, price escalation has begun to taper off since Q2 2023. Economic challenges are expected to slow pricing gains further as higher interest rates drive growth in cap rates. A market pricing correction is anticipated in the long term.
Broward County by the Numbers
- Deliveries (SF): 283,000
- Net absorption (SF): 354,000
- Vacancy rate: 3.7%
- Rent growth: 4.7%
- Sales volume: $733M
Last 12 Months | Source: CoStar Group
Broward County Submarket Performance
Retail leasing in Broward County has slowed over the last 12 months due to minimal space availability. Over 2.7 million square feet were leased in Q1 2024, down from peak levels of 3.3 million square feet in Q2 2021. Total leased square footage now takes up over 13% of available space. Net absorption remains healthy at -350,000 square feet despite annual net absorption being down from the five-year average of 420,000 square feet.
Healthy demand has resulted in positive annual net absorption, driving availability down to 4.3% as of Q2 2024, below the five-year average availability rate of 4.9%. As tenant moveouts remain low and supply remains limited, space availability is predicted to stay narrow. Absorption gains will continue to hold back until new products become available.
Lack of space availability is impacting absorption across retail segments. Half the leasing activity in the market is focused on general retail, with another 30% focused on neighborhood centers and the remaining split between malls, strip centers, and power centers.
Broward County Sales
Broward County serves as an active market for retail investment sales. However, over the past 12 months, transaction volume has slowed to just over $691 million in trades, compared to the annual transaction volume of $1 billion over the past 10 years. Since Q2 2023, price growth has begun to slow.
