Southeast Retail Overview

The Southeast’s commercial real estate markets have undergone significant transformation due to rapid population migration into the region since the onset of the pandemic. Many southeastern metro areas now require new development, with cities expanding into previously rural land. In Nashville and Charlotte, growth in the suburbs has created demand for grocery stores and basic-needs retailers. Meanwhile, increased density in cities like Atlanta and Miami has boosted the utilization of existing retail spaces. Although nationwide population migration has slowed, the South continues to lead early estimates for 2024.

Two major announcements in the manufacturing sector are likely to further boost demand and production in Ohio. Intel’s $20 billion facility in Licking County is progressing, though its opening date has been pushed past 2025. When completed, the factory will occupy 2.5 million square feet of industrial space. Meanwhile, Abbott is building a $536 million production facility in Bowling Green to meet the growing demand for baby formula. Both projects will drive industrial space demand, both directly and indirectly, with demand for additional distribution space expected to rise sharply as goods begin to flow from these new facilities.

 

Beyond population growth, the types of jobs moving to southern cities are further driving retail demand. Higherpaying employment opportunities are fueling consumer spending in the region. Florida recorded the nation’s strongest growth in this area last year, while Georgia, the Carolinas, and Tennessee also outpaced the national average in spending growth. Strong long-term consumer expectations in the Southeast are spurring rapid retail expansion. Both local firms, such as Publix, and national retailers, like Boot Barn, are eager to enter southeastern markets but are struggling to find available retail space. This scarcity has driven rental rates higher, exacerbating retail market tightness, which is already at record levels across the Southeast.

 

Atlanta

By the Numbers

• Vacancy: 3.7%
• Annual Net Absorption (SF): -61,000
• SF Under Construction: 600,000
• Rent per SF: $22.96
• Annual Rent Growth: 4.0%
• Average Price per SF: $222
• Average Cap Rate: 7.0% | Source: CoStar Group

 

Since 2014, Atlanta’s population growth has roughly doubled the U.S. average pace, and median household income growth has surpassed the national average since 2020. Favorable demographic trends continue to drive demand for retail space and support the market’s expansion. The metro’s fastest-growing and highest-spending neighborhoods, concentrated in the northern suburbs, are expected to capture a significant share of new retail demand. However, areas within the perimeter will also benefit from increased population density and job growth. High-paying office jobs and accompanying multifamily developments in Midtown, West Midtown, and the Eastside are boosting buying power in these premier in-town neighborhoods, where mixed-use retail is common.

 

Atlanta’s retail vacancy rate has remained below 4% since early 2021—90 basis points lower than the national average of 4.7%. Low vacancy is consistent across product types, with Atlanta malls reporting a vacancy rate of just 3.7%. For three consecutive years, absorption in the metro area has outpaced new completions, and with only 0.2% of inventory currently under construction, the limited supply pipeline is unlikely to reverse the market’s tightening conditions.

 

While Atlanta’s sales market has experienced fewer transactions since interest rates began rising in 2022 and 2023, sales metrics have remained strong. Since 2022, the average retail cap rate nationally has increased by nearly 20 basis points, yet Atlanta continues to experience cap rate compression—a testament to the city’s exceptional retail performance over the past three years. Investors are drawn to the market’s robust demographic drivers, resulting in nearly 5% price appreciation over the last 12 months. This stands out against the national trend of flat price movement during the same period.

 

Miami/Fort Lauderdale

By the Numbers

• Vacancy: 3.2%
• Annual Net Absorption (SF): 172,000
• SF Under Construction: 1,550,000
• Rent per SF: $43.01
• Annual Rent Growth: 2.2%
• Average Price per SF: $391
• Average Cap Rate: 5.7% | Source: CoStar Group

 

South Florida’s robust population growth has created a high-performing and stable environment for retailers in the region. This rapid growth, however, presents a double-edged sword for businesses. On one hand, the influx of residents drives increased demand for a variety of retail products. On the other, limited housing options strain consumer budgets. Housing inflation in South Florida significantly outpaced the national average in 2022 and 2023, putting additional pressure on spending. While consumer spending in Miami and Fort Lauderdale remains well above pre-pandemic levels, its growth has slowed due to rising housing costs. One mitigating factor is that many new residents come from high-income states like New York and New Jersey, providing additional spending power beyond the average newcomer.

 

Miami and Fort Lauderdale both maintain a retail vacancy rate below 4%, but net absorption trends highlight a divergence between the two markets. In the 12 months preceding October 2024, Miami saw an additional 968,000 square feet of retail space absorbed, while Fort Lauderdale experienced negative annual net absorption. This has resulted in a disparity in vacancy rates, with Miami at 2.7% and Fort Lauderdale at 3.9%. Construction activity mirrors these trends, with over 1 million of the 1.55 million square feet under development located in the Miami metro area.

 

Residential and inland areas of Miami are experiencing the lowest retail vacancy rates as retailers strive to meet heightened demand in strip malls, grocery-anchored centers, and power centers. Developers, however, are focusing on new projects in areas like South Beach, North Miami, and Miami Gardens rather than in high-demand zones stretching from Hialeah to Homestead. Similarly, Southeast Broward County and Hallandale are seeing notable construction activity due to their proximity to Miami.

 

Investor appetite has been dampened by rising borrowing costs, but the primary factor slowing sales volume over the past two years has been a lack of listings. Sellers, buoyed by strong property performance, are reluctant to reduce prices to align with buyer expectations. With rent growth in South Florida consistently outpacing both inflation and national retail rent growth since 2021, many investors are opting to hold onto their assets rather than sell.

 

Average pricing varies widely across the region. Retail properties in Miami Beach and Downtown Miami/Brickell can trade for as much as $800 per square foot for high-performing assets. Meanwhile, assets in northern Broward County and inland portions of Miami-Dade County frequently transact in the $250-$350 per square foot range. Downtown and Central Fort Lauderdale represent a midpoint, offering investors a balance of heightened foot traffic without the high entry costs associated with Miami Beach.

 

Tampa

By the Numbers

• Vacancy: 3.0%
• Annual Net Absorption (SF): 1,183,000
• SF Under Construction: 318,000
• Rent per SF: $26.30
• Annual Rent Growth: 4.2%
• Average Price per SF: $267
• Average Cap Rate: 6.5% | Source: CoStar Group

 

Tampa’s retail market has maintained a low vacancy rate since the onset of the pandemic. The city benefited from lighter COVID-19 restrictions compared to other parts of the country, which helped sustain foot traffic at retail centers and office buildings. While retail performance in Tampa held steady in 2020, it has tightened significantly in the years since. A unique feature of Tampa’s market is the tightening mall vacancy rate, driven by two high-performing malls in Westshore.

 

Tampa’s retail inventory is well-positioned, with the metro’s two largest submarkets—Westshore and East Tampa—recording vacancy rates even lower than the metro average. In Westshore, proximity to high-end offices, Tampa International Airport, and Raymond James Stadium keep retail shops and centers bustling year-round, compressing vacancy to a record low of 1.1%. Meanwhile, East Tampa boasts a vacancy rate of just 1.0%, also a record for the area. With no new spaces under construction in East Tampa, rent growth is expected to remain above 4% in the coming years. These two submarkets are not in direct competition for tenants; Westshore commands rental rates well above the market average, while East Tampa remains a suburban district with rents aligned with the overall metro level.

 

Downtown Tampa recorded a vacancy rate of 4.0% in 2024, which is below the national average but higher than the metro average. Negative net absorption during the second half of the year contributed to the slight vacancy increase. However, the Central Business District is expected to see improved fundamentals in 2025 and 2026, with only 21,000 square feet of new space set to enter the market. For comparison, approximately 52,000 square feet were delivered in Downtown Tampa in 2023 and 2024.

 

Defying national trends, transaction velocity in Tampa’s retail market has risen each quarter in 2024, culminating in $390 million in deal flow during Q3. While annual transaction velocity has declined in most cities, Tampa recorded a 12.4% increase in sales volume from Q3 2023 to Q3 2024. The market’s strong performance suggests that transaction activity could accelerate if borrowing costs ease in Q4 2024 and early 2025.

 

Nashville

By the Numbers

• Vacancy: 3.1%
• Annual Net Absorption (SF): 680,000
• SF Under Construction: 765,000
• Rent per SF: $28.23
• Annual Rent Growth: 2.7%
• Average Price per SF: $268
• Average Cap Rate: 6.3% | Source: CoStar Group

 

Like other Sunbelt metros, Nashville has greatly benefited from accelerated migration trends during and after the pandemic. The city is well-positioned to sustain and expand its population growth more effectively than other Sunbelt cities, thanks to significant corporate movement that has diversified its economy. Once dominated by leisure and hospitality employment, Nashville now boasts a more balanced job market. Major employers such as Oracle, Facebook, and Amazon have bolstered the city’s workforce, creating a retail market that caters to consumers across the income spectrum.

 

Retail vacancy in Nashville has been further reduced by the entry of several national and West Coast brands into the market over the past few years. Companies like Dutch Bros Coffee have driven demand for freestanding buildings, while expanding grocers such as Publix and Aldi have taken larger spaces in community and neighborhood centers. Notable leases also include experiential tenants like The Picklr and various gyms and fitness centers.

 

The metro’s tight retail market has resulted in fierce competition for space, with new lease listings being quickly absorbed and rental rates under significant upward pressure. Retail rents in Nashville have grown faster than the national average since 2014, and the pace of rent increases continues to outstrip the U.S. average by approximately 30 basis points. Despite this, developers have been slow to respond to the constrained supply, with construction starts in 2024 reaching their lowest level in Nashville since at least 2014.

 

Unlike most major markets, year-to-date retail transaction volume in 2024 is in line with historical averages and is outperforming the first three quarters of last year. Prior to 2020, investors could acquire retail spaces in Nashville at entry costs well below the national average, which drove significant activity from private investors. However, since 2020, a wave of corporate relocations to the city has attracted the attention of larger funds and institutional investors, recognizing Nashville’s growing potential.

 

This heightened buy-side interest has fueled a sharp increase in pricing growth. At the end of 2019, per-square-foot pricing in Nashville was $16 below the national average. Today, it stands $20 above the U.S. average, reflecting the metro’s remarkable transformation and appeal to investors.

 

Jacksonville

By the Numbers

• Vacancy: 4.3%
• Annual Net Absorption (SF): 1,179,000
• SF Under Construction: 299,000
• Rent per SF: $25.06
• Annual Rent Growth: 5.3%
• Average Price per SF: $242
• Average Cap Rate: 6.8% | Source: CoStar Group

 

Jacksonville has experienced some of the strongest GDP and population growth in the nation since the onset of COVID-19. The market has become a significant destination for relocating companies, with notable growth in both blue-collar and white-collar segments of the workforce since 2020. As Jacksonville’s multifamily and industrial markets have expanded to accommodate these population gains, the retail market has tightened considerably. Tenants, particularly those seeking spaces 20,000 square feet or larger, are finding it increasingly challenging to secure properties in the city’s most desirable submarkets.

 

Over the past 12 months, new construction has marginally outpaced demand, driven by exceptionally high construction activity in early 2024. However, the construction pipeline began to narrow in Q2, allowing net absorption to surpass completions from April through Q4. Strong leasing activity led to a 30-basispoint drop in vacancy from Q1 to Q3 2024, although, several speculative construction projects finalized in 4Q. This trend is expected to continue into 2025, as developers are currently working on the smallest volume of space under construction in Jacksonville since 2015.

 

St. Johns County has been particularly impacted by limited available space, with retailers eagerly targeting this affluent and rapidly growing suburb. Nearly 20% of all leasing activity in 2024 has occurred in St. Johns County, despite it accounting for only 13% of the metro’s total retail inventory. This high demand has pushed the vacancy rate in the submarket to just 1.7%. The tight conditions in St. Johns County is also driving demand in other southern portions of the metro.

 

While total trading volume has declined significantly from 2022 levels, retail properties in Jacksonville have held their value better than in most other markets. Since the rise in interest rates, average cap rates have continued to compress, and per-squarefoot pricing has steadily climbed. This resilience reflects strong market performance, with rent growth of 6.2% in Q3 2024—among the highest in the nation for a single market, regardless of property type. Retail assets are not typically sought after for rapid rent growth, but Jacksonville’s retail market continues to deliver exceptional returns for investors.

 

The Carolinas

By the Numbers

• Vacancy: 2.7%
• Annual Net Absorption (SF): 2,212,000
• SF Under Construction: 2,631,000
• Rent per SF: $19.52
• Annual Rent Growth: 2.0%
• Average Price per SF: $189
• Average Cap Rate: 7.4% | Source: CoStar Group

 

Institutional investor perception of the Carolinas has transformed significantly over the past decade. Once dominated by private investors, the major metros of North and South Carolina have successfully attracted increased levels of out-of-state and institutional capital. This shift is largely due to the high-profile businesses relocating to the region, including Apple, Meta, and numerous pharmaceutical companies in Raleigh-Durham, as well as Robinhood and LendingTree in Charlotte. Many of these firms are drawn by the region’s prestigious academic institutions, and the retention of graduates within the Carolinas has further augmented the region’s impressive population growth.

 

In North Carolina, the Triangle remains the tightest retail market, with limited availability stretching from East Raleigh to Burlington. Less than 10% of new space coming to market in this area is available for lease, reflecting robust demand for high-end retail near Raleigh-Durham’s universities and business parks. Retail space in Research Triangle Park (RTP) has performed exceptionally well, even as work-from-home policies have reduced foot traffic in the submarket. RTP’s retail vacancy is just 0.7%. Residential submarkets near RTP have also outperformed, with downtown areas in Raleigh and Durham recording lower occupancy rates than the broader metro or state averages.

 

While Greensboro-Winston-Salem and Charlotte have slightly higher retail vacancy rates than Raleigh-Durham, these markets still report sub-4% vacancy, well below the national average. Winston-Salem, in particular, has benefited from spillover demand from Charlotte, contributing to nearly 300,000 square feet of net absorption over the past 12 months. By contrast, Charlotte and Greensboro have seen slightly negative absorption figures, primarily due to a few notable move-outs combined with a highly competitive leasing environment. Retail space in Charlotte leases significantly faster than the national average, with a turnaround time of less than six months compared to the typical eight months nationwide.

 

In South Carolina, coastal communities are experiencing increased interest from both retailers and investors. Hilton Head, long a hub for retail and hospitality, is seeing population growth augment its tourism-driven revenue. Retail vacancy remains low along the coast, from Hilton Head to Myrtle Beach. Rents in Charleston and Hilton Head are well above the state average and even surpass levels in Columbia, yet they continue to rise at a brisk pace of 3% annually. Inland areas like Greenville are also outperforming, with exceptionally strong leasing f igures through the first three quarters of 2024.

 

Sales activity in both North and South Carolina has been significantly impacted by higher borrowing costs since the Federal Reserve began raising interest rates. In North Carolina, the Triangle has experienced the sharpest decline in transaction volume among the region’s major metros, likely due to strong performance and limited property listings rather than a lack of investor interest. Despite rising capital costs, sales pricing in the Triangle recently set a record at $256 per square foot. Meanwhile, Asheville is undergoing a notable recovery in transaction velocity. Since early 2024, sales volumes in Asheville have surpassed pre-pandemic levels, suggesting that the market’s growth could be just the beginning of broader momentum for North Carolina metros during the current rate-cutting cycle.

 

In South Carolina, investors have increasingly focused on the strong performance trends and longterm growth drivers of the state’s coastal metros. Charleston has experienced significant population growth alongside a surge in activity at the Port of Charleston, which has generated a wealth of auxiliary employment opportunities in the metro. Consequently, entry costs in Charleston exceeded the national average for the first time on record in 2021, and the premium required to enter the market has continued to grow. The average pricing now stands at $266 per square foot, $18 above the U.S. average.

 

Birmingham

By the Numbers

• Vacancy: 3.9%
• Annual Net Absorption (SF): -428,000
• SF Under Construction: 68,000
• Rent per SF: $15.41
• Annual Rent Growth: 2.5%
• Average Price per SF: $146
• Average Cap Rate: 7.4% | Source: CoStar Group

 

Birmingham has a stable economic base that helps insulate the metro from the effects of economic downturns. The region’s two largest employers, the state government and the University of Alabama, provide steady employment opportunities and attract workers from across the state. Although Birmingham is a relatively small market, ranking 47th in population nationally, the metro has recently recorded population growth well above the U.S. average. With these trends, Birmingham has the potential to join Jacksonville, Raleigh-Durham, and Charleston as a premier Sun Belt growth metro.

 

The metro faced challenges at the start of 2024 due to a series of retailer bankruptcies and closures, which contributed to negative net absoption. While average vacancy and rent trends have softened this year, the impact has been largely concentrated in the southern suburbs, particularly in areas such as Fairfield, Bessemer, Homewood, and Hoover. Despite these setbacks, leasing activity across the metro has remained stable, suggesting that retail fundamentals are poised to recover once vacant spaces left by closures are reoccupied.

 

For investors, Birmingham offers an opportunity to enter the rapidly growing Sun Belt region without incurring the high entry costs seen in larger metros. The city’s urban characteristics provide a level of property performance stability, while also offering elevated yields comparable to more rural areas of Florida, Georgia, and the Carolinas. The 8.0% average cap rate for retail transactions in 2024 is roughly 100–200 basis points higher than what is observed in the region’s other urban centers.