Is a retail apocalypse hitting South Florida? This investor and broker has an answer
Are brick-and-mortar stores on the brink of extinction in South Florida?
No, but bad retail is, said Beth Azor of the Weston-based Azor Advisory Services.
Retail vacancy rates in Miami are at 6.4%, lower than the national average of 10%. As shops and malls across the country shutter, local luxury shopping centers report an uptick in sales and continue to grow, according to a Wall Street Journal report. But with online sales expected to grow, what does the future of retail look like in South Florida?
Azor, a commercial real estate investor and broker in South Florida for 34 years, shared her insights on the market via email for Re|source.
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Q: What trends will shape Miami-Dade County and Broward’s commercial real estate and retail this year?
We will see the continued growth into emerging areas such as Wynwood, Allapattah, River Landing and F.A.T. Village Arts District. In 2020, I believe we will see new lots of cranes with new developments with multi-family, office, hotel as well as industrial and some retail. We will see some of the planned food halls not go forward, and some of the existing ones close. We will see shopping centers continue to be populated with food, fun, fitness and physicians.
Q: What neighborhoods or shopping centers in Dade and Broward do you expect to attract the most leases, and why?
Aventura, Doral, Davie, East Fort Lauderdale will see the most leases signed for retail. These areas are posting huge sales revenues for the restaurants and retail, therefore demand is high. Revenues are high due to high income and significant daytime population. The only way there will not be a lot of leases signed would be due to lack of product available.
Q: You said at the recent CCIM event that bad retail is dead. What did you mean by that, and why do you see this happening?
A lot has been written that retail is dead. I don’t believe that. I do believe that bad retail is dead for retailers who don’t focus on their customer and offer them a reason to get off the couch and off their computer.
Toys R Us is a great example. Toys R Us had a phenomenal opportunity to create great customer experiences for children to require parents to visit there often. Instead Toys R Us didn’t provide good customer service, so parents veered away and started shopping at Target, Walmart and, of course, Amazon for their toys.
An example of good retail is Ulta Beauty. Ulta frequently offers superb customer service and customer experiences. Also, retailers that provide an app, where you can order and pay with one button will win! Think Uber, Starbucks and Dominoes.
Q: You also said at the CCIM event that the planned American Dream Miami will be good for the Magic City. Why do you believe that?
The American Dream Mall will provide a combination theme park and retail extravaganza that we don’t have in Miami. Sawgrass Mills Mall, being the second most visited tourist attraction in the state behind Disney, shows us that tourists and residents enjoy shopping. We locals don’t have a theme park as it has been described. I think it will provide jobs and bring significant tax revenues to our area.
Anything that can attract tourists and also provide entertainment for the locals is a good thing.
Q: Online retail is 7% of all total sales nationwide. Industry professionals expect online shopping to increase but you don’t think that spells bad news for brick-and-mortar shops. Can you discuss the Halo Effect and the relationship you see online and brick-and-mortar shopping have?
Based on a survey recently conducted by the International Council of Shopping Centers, it was found that when an online retailer opens a bricks-and-mortar store the retailers’ online sales increase. Additionally, the survey showed that when a bricks-and-mortar store closed, that store’s online customer traffic reduced significantly. Therefore, it has been proven that online retailing and bricks-and-mortar thrive when used in a combination.
Also, as online retailers continue to raise private equity money and their revenues cap out online, we will begin to see online retailers opening more bricks-and-mortar stores. Digitally Native Brands, like Warby Parker, Bonobos and Casper, are opening stores currently and it has been predicted that these direct-to-consumer brands will be opening more than 800 physical stores in the next few years.
I don’t see retail as an apocalypse but rather a resurgence.
