While many cities are still facing major challenges, the Miami retail scene is having a moment.
After years of pandemic-fueled tourism and population increases, retailers — many new to the city — are following their wealthy customers to the South Florida hot spot in droves.
In fact, recent openings like Kith in the Design District and Nike’s new Rise concept shop in Aventura mall, as well as a new Snipes store with DJ Khaled on Collins Avenue and an upcoming Ecco pop-up on Lincoln Road in Miami Beach have only reinforced the notion that footwear companies are bullish on Magic City.
So, what caused this retail boom in the first place? Many experts believe it was the rapid economic bounce from the early lifting of COVID restrictions. When the pandemic forced closures around the country in March 2020, Florida was one of the first states to ease restrictions to accommodate its lucrative spring break season. By the end of 2020, most of the state’s COVID-related policies were repealed, and by May 2021, Florida Gov. Ron DeSantis suspended all remaining restrictions.
Those policies, coupled with Florida’s warm climate, the wide adoption of remote work and a favorable tax code led many wealthy Americans to flock to Miami, leading to job and population growth in the region.
“South Florida took advantage of the pandemic, due to the political environment,” Drew Schaul, EVP of CBRE’s advisory and transaction services, told FN. “Retailers were able to open for business, which wasn’t the case in many different parts of the country, especially in the Northeast. So, we had this ‘great migration’ to South Florida, and specifically Miami. Because of that, certain submarkets benefited that I would say were far from reaching their potential prior to the pandemic.”
This great migration has led to annual job growth in Miami of 5.4% in 2022, which exceeded the 4.1% seen nationally, according to data from global commercial real estate firm Newmark. Those gains were led by restaurants, retail trade and ambulatory health care, the company said.
Additionally, Miami’s GDP also rose 5.1% in 2022, compared with 2% nationally, according to Newmark. GDP growth was led by real estate and professional and technical services, the company stated.
And with this influx of new money, retailers have followed suit and planted roots in Miami. According to CBRE’s most recent regional data, total retail property sales in the South Florida metroplex (Miami, Fort Lauderdale and West Palm Beach) grew 7% year-over-year in 2021 to a record $9 billion. The market’s strong performance has attracted more investors, who completed $3.4 billion worth of retail property acquisitions in 2021 — the highest annual volume since 2015.
Retail rents are also up. John Ellis, senior managing director of Newmark’s Miami office, said Miami experienced “intense” increases between 2020 and 2021 of 8.5%, followed by 6.9% rent growth between 2021 and 2022.
“We are back down to 3 to 4% rent growth, which is more in line with expectations,” Ellis noted. “Our vacancy rate is extremely low, though, at 3.3%, with about 140.8 million square feet of retail space available in the region.”
Ellis went on to note that the average retail rent in Miami is sitting at $44.29 per square foot, but some outliers, like the highly trafficked Design District and Lincoln Road, are seeing prices at over $200 per square foot.
Even with these high lease costs, retailers are still opening shop. In February, New York based-retailer Kith unveiled its second outpost in the city. Located at 69 NE 41st St., the new store includes a Kith for Sadelle’s restaurant and a standalone Kith Treats store directly across the street. “Evolving and expanding our spaces with tact is as challenging as it is motivating,” Fieg said in a statement at the time.
Further up the coast at Aventura Mall, Nike unveiled the first U.S. location of its Rise concept store in November. The company said at the time that this latest opening signaled the next stage of Nike’s retail expansion in North America, but also served as its “best expression” of sport performance for the full family.
Meanwhile, Danish footwear brand Ecco, is opting to open a Miami pop-up shop this spring. The company announced last month that it would host a two-month residency on Lincoln Road, inside a 3,000-square-foot space during May and June. “The goal of this pop-up is to drive a younger audience in-store to learn about the brand and our leather goods line, as well as sell product to desired audience and gather learnings to duplicate pop-ups in other key cities,” the company said in a statement.
All this activity is welcome news for other retailers with more established roots in the region, like local independent retailer UNKNWN. The co-founders said they’ve felt the change happening for years and believe the growth has been beneficial for the city and its business.
“Miami has definitely been in a state of growth in the past few years,” UNKNWN co-founder Jaron Kanfer told FN. “As far as fashion and retail, the city has seen natural growth from the benefits of being a warm destination, which attracts a lot of tourists. And even though Miami is a transient city, fashion is very relevant here.”
The store, which Kanfer co-founded in 2011 with childhood friends Frankie Walker Jr. and basketball star LeBron James, was originally located in Aventura Mall until relocating to the Wynwood neighborhood at the end of 2019. “Being a part of a mall, we were restricted in what we wanted to do in terms of experiences,” said Kanfer. “Now we have a courtyard space at the shop and hold weekly workouts including HIIT training and run clubs. It allows us to be more part of a community, which is what we wanted.”
Walker Jr. added, “The growth we are seeing in the city has helped us grow our own business along with building our UNKNWN community. In fact, the success we are having at our Wynwood store helped fund the second location we opened last year in Akron, Ohio.”
But is all this growth sustainable? Newmark’s Ellis told FN, “With inflation being a concern, we have seen some stabilization in the market.”
But he added there is still new development happening, with 3.5 million-square-feet of pre-lease inventory. “And tenants remain willing to pay premium rents in Brickell, Aventura, Coconut Grove, Wynwood and the Design District, even though rent growth has subsided this year [and should revert] to a more historical normal rate by 2025.”