vacancies, or as experts call it, a market correction
As can be seen throughout the country, gas prices and the economy are keeping more shoppers home this summer, and the retail sector is especially feeling the pressure of compounded
market issues. Unanchored strip centers are getting hit hardest
in Palm Beach County, according to a second-quarter report by
Marcus & Millichap, with many businesses, especially those providing home services, vacating the market completely.
“We are also starting to see restaurants go out of business, and
where a few years ago you saw Publix-anchored centers full,
now there are vacancies,” observes Kearney. Increases in taxes
have made it more difficult for marginal retailers, which also
face reduced revenue. “Taxes have increased rent and decreased
profit in an environment where a retailer is probably doing less
business,” he says.
National retailers are also holding off on expansion plans in
the area, according to various brokers. “Right now we’re not
seeing a lot of retailers expanding because the economy is not
in expansion mode,” says Doug Mandell, associate vice president with Marcus & Millichap. “People are skittish, re-evaluat-ing their coverage while being aware of cannibalization of
existing stores, as we’ve seen with Starbucks.”
Boca is fairing better than West Palm, according to multiple
brokerage market statistics, although vacancy rates in both markets vary widely between brokerage reports. Marcus & Millichap puts the two at almost equal at 4.5% and 4.6%, an increase
of one and three percentage points, respectively. Yet a second-quarter report by CB Richard Ellis places Boca Raton’s vacancy
rate at 4.5% and West Palm Beach at 7.2%, with average triple-net asking rents of $28.75 in Boca and $20.37 in West Palm.
Industry hopefuls see the space openings as a time to act for
retailers trying to get into the South Florida market. Despite the
downturn, national chains are looking for local space, with local
Palm Beach County ranked eighth in highest overall average asking office rents in the country, according to Cushman & Wakefield. CityPlace Tower (right), an
18-story, 300,000-sf building at the corner of Okeechobee and South Quadrille boulevards, is the city’s first class A building to open in the last 20 years.
