Tampa scores a surprise victory in a CoStar survey.
The No. 3 market nationwide for growth in retail rent rates is a bit of a surprise: Tampa Bay.
For a market sometimes considered second-tier in terms of attracting national retail, that’s a strong sign the economy continues to outperform other southern cities. The report, from commercial real estate analytics firm CoStar, has a few other surprises. Sacramento, Calif., for one, posted the best retail rent growth rate nationally — over even Los Angeles and San Francisco — and two other Florida regions, Orlando and Miami-Dade, made the top six.
Florida, adds CoStar, is the only state on the report with three metro areas.
“Florida is the center of retail rent growth in the United States, a sign the tourist-centric state may be benefiting from visitors amid the changing landscape of stores and restaurants,” states the report. “Visitors to tourist areas from Walt Disney World to Miami Beach may be helping Florida's retail landlords boost their bottom lines.”
That’s because visitors aren’t surfing Amazon while on the beach. “When they’re on vacation, they want to shop in the stores – not online,” says CoStar Market Analytics economist Christos Costandinides, adding that increased store traffic leads to higher sales and eventually pricey rents.
While Florida rides a visitor wave to higher rents, the overall retail market continues to sputter. Mall vacancy rates on a national scale, for example, increased slightly in the first quarter of 2019 over the fourth quarter of 2018, from 9% to 9.3%, according to a separate report from real estate data firm REIS Inc. The 9.3% mark is the highest mall vacancy rate since it was 9.4% in the 2011 third quarter, the firm reports.
With more store closings projected for 2019 — following brands like Payless, Charlotte Russe, and Gymboree — the retail market faces more obstacles, analysts project. “As the retail sector continues to undergo restructuring,” the REIS report states, “a number of retail real estate markets face more vacancies and falling rents.”