By Frank Begrowicz, Director, Retail Services
As a global tourist destination, Miami’s economy is driven by the buying power of seasonal visitors. However, below the surface of our general tourism data is an often underappreciated aspect of this broad economic indicator – the “shadow resident” to whom Miami may be a second, third or fourth home. Beyond their impact at the cash register, the shadow resident continues to influence commercial and residential development throughout South Florida. Much like the commonly recognized Chinatown and Little Korea neighborhoods of cities in the western United States, submarkets such as Doral, Kendall and Sunny Isles are representative of the Venezuelan, Colombian and Eastern European shadow residents who influence those neighborhoods. When combined with the seasonal snow birds who flock to South Florida from the northeast U.S. during the winter months, it’s easy to see how this uptick in population can also add pressure to local infrastructure and traffic patterns. While it has historically impacted the unit sales of retail operations, this increased density is now supporting market segmentation into smaller and smaller trade areas, which each require their own service uses and retail experiences.
Twenty-five to 30 years ago, if you were a retailer heading into South Florida, you went to a major regional mall like Bal Harbour or Aventura. And up until about ten years ago, that was the only option. There were a few affluent residential enclaves, but not the co-tenancy you’d like to see if you’re a luxury brand looking to break in. Quite simply, there were no high streets.
Over time, however, those enclaves became more and more relevant as retail centers. Retailers, realizing the depth of the market, took a chance at street locations where there was strong (primarily tourist) pedestrian traffic, and the Collins Avenue and Lincoln Road retail corridors (and, to a lesser extent, Coconut Grove) emerged. As co-tenancy improved, these became the market’s high streets.
And from 2010 to today, there’s been a veritable explosion of opportunity. Market segmentation really began to take hold over the last cycle. Driven by overall market density and quite a bit of speculative investment, smaller trade areas have emerged like Wynwood, The Design District, and South Miami, each of which have their own character and customer (although there is certainly crossover). These new retail submarkets are on everyone’s “must-understand” list, and a retailer that once had very limited choices when it came to distribution points now has a tremendous amount of options. This variety allows them to consider, very carefully, how they can best cater to their target audience and allows them to be far more precise in their expansion strategy than ever before.
Frank Begrowicz joined Cushman & Wakefield in September 2010. His current responsibilities include agency leasing, tenant representation, site selection management and the sale of retail property in the South Florida market.