A flurry of grocery-anchored mall deals is setting South Florida’s retail market on fire, fueled by investors seeking secure cash flow stability, experts say.
The most recent sales are of two commercial properties in Broward County that sold for a total of $57 million.
“Grocery-anchored retail centers remain in high demand from investors across the country, but particularly in high-growth Sun Belt markets like South Florida,” said JLL’s Danny Finkle. by email. “It has been one of the best-performing sectors over the past few years, and its outperformance during the pandemic has led to heightened investor attention, which in turn has driven prices higher for some.”
In Plantation, a subsidiary of Barron Real Estate, founded by Charles Ladd, paid $38.4 million for Plantation Marketplace at 7023 West Broward Boulevard, according to a press release. The deal comes down to $166 per square foot.
The seller, a subsidiary of Miami Manager, a Sunrise-based real estate investment firm, paid $32.8 million for the property in 2015, records show. The mall was built in 1979.
The 230,330 square foot mall is anchored by a Food Fair store. Other tenants include Big Lots, CVS, Quest Diagnostics, Subway, Metro PCS and MD Now. At the time of the sale, Plantation Marketplace was about 70% busy, the statement said.
In Deerfield Beach, JBL Asset Management, a Hollywood-based real estate investment firm led by Jacob Khotoveli, has acquired Rivertowne Square at 1015 South Federal Highway for $18.7 million, according to a news release. The deal comes down to $128 per square foot.
A JLL team led by Finkle and Eric Williams represented the seller, RPT Realty. He paid $8.6 million for the 13-acre property in 1996, records show. The mall was built in 1980.
Rivertown Square is anchored by Winn-Dixie and Bealls Outlet, Finkle said. The 145,502 square foot mall is 92% occupied, with other tenants including Hard Exercise Works, Nail Face Spa and Painting with a Twist. The deal also included two outdoor lots leased to Buffalo Wild Wings and Tijuana Taxi Co.
The Plantation Marketplace and Rivertowne Square sales follow two other major deals involving malls anchored by grocery stores. In North Palm Beach, investors tied to construction and utility companies Ferreira paid $36 million for Shoppes at City Center, a 98,846-square-foot mall 96.8% leased and anchored by West Marine and Doris Italian Market & Bakery.
In West Palm Beach, Publix paid $56.5 million for River Bridge Center, a 299,781-square-foot retail site anchored by one of the Lakeland-based grocery chain’s stores. The deal also included nine outdoor plots. Publix paid $243 per square foot for the property.
Douglas Mandel, who led a Marcus & Millichap team that brokered the Shoppes at City Center deal, said institutional investors tend to gravitate toward grocery-anchored real estate assets due to tenant perceptions and the income stability that these properties offer.
“With the deal we just worked on, buyers were looking for generational hold,” Mandel said. “They liked this asset because of strong store sales and strong tenants. The grocers just bring a lot of traffic.
Finkle, whose team also brokered the River Bridge Center deal, said prices for grocery-anchored retail properties have risen in recent months. For example, the $24.6 million sale in March of Shoppes at Palm Coast Plaza in West Palm Beach was worth $100 per square foot. This center is anchored by a Winn-Dixie.
In February, Shoppes at Cresthaven, another West Palm Beach mall anchored by a Presidente supermarket, sold for $20.7 million, or $120 per square foot.
“That being said, in many cases investors are still able to acquire these centers at lower prices [building new ones]“, Finkel said.
Claudio Mekler, founder and CEO of Miami Manager, said investor appetite for grocery-anchored malls remains strong despite rising interest rates and inflation.
“Economic uncertainty caused by inflation and rising interest rates is not yet hurting the valuation of grocery-anchored malls like Plantation Marketplace,” Mekler said. “That could change in the fourth quarter.”