Woolbright Development Research Retail Market Overview: Palm Beach

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1 Retail Market Overview: 2015 FIRST QUARTER Jacksonville The Retail Market Continues a Moderate Recovery; Average Occupancy Levels Stand Flat at 90%, and Average Base Rental Rates At Publix Anchored Centers Stand At $25.80 NNN per Square Foot, Growing 6%. Tampa Orlando West Ft. Lauderdale Miami

2 Retail Market Conditions: Centers Greater Than 45, M 7.1 M 130, ,000 11% ( 1%) 10% (+2%) 100, ,000 Occupancy levels continue to hold steady at 90% in Market M 30, , M 50,000 11% (+1%) 17% ( 1%) 1. Vacancy rate remains flat at about 10.5% for three consecutive years. 2. From January 2014 to January 2015, the Palm Beach market absorbed almost 0.5 M. It is the highest absorption in 8 years. 3. New developments increased by 170% in the last 12 months (580,000 completed, a construction rate of 1.6%). 5.8 M 120,000 6% ( 2%) Market: Inventory: 36.5 M (275 centers) Vacancy : 10.5% (no change) Absorption: 0.5 M New GLA: 0.6 M Inventory Vacancy Absorption (positive) Absorption (negative) New Openings (M)

3 Retail Market Conditions: Publix Anchored Centers 2.3 M 1.8 M 30,000 60,000 7% ( 1%) 9% (+1%) Vacancy rate improved by 800 basis points to 9.0% for Publix anchored centers. 1. Vacancy rate decreased 80 bps to 9.0% in January 2015, from 9.8% in January M 30,000 17% ( 3%) 2. Publix anchored centers absorbed net 50,000 sf in 12 months. 3. No new Publix anchored shopping centers were built in the last 12 months. 2.8 M 40,000 9% ( 1%) 4. Rental Rates are growing. Base rents at Publix anchored centers increased by $1.40 or 6% to $25.77 NNN per. 1.6 M 5% (Ø) 10,000 Market Publix Centers: Inventory: 9.5 (74) Vacancy : 9.4% (-0.4 bps) Absorption: 50,000 New GLA: None Inventory Vacancy Absorption (positive) Absorption (negative) New Openings (M)

4 Vacancy Rate As of January 2015, occupancy levels recovered 30% since 2010 peak at 12.7%. 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 11.3% 10.7% 10.3% Gardens Jupiter 8.3% North WPB Wellington 17.9% 16.7% South WPB Lake Worth 10.3% 2006 AVG. VACANCY RATE (5.5%) 10.9% Boynton Beach Delray Beach 2014 JAN 2015 JAN 2010 AVG. VACANCY RATE (12.7%) 2015 AVG. VACANCY RATE (10.6%) 10.5% 10.6% 7.4% 5.6% Boca Raton PALM BEACH

5 Vacancy Distribution Over half of the centers in the market have a vacancy rate of 0 5% % 54% All Centers % 49% Publix Centers % 17% 8% 8% 24% 21% % 23% 11% 9% 24% 19% 0 5% 6 10% 11 15% 15% % 6 10% 11 15% 15% Average Vacancy 10.5% 10.6% Average Vacancy 9.8% 9.4% Median Vacancy 5.1% 4.7% Median Vacancy 6.0% 6.0%

6 Historical Vacancy Rate 14% Vacancy rates are declining with a slow and choppy pace. 12.7%F 12% 10% 11.9% 10.4% 10.6% 8% 6.8% 6% 4% 5.5% 2% 0% Florida Major Markets

7 3,500,000 Shop Vacancy vs. Anchor Vacancy Shop vacancy is steadily declining, down 30% from Anchor vacancy is down 20% from its peak. 3,000, M 2,500,000 2,000,000 1,500, M 2.2M 1.7M 1,000, , M 0.8M Shop Vacancy Anchor Vacancy

8 Construction Rate: Historical and Projection After 4 years of almost no new space being built, new developments increased to 0.6M sf in % 80 s and 90 s S&L Crisis Dot Com Bubble The Great Recession 4 centers opened, adding 0.6M square feet. 4 centers proposed to open, adding 0.6M square feet. 16% 14% 12% 10% 8% 6% 4% 2% % 2016

9 Absorption Ground up centers accounted for 93% of the positive absorption (existing centers 7%). 600, , , , , ,000 (100,000) Gardens Jupiter North WPB Wellington South WPB Lake Worth Boynton Beach Delray Beach Boca Raton PALM BEACH (200,000) (300,000) Existing New Openings

10 New GLA vs. Anchor Area New ground up developments are starting to contain shop space. Completion Under Construction Proposed 340,000 M (60%) 240,000 M (40%) 20,000 M (30%) 40,000 M (70%) 110,000 M (20%) 460,000 M (80%) Shop Space Anchor Space Shop Space Anchor Space Shop Space Anchor Space

11 Base Rental Rates: Publix Anchored Centers $24 $26 $21 Average Rental Rate Stands At $25.80 NNN. Average rental rates in the market range from $21 to $32 NNN. Boca Raton is the strongest submarket, asking $32 NNN $26 $32

12 Base Rental Rates: Publix Anchored Centers (12 month change) +3% $ % $0.40 6% Rent Growth in Palm Beach Market. Base rents increased by $1.40 or about 600 basis points to $25.80 NNN in January 2015, from $24.40 NNN in January % $2.50 All five submarkets in market increased base rental rates. +6% $1.400 The South WPB Lake Worth submarket was the most improved, increasing $2.50 to $20.75 NNN. +7% $2.10

13 Base Rental Rates at Publix Anchored Centers: Historical and Projection Three years after the market bottomed out, rents have grown by $2.75 NNN (back to 2006 levels). $30 $28 $26.95NNN $26 $24 $24.65NNN $25.80NNN $22 $20 $23.06NNN $21.36NNN $23.10NNN $ Florida Major Markets

14 Base Rental Rate vs. Vacancy Rate Since bottoming out, base rental rates have recovered 70% and occupancy levels have recovered 30%. $30 $28 $26.95NNN 100% 98% $26 $24 $22 95% $23.06NNN $25.80NNN 89% 96% 94% 92% 90% $20 87% 88% $18 86% Base Rental Rate Occupancy Rate

15 About this study Data was collected in January 2014 and January 2015 through on site inspection by Woolbright Development and includes all retail centers in the Palm Beach market greater than 45,000, and is the exclusive property of Woolbright Development, Inc. For more information about Woolbright s research please send an to lhoyer@woolbright.net or call Liz Hoyer, Research Director at Woolbright Development Woolbright Development Inc., a real estate investment firm based in Boca Raton, Florida, acquires and develops retail grocery and basic needs shopping centers throughout the state of Florida. Founded 22 years ago, Woolbright is now one of Florida's largest investors in Florida shopping centers and is partnered with some of the US s largest real estate investors. The keys to our success are extensive area research, industry knowledge, client commitment, and vision. Woolbright currently maintains a retail portfolio of 3.5 M all of which is located in Florida's major metropolitan areas. Information about the firm, recent research studies and a complete listing of our portfolio can be found on our website Copyright 2013 by Woolbright Development, Inc.