Big Box is Booming, and it’s Mostly Going into Preexisting Space

The big box market has consistently been resilient against the pressures of the pandemic. In 2021, big box retailers opened a net of 182 new locations in Florida, totaling over 4.0 million square feet of space.

With nearly no new retail shopping center construction, most big boxes aren’t expanding by going into new construction projects – instead, they are going into existing shopping centers or building freestanding box spaces.

 Grocery stores and discount stores account for 75% of the box store growth.  Those two areas have a good deal of overlapping sales and, as a result, they are fiercely competing to win the hearts of consumers. We are witnessing an epic battle where scale, logistics, site selection and technology are being deployed to win market share.  Stay tuned – we will have regular updates on the winners and the losers.

Base Rents at an All-Time High

Using Publix-Anchored centers as a control group, base rental rates across Florida’s major markets are now at a twenty-year high. Just prior to the Great Financial Crisis, base rents topped off at the $21-28 rate, depending on the market.

By 2017-2018, all four major markets surpassed their previous highs ‒ and the numbers have only increased since. Over the last seven years retail property rents have risen by 3-4% annually, significantly exceeding the overall rate of inflation or CPI. By 2023, we project base rental rates to range from $28-36 depending on the market.

How can you see the future?

Here is what I use to see the future

How can you see the future? Unfortunately, there is no crystal ball, but the next best thing is the prediction markets that harvest the wisdom of the crowds to come up with the best guess for the future. Predictions based on betting, date back to 1503 when bets were placed to predict the next Pope.

What do you use? Please post it to the comments. #future #investing #retail #markets