Vero’s booming residential real estate market has been picking up momentum since 2013, on and off the island, and the commercial real estate market, which typically follows residential, is finally strengthening in its wake, according to three local commercial real estate brokers.
Billy Moss, of Lambert Commercial Real Estate, said the lag time between residential and commercial booms is “about 24 to 36 months.” Keith Kite, of Kite Properties, estimated a similar timeframe.
“The (current) residential market has a three- to four-month inventory, which is considered a sellers’ market,” said Michael Yurocko, of SLC Commercial Realty & Development. “When people buy houses, they have to buy stuff.”
When people buy “stuff,” retail thrives and commercial real estate benefits.
Office occupancy and rental rates have improved apace, as the overall economy has strengthened. Cushman & Wakefield, a global real estate services firm, recently reported Florida’s Class A office space – the best constructed, located, managed and newest – saw a 5-percent increase in rental rates over the last year.
Kite said the Vero Beach area is doing even better. “Across the board, commercial real estate is up 7 to 8 percent (year over year). The prime market is up 10 to 15 percent, which includes Ocean Drive, Cardinal Drive, Miracle Mile and downtown,” he said.
Moss said retail space on the island is now going for $30 to $35 a square foot, up $10 or more per foot since the trough of the real estate recession. On Ocean Drive, the island’s prime retail location, rates are even higher, averaging $40 per foot.
Office space on the island is generally around $25 a square foot, with higher rates on Ocean Drive, where space rents for about $35 a square foot.
Supply and demand determine price, so an increase in rental rates typically indicates a decrease in vacancies.
“Beach side is 100-percent leased,” Kite said.
Lease and occupancy rates have risen on the mainland, as well, with retail space in the Miracle Mile area going for $25 a square foot, a big jump since the recession.
“Miracle Mile is 95- to 97-percent leased,” Kite said, noting that a Pet’s Mart recently opened in Miracle Mile Plaza in a large space next to Fresh Market.
Three Avenues Shopping Center on the opposite side of 21st Street has all but two spaces rented, Kite said.
Kollin Kite, a leasing specialist with Kite Properties, recently leased 8,000 square feet to Tax Savings Professionals in the Bank of America Financial Center at 601 21st Street, as well as 5,000 square feet to Bailey’s Pharmacy and Medical Supplies in what was the Oculina Bank building at 780 U.S. Highway 1.
Yurocko said national retail chains coming into Vero may be a factor in driving rents up. “Local operators can only afford so much, while national stores pay higher rent per square foot,” he said.
He estimated industrial rents have increased about 5 percent “because availability has declined. It’s supply and demand.”
The most asked-for space, Yurocko said, is “flex space, with an office in the front and 1,500 square feet of warehouse in the back. I could lease those all day, but they’re hard to find.”
Moss, Yurocko and Kite, in separate interviews, agreed new construction on U.S. Highway 1 is the main act in the commercial real estate uptick on the mainland.
“That’s what everyone is noticing,” Moss said.
“New building is very strong,” Kite said. “Three Cumberland Farms have recently been built and a Walmart is going in at 17th Street and U.S. Highway 1.”
The Walmart “will just have a grocery store and not the other stuff,” Moss said, and is termed a “Walmart Neighborhood Market.”
The Walmart is expected to revive the location, which was an Albertsons grocery store that has remained empty since 2012. Walmart has moved Neighborhood Market operations into a number of closed Albertsons in other parts of Florida.
Harbor Point, at 53rd Street and U.S. Highway 1, was recently built, Kite said, and Dunkin’ Donuts, AT&T and other tenants have signed leases.
Yurocko said he’s involved with the 11th Street and U.S. Highway 1 development, which was an “old Lincoln Mercury car dealership.” An O’Reilly Auto Parts is going in, with “build-to-suit, mostly retail uses” also being marketed for the site.
Roberts Equities, based in Boca Raton, purchased the 3.65-acre bank-owned parcel about a year ago for $1.25 million. O’Reilly Auto Parts will occupy 7,000 square feet and front the highway, according to Randy Tulepan of Roberts Equities.
After the auto store is complete, two other buildings are planned. A 4,000-square-foot structure will be built that could house a small restaurant, cellphone store and one other small tenant. A 12,000-square-foot retail building with multiple tenants will sit behind the first two buildings.
A few blocks south, at 12th Street and U.S. Highway 1, Moss said he’s working on a four-acre development, which will feature Wawa, a convenience and retail store, as well as a gas station. “Wawa has a cult following,” said Moss, who brokered the deal that is bringing what he calls “a restaurant with gas pumps, not a gas station with food,” to Vero.
Also on the site will be 5,000 square feet of retail space. The lease rate is about $30 a square foot, Moss said, dramatically higher than the $15-a-square-foot rate for existing retail space along U.S. Highway 1, he said.
“A couple of national fast-food franchises” are also planned for the site, Moss said, and one such franchise is almost landed. “It’s still in due diligence,” Moss said, “so I can’t say the name.”
Further south, Elysian Partners, LLC, also of Boca Raton, is remodeling the Tropic Square shopping center at 6th Avenue and U.S. 1, adding to the upgraded U.S. 1 environment that is pushing lease rates higher.
“The 12,000 square foot post office that used to be there will be divided up into 1,000-square-foot retail spaces,” said Moss, who is representing the owner.
“Last year was a great year and we have our sights set on an even better one this year,” Moss said.
“Shopping centers are filling up, new businesses are coming and old businesses are looking for new locations.”
