The Truth Behind Wynwood’s Real Estate Vacancies

Vacancy signs adorn the streets of Wynwood, leading many to think that tons of real estate opportunities are available. However, the truth is that there’s a lot less space available for rent than it seems.

Here’s the thing about vacancies: they’re not all true vacancies.

What does that mean? It means that most of the vacancies in Wynwood don’t have long-term leases set up to support a business. Let’s break this down even further.

We knew the market was being deceptive, and we needed to get the facts. So we analyzed hundreds of listings and data from Loopnet to dig deep and figure out just how much of Wynwood was actually available for businesses who were new to the neighborhood to thrive in. Once we acquired the data, we got to work like the real estate data scientists we are. We divided it into two categories—office and retail—and did a little bit of math.

What is the Data Showing Us?

Office Space: 

Current amount of office SF: 1,065,856

Current asking rent PSF on all office vacancies in Wynwood: $44 PSF NNN

So we asked ourselves, of that space, how much appears to be available?

And what’s the amount of office space that is available long-term (with leases of 8 years or more)?

And then we broke it down even further. What’s the amount of office space that’s available long-term but is also available immediately?

Even though it looks like 65% of existing office space in Wynwood is available to lease, technically only about half of it is actually immediately available for long-term leases. What does this mean? It’s harder to get an office space in Wynwood than it seems.

Also, we discovered that the average asking rent PSF on vacancies that are available for long-term leases is 9% higher than all the vacancies, at $48 PSF NNN.

Why is this happening? Keep reading to discover why.

Retail Space: 

Current amount of retail SF: 975,453

Current average PPSF on retail space in Wynwood: $61

So we asked ourselves, of that amount of space, how much appears to be available?

And what’s the amount of retail space that is available long-term (with leases of 8 years or more)?

And then we broke it down even further. What’s the amount of retail space that’s available long-term but is also available immediately?

It appears as though 59% of existing retail space in Wynwood is available to lease, but technically only about a third of it is actually immediately available for long-term leases.

Also, the average asking rent PSF on long-term vacancies vs. all vacancies jumps a whooping 21% from $61 PSF NNN to $74 PSF NNN.

Why is this happening? Keep reading to get some answers!

Why Are We Seeing These Discrepancies in the Marketplace Right Now?

There are several reasons for these inconsistencies! 

With Wynwood’s continued expansion, the area is quickly morphing into a live-work-play destination—for better or for worse, in 10 years, the neighborhood will be mostly midrises and highrises. This affects how building owners manage their properties. 

One-story buildings have tons of potential for redevelopment, making long-term leases an unattractive option for developers. Developing prospects also result in landlords not offering allowances or buildouts for renovations. From a business perspective, it doesn’t make sense to spend money on remodeling a property that’s just going to be bulldozed and redeveloped. 

This is especially important for retail / restaurant tenants, as typically retail and restaurant owners put a lot of work into making their spaces unique—and from their business perspective, it doesn’t make sense to put in that work and money without signing a minimum of a 10-year lease.

Additionally, landlords are buying properties with the intention of reselling depending on the year-over-year cost increase on real estate in the area.

What Does This Mean for the Commercial Real Estate Industry in Wynwood?

All these changes, inevitably, change the nature of the neighborhood. Less long-term leases make it difficult for new concepts to open up in the neighborhood—especially small businesses—whether with their first location or as expansions. 

Wynwood’s cultural fabric has also not been woven to be a residential area, lacking essentials like pharmacies, grocery stores, etc. Now is an ideal time for essential businesses to secure their spots in the neighborhood before the residential boom that’s coming with the wave of mixed-use developments.

How Can You Navigate the Wynwood Market in its Growing State?

Knowing the Miami area is more important than ever. Wynwood will continue to grow, causing small businesses to be pushed to surrounding neighborhoods, such as Upper Buena Vista, Little Haiti, Little River, MiMo, Allapattah, and Overtown. To seek out places and experiences similar to those that made Wynwood popular, local residents are going to start turning to nearby neighborhoods that are just as culturally diverse and vibrant.

As South Florida’s original full-service commercial real estate broker, Metro 1 has been helping shape Miami’s communities for over 15 years. While studying the market is surely helpful, having an established, experienced real estate broker on your side is even better. Contact us and let’s get working.