The nationwide slowdown in the housing market has hit Broward and Palm Beach Counties, and will likely affect the retail real estate fundamentals in the area. Fort Lauderdale, for example, made the number 19 spot on the list of the “25 Worst Housing Markets” in the country, according to Housing Predictor, which tracks 250 markets around the United States. Median housing prices in the city are forecast to drop 6.9 percent this year, from the current $324,000.

So far, demand for retail space remains brisk, according to brokerage firm NAI Global. But “investors should be cognizant of the near-term trends in the housing markets,” notes Gene A. Berman, regional manager of Marcus & Millichap Real Estate Investment Services' Fort Lauderdale office.

The researchers at Marcus & Millichap expect the area to weather the housing fallout fairly well, with rental rates in Broward County forecast to go up 5 percent in 2007, and for Palm Beach County 5.8 percent. But increased retail supply (in the past 12 months, 3.6 million square feet of space was added to the market), has led to higher vacancy rates. Year to date, vacancies rose to 5 percent in Broward County and 6.2 percent in Palm Beach County, an increase of 20 basis points and 40 basis points respectively. In addition, Marcus & Millichap expects that vacancies in Broward will rise by another 20 basis points before the end of the year, to 5.2 percent.