Retail development flourishing in Florida, ICSC conference reveals
Florida retail property remains as hot as the Miami sun. Driven by swelling population and tourism numbers, retail tenants are queuing up to locate in the Sunshine State, assuming they can afford the rent, presenters and conference attendees said at the 2017 Florida Conference & Deal Making, in Orlando, this week. Roughly 80 retailers exhibited at the show, double the lineup last year, and the attendance total of about 5,000 was up year on year too, according to Planning Committee Chairman Katy Welsh, senior vice president of South Florida retail leasing for Colliers International.
Florida, which is taking in about 1,000 new residents per day, is expected to reach a population level of 21 million this year, and that is driving retail, said Josh Beyer, senior vice president of development for the St. Petersburg–based Sembler Co. “Pretty much all of Florida is on a good track,” Beyer said.
South Florida completions this year will reach their highest point since 2008, led by CityPlace Doral, according to Marcus & Millichap. The addition of some 3.1 million square feet of top-tier retail over the past three years has driven asking rents to new heights as vacancies have eased, the firm’s midyear retail report notes.
“South Florida not only benefits from phenomenal tourist numbers, it has higher-than-average sales margins,” said John Crossman, CRX, president of the Orlando-based Crossman & Co. And this does not refer only to high-ticket items — time-share residents, who are in abundance in Florida, spend considerably more on necessities than hotel guests do, he pointed out.
Monday’s Hot Retailer breakfast saw no shortage of retail chains seeking growth space. Among them was Orchard Supply Hardware (owned by Lowe’s), which opened two South Florida stores of roughly 37,000 square feet each last year and is expanding statewide. The Publix GreenWise Markets organic concept is also birthing stores here, Beyer said. Some retailers, however, say they are no longer looking in South Florida, because the rents are too high, he pointed out.
Also in expansion mode, Welsh said, is Bolay, a quick-service bowl concept created by Outback Steakhouse founders, which opened its first Broward County store in May. Lucky’s Market, which announced that it would roll out eight supermarkets in the Orlando area by the end of next year, is another. Pizza is piping hot, with MOD Pizza planning for three South Florida units by the end of this year — and with an additional goal of as many as 60 across the state over the next seven years or so.
In another trend, the state’s top shopping centers are paying hundreds of thousands of dollars to exit tenant exclusive-use clauses so they can bring in some of the hottest new retailers and restaurants, Welsh said.
Many attendees contemplated what point the present retail cycle is in, said Ian Weiner, president of Boca Raton–based Pebb Enterprises. “But we still aren’t sure,” he said. “To use a baseball analogy, I think we’re past the seventh inning.” Others said they anticipate additional retailer consolidation and downsizing over the next year. “There was also a good amount of talk about converting retail properties into different asset classes, such as medical uses,” he said.
Most of the remaining retail opportunity in South Florida is from redevelopment, Weiner said. “Trying to find larger parcels to create critical mass is a challenge — it’s just so overly built,” he said. “We’re looking at converting existing properties.”
Developers are working on several new and redeveloped projects along the Florida West Coast, including Sembler’s new West Villages Marketplace, in South Sarasota County. This is part of the West Villages master-planned community, which will comprise 26,000 housing units at completion, plus a new spring-training facility for the Atlanta Braves.
The wholesale loss of department-store anchors has tended to be less traumatic throughout much of Florida because landlords have been able to find replacements quickly, Crossman said. “They are going to backfill with something else that is going to make their real estate more valuable.” Nor is the so-called “Amazon effect” poised to render quality shopping centers obsolete, asserted Crossman. “Amazon does a lot of great things, but it doesn’t provide that connectivity people need,” he said. Colliers data show that Internet sales are not hurting mall sales as badly as large discounters are, said Welsh.
“In general, we are positive and optimistic,” summarized Crossman, “but everyone needs to stay on their toes to make their numbers.”
Original Article Published by The International Council of Shopping Centers – Shopping Centers Today