Despite the country's slowing economy, Florida retail is holding steady. While Florida retail development has slightly decreased over the past year, the state's influx of residents, tourists, industry and jobs ensures that developers will continue to build retail/entertainment complexes and, perhaps more importantly, grocery-anchored centers.

The supermarket business is booming in Florida right now. "Although we're starting to see some slowdown in other arenas, we haven't seen a real slowdown at all in retail. If nothing, we're seeing a very aggressive expansion by the grocery stores. These are actually some of the busiest times we've had in the past 5 years," says Robert Breslau, president of Fort Lauderdale-based Stiles Retail Group, which is currently developing two grocery-anchored centers in Jacksonville, three in Broward County and two in Palm Beach County.

Central Florida

Central Florida development has been exploding over the past few years, but with the completion of many projects and few major ones on the horizon, it is slowing slightly.

According to Marcus & Millichap's most recent retail research report for Central Florida, job creation and population have decreased slightly over the past year. Yet, the area's rate of job growth is still higher than the national rate. In fact, Tampa has the second highest level of employment growth in the country. Many businesses are leaving the high rental rates (the average rent for Class A retail in Miami is currently $17.01 per square foot1) and overdeveloped areas of South Florida to bring businesses, and thus jobs, to Central Florida. Three of Central Florida's metro areas, Sarasota-Bradenton, Tampa-St. Petersburg and Orlando, were recently given a five-star rating by Demographics Daily for high job growth and low unemployment rates. Retail construction starts in Central Florida totaled 10.1 million square feet last year, with a slight decline predicted for this year. Retail rents increased by 4.7 percent in 2000 and are expected to increase by 3 percent this year.3

In Tampa, 3.5 million square feet of retail space was started in 2000. As in the rest of Central Florida, Tampa construction starts are expected to slow slightly in 2001. The majority of last year's construction starts were in Pasco/Hernando, Central Hillsborough and Central Pinellas counties. Pasco/Hernando's growth has exploded due to the completion of the Suncoast Parkway. Overall vacancy rates for Hillsborough and Pinellas counties are currently at 7.9 percent.3 The average rent per square foot for Class A retail properties is $13.44 in the Tampa area.1 In the Tampa Bay area, most of the retail growth is taking place in neighborhood communities, where new centers are a low risk proposition because the anchor grocery tenant assumes a majority of the gross leasable area.

Charlotte, North Carolina-based Crescent Resources is developing The Shoppes at New Tampa. The 289,496-square-foot center with a 60,000-square-foot grocery anchor is expected to be complete in the second quarter of 2002.

RMC/Konover, based in Tampa, is constructing a new 54,000-square-foot Publix store in Brandon that will be completed by the end of 2002. It is also constructing an on-site replacement of a grocery anchor in Tampa that will be finished in summer 2002.

While Tampa-area neighborhood and community centers are growing, power and regional centers are being renovated and expanded. Madison Marquette's Old Hyde Park Village in Tampa recently underwent an expansion. A new 25,000-square-foot component has been added that includes Pottery Barn Design Studio and Pottery Barn Kids. The expansion and renovation of the 247,000-square-foot center also included the addition of MAC Cosmetics and Anthropologie stores and the expansion of existing Banana Republic and Gap stores.

To the east of Tampa in Winter Haven, Trammell Crow is working on a redevelopment of Winter Haven Citi Centre. The previously existing mall was demolished, except for a Burdines anchor (which was expanded by 15,000 square feet), to create a new 321,000-square-foot center. The new center, which has its scheduled grand opening this month, is anchored by a new 135,000-square-foot Lowe's Home Improvement store, a 24,000-square-foot Staples, Belk and the preexisting Burdine's.

Shoppers all over Central and Southwest Florida are eagerly awaiting the opening of International Plaza on September 14th. The two-level, 1.26 million-square-foot center, developed by Bloomfield Hills, Michigan-based Taubman, will be anchored by Dillard's, Neiman Marcus, Nordstrom and Lord & Taylor. It will also feature a 125,000-square-foot outdoor lifestyle/ entertainment center known as Bay Street. A 300-room hotel is also planned for the property.

Retail development in Orlando, with 4 million square feet of retail starts in 2000, is also expected to slow slightly this year.3 According to CB Richard Ellis' first quarter 2001 Orlando Market Index Brief, an announcement was recently made of the sale of Church Street Station. The Jaymont Property, one block from Church Street Station, has also been sold and will be redeveloped as a mixed-use office, retail and residential complex.

Last year, the Orlando submarkets with the most starts were Southwest-Disney, Northeast-University and Central Orange. This year, the race for the tourist trade is still booming and the International Drive tourist corridor area is a hotspot. Rents in the tourist corridor have gone up to $17 per square foot in the last few months3, with the rest of the area's rents rising slightly to $14.48 per square foot for Class A properties in the whole Orlando area.1 Vacancy rates are a healthy 3.7 percent in the Orlando area.4 In the tourist corridor, Phase II of Festival Bay, developed by Memphis, Tennessee-based Belz Enterprises, is under construction and scheduled to open fall 2002. Located on International Drive, it features a 20-acre outdoor amusement park.

The Conroy and Interstate 4 interchange also seems to be a new hotbed of development activity in the Orlando area. The Mall at Millenia, a joint venture development of Taubman Centers and The Forbes Company, will open October 18, 2002. The 1.2-million-square-foot center, part of a 405-acre mixed use development, will feature Neiman Marcus, Bloomingdale's and Macy's as anchors. The surrounding Millenia development, which is a joint venture of Schrimshers, John Rife, Jones Lang LaSalle Development and DLJ Opportunity Partners, will contain 2 million square feet of Class A office space, three hotels and two power centers with more than 500,000 square feet of retail.

Next to the Millenia development, Swerdlow is constructing a power center anchored by The Home Depot, Home Expo Center, BJ's and Linens ¹n Things. Also at Interstate 4 and Conroy, Phase I of Millenia Collection will open in the third quarter of 2002. This development is a joint venture of Eustis-based Retail Equities and EJ Plesko & Associates. Phase II of the development is called Millenia Crossing. This 350,000-square-foot power center is scheduled to open in spring 2003.

Retail Equities is also developing Oviedo Crossroads in Oviedo. The 230,000-square-foot development will be adding a 31,000-square-foot Phase III, including a 20,000-square-foot anchor. The center is currently anchored by Staples and Home Depot.

Indianapolis-based Simon Property Group is in the process of expanding two of its Orlando super regional centers. The second phase of expansion for The Florida Mall in Orlando will add 30,000 square feet of specialty shops and a new two-level, 167,000-square-foot Nordstrom. The expansion will be complete in fall 2002. The mall is currently 1.85 million square feet. Simon is also expanding Waterford Lakes Town Center in Orlando. As part of the final phase of expansion, two additional anchors will be added in fall 2001 to the 1.02 million-square-foot power and lifestyle center.

Crescent Resources is developing Gateway Crossings in Orlando. This center will be over 225,000 square feet and will be complete in the third quarter of 2002.

In Orlando, Regency Centers is constructing the 194,840-square-foot Regency Village, which is anchored by Publix.

The Sarasota-Bradenton area had 2 million square feet of construction starts in 2000 (1.3 million of them in Manatee County) according to Marcus & Millichap's May 2001 Retail Research Report for Central Florida. Vacancy rose to 11 percent in 2000, but with the volume of new construction, this is expected to be largely absorbed this year. Rents averaged $13.54 per square foot in 2000 and are expected to rise in 2001.3

The development of grocery (especially Publix)-anchored shopping centers is exploding in the Sarasota-Bradenton area and throughout the rest of Central Florida.

Tampa-based Paradise Development is having success with building grocery-anchored shopping centers. The company is currently developing Albertsons at Parkwood Square in the Sarasota-Bradenton suburb of Ellenton in Manatee County. The 83,641-square-foot center, with a 61,068-square-foot Albertsons anchor, will open this September.

Regency Centers has recently opened a 75,020-square-foot center, Kings Crossing, in Sun City. It is anchored by Publix.

With the success of BayWalk, a 150,000-square-foot open-air center in St. Petersburg, The Sembler Company is continuing to expand in Central Florida. It currently has three grocery-anchored developments underway in the area. In the Keystone area, one of the fastest growing sections of Hillsborough County, Keystone Shopping Center in Odessa will feature a 47,000-square-foot Kash N' Karry. It is expected to open in March 2002. Publix at Cocoa Commons is a 88,120-square-foot center in the new growth corridor to the west of downtown Cocoa. With a 51,000-square-foot Publix, the center is expected to open this month. Publix at Bayside Lakes, part of the 583-acre Bayside Lakes community development, is a 73,570-square-foot center in Palm Bay.

RMC/Konover is building an on-site replacement of a Publix in Venice. The 37,000-square-foot store will expand to 44,000 square feet. This will be complete by the end of the year. To the west, the company is also doing an on-site replacement of a Publix in Winter Haven. The new store will be expanded from 38,000 square feet to 44,000 square feet, and will be complete by the end of 2002.

Watkins Retail Group is also building Publix-anchored centers. The company is currently constructing a 130,000-square-foot center in Eustis and a 92,000-square-foot center in Merrit Island. Both are set to open in 2002.

Cushman & Wakefield is busy brokering sales in the Merritt Island area. Merritt Island "is a market that has seen tremendous growth as a result of Port Canaveral growth in recent years," says Cushman & Wakefield Investment Sales Team director Mark Gilbert. He is currently brokering the investment sales transaction of Merritt Square Mall, a 800,000-square-foot regional mall anchored by Burdines, Dillards, JC Penney and Sears.

Southwest Florida

"Florida's Gulf Coast could be renamed the Florida Gold Coast as residents, builders, developers and financial institutions migrate to the area to take advantage of the sun, weather and booming population growth," boasts Steven Mazurka of www.Mazurka.com. "From Sarasota and Port Charlotte through Ft. Myers to Naples and Marco Island, the recent slowdown in the economy has not dented the growth on the Gulf Coast." www.Mazurka.com was formed to provide commercial real estate services including marketing, relocation, expansion and consulting to companies and individuals. "Also, I think it's important to note that while growth remains strong along Tamiami Trail (Hwy 41), from Tampa to Naples, the center of activity has moved astride Interstate 75," Mazurka continues. "This is the major transportation route and the focus of growth is shifting to the last available large parcels on either side of the Interstate."

The Fort Myers and Naples areas are also experiencing a new trend in retail development. With the slowing of new construction comes an increase in redevelopment. This need for redevelopment is partly due to the dearth of space which resulted from the previous overdevelopment in the US 41 corridor area.2

Miami-based Courtelis Company recently broke ground on Phase II of The Prado at Spring Creek in Bonita Springs. The center is currently 172,928 square feet. Phase II will add 56,281 square feet and will be anchored by a 28,000-square-foot Stein Mart. Phase I was developed by Courtelis in 1999. Courtelis also recently opened The Granada Shoppes in Naples. The 300,000-square-foot project, which covers 39 acres, is anchored by Expo Design Center, Marshall's, Haverty's and Linens ¹n Things.

Simon Property Group is developing a center in Estero/Bonita Springs. It will feature 1 million square feet of retail space, 300,000 square feet of office space, 1,200 residential units and a 600-room hotel. Plans call for five anchors. It is scheduled for completion in 2004.

Regency Centers is constructing two Publix-anchored shopping centers in the area - the 79,400-square-foot Grande Oaks in Fort Myers and The Shoppes of Pebblebrooke, a 76,766-square-foot center in Naples.

Southeast Florida

According to Marcus & Millichap's most recent Retail Research Report on the South Florida retail market, construction starts will be strong in 2001 because of the area's growing population and demand from tenants, but some planned developments may be postponed because of lack of financing. In 2001, 7.5 million square feet of retail space will be completed. Demand is high because of the good job market and population growth. Vacancy is expected to decline this year and rental rates are expected to rise in Palm Beach, Broward and Dade counties. Miami-Dade County had the highest overall retail rents last year at $17.60 per square foot and with an average of $18.20 per square foot so far this year. Overall vacancy rates are about 7 percent, with even lower rates in some submarkets.

Grocery-anchored centers will continue to remain popular in this area due to their relative stability. As in the rest of Florida, the development of Publix-anchored centers is popular. Paradise Development is developing the 69,475-square-foot Publix at Laguna Isles center in Pembroke Pines in Broward County. The center has a 37,887-square-foot Publix. RMC/ Konover is constructing a 27,000-square-foot Publix for a center in Boca Raton. The store will be complete by the end of this year.

Terranova recently brokered the sale of Parkhill Plaza, a 120,101-square-foot, grocery-anchored center in Miami. It also brokered the sale of the 96,918-square-foot Palm Plaza in Miami Lakes.

Miami and the Ft. Lauderdale area are experiencing a trend toward urbanization. Previously underdeveloped urban areas like the downtown Kendall and Brickell areas are seeing a surge of development.

"The Kendall submarket is one of the hottest retail markets in Florida," says Cushman & Wakefield's Gilbert. Cushman & Wakefield is currently working on the investment sales transaction of Kendall Mall, a 300,000-square-foot center in the Kendall submarket of Miami. The company is also brokering the sales of Palm Aire Marketplace, a 140,000-square-foot center in Pompano Beach (Broward County); The Plaza at Delray, a 332,000-square-foot center in Delray Beach; Northridge Shopping Center, a 250,000-square-foot center in Fort Lauderdale; and Miller Square Shopping Center, a 200,000-square-foot center in Miami. All of these centers are grocery anchored.

Redevelopment is also becoming a priority in South Florida because of the fixed western boundaries of the area and the overdevelopment and scarcity of land in Miami-Dade County. It is also becoming necessary for older centers to redevelop or renovate because of the influx and competition of new supercenters.2 Courtelis Company is currently redeveloping Lakewood Shopping Center in Margate. The redevelopment of the 350,000-square-foot center will include a 165,000-square-foot Kmart Supercenter, a 30,000-square-foot Marshalls and a complete exterior and interior facelift. The center, which was built by Courtelis in 1971, will stay open through the completion of the remodeling in 2002.

Simon is renovating Dadeland Mall. It is conducting a complete renovation of the common area and food court of this 1.4 million-square-foot center in Miami. Saks Fifth Avenue is being renovated and expanded. JC Penney and Lord & Taylor are also being renovated.

While other areas of the state are focusing almost entirely on grocery-anchored centers, Southeast Florida is still constructing super-regional and open-air retail centers.

The Mall at Wellington Green, developed by Taubman in Palm Beach County, is scheduled to open in October. It will be a 1.3 million-square-foot center, in the center of a 470-acre mixed-use development. It will be anchored by Burdines, Dillard's, Lord & Taylor and JC Penney. Nordstrom will join the center in 2003.

France-based Constructa USA is developing a new 165,000-square-foot leisure and lifestyle center in urban Miami, near Biscayne Bay and the Miami River, called Mary Brickell Village. The two-level complex will have a tropical-themed design and lush landscaping. It will span two blocks on either side of South Miami Avenue, just west of Brickell Avenue. The center will be designed like a small-scale village and will have a plaza with a stepped amphitheater and an enclosed pavillion for functions. The city approved the project in 2000, the sight has been cleared and the design details are being finalized.

Jupiter-based DeGuardiola Development's Abacoa Town Center in Jupiter opened its first phase in February. It includes 109,000 square feet of retail development, a multi-screen theater, 27,000 square feet of office space, 400 apartments and an open-air theater. When the development is complete, it will fill 70 acres and offer 400,000 square feet of retail, 400,000 square feet of office space, 600 residences and an inn and conference center with a 130-room hotel and 20,000 square feet of office space.

Stiles Corporation is constructing Las Olas Centre in Fort Lauderdale. Construction began in December 2000 and is slated for completion in the third quarter of 2002. It will be a 411,000-square-foot, 23-story office building with a retail component of 71,000 square feet.

Turnberry Associates is currently constructing Aventura Crossings, a 220,000-square-foot, Mediterranean-style center across from Turnberry's Aventura Mall in Aventura. It is located 12 miles south of Fort Lauderdale and 12 miles north of Miami, on the Interstate 95 corridor. Nordstrom Rack is a proposed tenant. Construction will commence in summer 2002, with a scheduled completion date of 2003. The project is a joint venture between Ed Gadinsky and Turnberry.

Palm Beach Gardens-based Catalfumo is now developing Legacy Place of The Palm Beaches on 74 acres in Palm Beach Gardens. It is a 500,000-square-foot, mixed-use development with shopping, dining and entertainment options. Legacy Place will have a stadium seating movie theatre and feature musical, arts and gardening festivals on the center's two main stages. The center will consist of 450 apartments, 400,000 square feet of retail, 69,000 square feet of office space, themed restaurants, outdoor entertainment, nighttime venues and specialty retailers in a subtropical atmosphere. It is scheduled to open in spring 2002.

Catalfumo is also currently constructing the second phase of a retail strip center called Sunny Plaza in Palm Beach Gardens. It is building two additional buildings (combined total of 15,000 square feet) to match the original one currently there.

The Interstate 95 corridor is still a great location for investment and speculation, as evidenced by Swerdlow's recent divestiture. Hollywood-based Swerdlow recently sold six properties, which made up about one-third of its entire portfolio. Swerdlow felt that it had maximized its profits and wanted to turn the properties over to a long-term institutional investor. The buyer was San Diego-based Price Enterprises, which is largely owned by Excel Legacy. The buyer liked the Interstate 95 corridor and the large, dominant, regional, open-air centers. Most of the centers are in the Miami area and include: Cross County Plaza in West Palm Beach, a recently redeveloped 362,000-square-foot center anchored by Kmart, Winn-Dixie and Linens ¹N Things; Cypress Creek Station in Fort Lauderdale, a 229,000-square-foot center just west of Interstate 95, anchored by Office Depot and Regal Cinema; Hollywood Mall Plaza, a recently redeveloped 370,000-square-foot center one-quarter mile west of Interstate 95 anchored by Target and Publix; Kendale Lakes Plaza, a 403,000-square-foot suburban Miami center that was completely rebuilt in 1996 and anchored by Kmart, Marshall's, Office Max and Syms; and Oakwood Plaza in Hollywood, a 906,000-square-foot center on Interstate 95, which is the largest open-air center in South Florida, anchored by Kmart, Home Depot, Office Max, Marshall's, Regal Cinema, Barnes & Noble and Dave & Buster's.

North and Panhandle

With a 41 percent growth rate in tourism over the past 5 years, the Destin-Fort Walton Beach area has about 5 million visitors a year. The population of Northwest Florida has nearly doubled over the past 10 years. Due to this explosion of residents and visitors, the retail needs and services of residents in the area, particularly in the Highway 98/Emerald Coast corridor, which stretches from Pensacola to Panama City, are not being met. Developers are scrambling to fill in the blanks.

Turnberry Associates is currently developing Destin Commons in Destin. The 400,000-square-foot, open-air center will feature a 15-screen, stadium-seating movie theater and a resort-style town square. Destin Commons will be anchored by two undisclosed department stores and is scheduled to open in fall 2002. Retail Estate Management is the leasing principal.

Approximately 10 miles east of Destin, local developer The Howard Group is developing Grand Boulevard at Sandestin. The 700,000-square-foot development will feature retail and office space. The development, which will have direct access to the nearby Sandestin Golf and Beach Resort, will open spring 2003.

Jacksonville-based St. Joe, which is actively marketing long-held lands in Northwest Florida for retail land sales and development through St. Joe Commercial, is developing Pier Park in Panama City Beach. St. Joe's preliminary development plans for Pier Park were recently approved by the city council. The plan for the center, which could play a major part in revitalizing the Panama City area, calls for an 80-acre city park, 6 acres of beach, 50 acres of retail and restaurants, a 30-acre entertainment attraction area and 80 acres of commercial space with highway frontage. Phase I will feature a 200,000-square-foot retail village. It will be anchored by a Jimmy Buffett Margaritaville restaurant and a 1,500-seat music theatre. It is set to break ground this fall.

Paradise Development recently developed Publix at Paradise Pointe, an 83,930-square-foot center with a 43,799-square-foot Publix, in Fort Walton Beach. Paradise Development is also developing Phase II of Shoppes at Paradise Key in Destin. Phase I opened in 1999. The center is currently 276,681 square feet with a 51,420-square-foot Publix. Phase II will include a 25,000-square-foot Bed Bath & Beyond.

Moving away from the panhandle and to the east, RMC/Konover is developing an on-site replacement of a Publix in Gainesville Shopping Center in Gainesville. It will move from a 34,000-square-foot store to a 37,000-square-foot one. This redevelopment will be completed by the end of the year.

In Jacksonville, Simon Property Group is developing St. Johns Town Center. The project is a mixed-use, open-air, urban designed center scheduled to open in spring 2004. It is a 1.2-million-square-foot super-regional mall. It will have four anchors and four junior anchors. It will also include a hotel, offices and apartments.

Twenty minutes southwest of Jacksonville, Regency Centers is currently constructing Fleming Island, a 120,692-square-foot center with a Publix anchor in Orange Park. Regency is also constructing Julington Village, an 821,820-square-foot center in Jacksonville, anchored by Publix.

Southeast of Jacksonville, Belz Enterprises is expanding Belz Factory Outlet World in St. Augustine to over 578,000 square feet with the addition of a 263,500-square-foot Phase II.

Evidence of Northern Florida's flourishing tourist trade, and the ensuing demand for retail, comes with the City of Daytona Beach's selection of Trammell Crow Company, along with Carlsberg Management Company, The Boyd Group and the Boardwalk Merchants Association, to develop a six-block, 19.2-acre beach/boardwalk development. The redevelopment of the boardwalk area will include 200,000 square feet of retail, two hotels and a timeshare complex. The pier designs will be based on the Santa Monica Pier in California. The major components of the $350 million project will be completed in about 3 years.

Sources:
1 National Real Estate Index, (415) 733-5322, www.realestateindex.com. The index provides quarterly prices, rents and cap rates for six property sectors as well as economic and real estate analyses for over 50 metropolitan areas.

2 May 2001 South Florida Retail Research Report, Marcus & Millichap.

3 May 2001 Central Florida Retail Research Report, Marcus & Millichap.

4 First Quarter 2001 Orlando Retail Market Index, CB Richard Ellis.


©2001 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.