COVER STORY, AUGUST 2006

FLORIDA RETAIL ROLLS ON
Retail remains strong despite increasing development difficulties.
Stephen O’Kane

Many retail developers with projects in Florida are noticing that the development process is not getting any easier, from rising insurance rates to dwindling developable land. However, despite these challenges, the Florida market continues to see large growth in retail centers just about everywhere in the state. With many grocery-anchored shopping centers, outdoor lifestyle projects and mixed-use developments currently being planned and built, developers are seeing no signs of slowing for the Sunshine State.

The challenges developers are currently facing range from increasing insurance rates and affordability of land to lengthy entitlement processes and natural land complications. “Some of the challenges are hurricanes and the insurance that is required for catastrophic wind damage,” says Gary Montour, vice president of Jacksonville, Florida-based Colliers Dickinson.

The natural disasters that have occurred in Florida over the past few years have spiked insurance rates, therefore making it more difficult for retail developments to create the types of centers they want, where they want. “The rising costs have certainly been knocking some retailers out of the market or preventing them from even entering the market,” says Mike Fimiani of Boca Raton, Florida-based Woolbright Development. However, the companies that do invest their time and money in this market are finding consumers around every corner.

These obstacles have been present in Florida for some time, but it seems the awareness of the difficulties, and the importance of how to overcome them, is now becoming more and more prevalent. “As developers, we have a responsibility to keep up with and control the quality of developments and make sure that we are maintaining the natural beauty of Florida. Projects should enhance the natural beauty of the area,” says Myra Williams, vice president of marketing for Destin, Florida-based Howard Group. And that’s just what the development companies are striving for — quality retail centers that meet the needs of the growing population in Florida while also preserving the natural beauty the state is known for.

In addition to the increasing financial difficulties in the state due to natural disasters, the amount of developable land continues to diminish, also making Florida more expensive. “Wetlands issues, with Florida having such a high water table, make it more difficult to find tracts of land that don’t have significant wetlands issues that require approvals by highly intrusive public approvals,” says Montour.

Despite the numerous encumbrances developers are facing in the current Florida market, the velocity of growth makes it possible for these retail developments to thrive. “The strong growth in population and overall demographics are the primary driver of retail development in Florida,” says Brad Peterson, vice president of the East Coast retail investment team in the Orlando, Florida office of Trammell Crow Company.            

“The population growth across the state, as well as the rising median incomes, means there are more consumers and they are spending more money — the real driver behind retail development. Florida’s growth is outpacing nearly every other area of the country currently.” And there are numerous developments underway that are catering to the needs of the rapidly growing population of Florida.

Miami — Ft. Lauderdale — Southeast Coast

The Miami / Ft. Lauderdale area in the southeastern Florida market is showing tremendous growth, which can be seen by the amount, and quality of, retail developments in the region. There are currently a number of large projects under construction from Miami moving north to Port St. Lucie in St. Lucie County.

“Top retailers are quickly recognizing the buying power of the residents and visitors to South Florida (and especially Northern Palm Beach County), and we’ve been receiving calls from top retailers and restaurants from all around the country and world, who want to be a part of the incredible growth,” comments Ashley Ostroff, director of marketing for Palm Beach Gardens, Florida-based Menin Development Companies. “There is a large increase in the number of young families and young business people who are moving to South Florida. This kind of growth, coupled with strong income and home values, makes Florida a logical place to open new retail locations.”

Menin Development Companies has developed Downtown at the Gardens, a 338,100-square-foot open-air shopping center, which opened in November 2005. The retail center, which is located at the intersection of PGA Boulevard and Alternate A1A in Palm Beach Gardens, features tenants such as Whole Foods Market, Cobb Cinemas, The Cheesecake Factory, The Grape and Urban Outfitters. Retailers and restaurants have continued to open throughout the year at Downtown at the Gardens, which is currently 80 percent leased. Open-air centers like Menin Development’s Downtown at the Gardens are becoming increasingly popular throughout all of Florida.

This open-air trend continues across the region. “Since Florida continues to prosper, the retail will be there too. I think we’re keeping the right pace to satisfy the needs of the influx of people in the market,” comments Fimiani. Woolbright Development is currently developing two open-air shopping centers in the greater Miami market: Carter Square, which is located at the southeast corner of Kendall Drive & 137th Avenue in Kendall; and London Square, which is located at 137th Avenue and 120th Street in Kendall. Carter Square will span 67,000 square feet with Staples and Walgreens as anchors. London Square will span 325,000 square feet and will be shadow-anchored by a major wholesale club.

Forest City Enterprises has teamed with Magna Entertainment Corporation to build a lifestyle center adjacent to Gulfstream Park in Hallendale, Florida. The first phase of The Village at Gulfstream Park will construct retail, entertainment and restaurants, along with 400 high-end condominium units. The project is expected to be completed in fall 2008.

The Sembler Company currently has two mixed-use projects under development. Legacy Place in Palm Beach Gardens will include 394,000 square feet of retail and approximately 34,000 square feet of office space. It will open this fall. The Sembler Company is also developing Boynton Town Center in Boynton Beach. This mixed-use community, which is expected to open in March of next year, will feature 400,000 square feet of retail, 10,000 square feet of office space and 1,200 residential units.

New Plan Excel Realty Trust has combined the open-air style project with another important facet — redevelopment. With the amount of available land becoming scarce, companies are trying to find ways to open new retail centers that cater to the latest consumer trends. Redeveloping properties that already occupy space has been a good way of using the old to bring in the new. New Plan Excel Realty Trust is currently undertaking a renovation to Mall at 163rd Street in North Miami Beach, which will redevelop the enclosed mall into a partial open-air community shopping center. The 361,246-square-foot center, which was scheduled for an initial grand opening in February 2006 and for completion this month, will focus entirely on retail and feature tenants such as Marshalls, Ross Dress For Less, Anna’s Linens, Office Depot and Wal-Mart SuperCenter.

New Plan Excel Realty Trust has another project called Presidential Plaza in North Lauderdale. The company has redeveloped a former Winn-Dixie into a 34,000-square-foot Sedano’s grocer that now anchors the center.

In addition to the open-air centers, these grocery-anchored centers are showing strength in the Miami market as well. “Grocery-anchored centers remain a strong investment piece for retail owners,” says Peterson. “While many new lifestyle centers and larger projects garner more attention, there is still a great deal of value in the centers because of their increasing demand as population grows.”

The Shoppes at Veranda Falls will be anchored by a 45,000-square-foot Publix.

“There are also starting to be more and more grocery-anchored projects that contain a mixed element,” says Peterson. “Multifamily housing nearby brings a dedicated customer base to the project and can help a developer leverage a product as superior.”

Turnberry Associates is constructing a 232,000-square-foot expansion for Aventura Mall in Aventura, Florida.

Beachwood, Ohio-based Developers Diversified is currently working on Homestead Pavilion, a new shopping center development in Homestead that is scheduled to open in 2007. The Mercato, which will focus solely on retail, will be situated on 56.6 acres of land and span 399,868 square feet. The likely tenant mix will feature Ross Dress For Less, PetsMart, Circuit City and Michaels.

Downtown West Palm Beach is also seeing a surge of new retail. “Right now we are on a great path with regards to new retail,” says Melissa Wohlust, executive director of the downtown development authority for West Palm Beach. “We just recently signed on 12 new retailers, which all came in a period of three months.”  A new store, SoHo Living by Brandon, which is the first of its kind, recently joined the Clematis district in downtown West Palm Beach and represents the wave of new retailers showing up all over the state.

Southwest Florida

What is currently happening in the Miami / Ft. Lauderdale market is representative of the types of developments occurring all over the state. South Florida is also seeing a new wave of mixed-use developments that are responses to consumers’ desire for convenience as well as something new. “The biggest trend in the industry right now is the lifestyle centers and the mixed-use-type projects,” says Dougall McCorkle of The Lutgert Companies. “This is occurring for a number of reasons. First, there is the stagnation in the development of new regional malls in the country, and developers are forced to reinvent themselves. This has played right into the hands of the consumer, because the consumer is looking for something different, particularly the older, more affluent consumer base that has expanded due to the strong economy and the aging of the baby boomers.”

The Lutgert Companies is currently developing one of these new mixed-use-type projects. The Mercato, which is located in Naples, will feature 325,000 square feet of retail, 100,000 square feet of office space, 175 residential units and 65 hotel rooms. The mixed-use development is scheduled for completion in first quarter 2007 and will be anchored by Whole Foods.

Woolbright Development is also developing a mixed-use center in Naples that will be called The Collection at Vanderbilt. The 253,000-square-foot shopping center, which is located at the northwest corner of Vanderbilt Beach and Airport Pulling roads, is in close proximity to two Ritz-Carlton resorts and Greg Norman’s Tiburon Golf Community. The mixed-use project will also feature seven outparcels and 35,000 square feet of office space. The Collection at Vanderbilt will be anchored by Fresh Market and Benihana Restaurant.

Tampa — St. Petersburg

The Tampa / St. Petersburg market is no exception when it comes to new retail developments in Florida. This region is also seeing a large number of mixed-use and open-air centers being developed despite the high construction and land costs that are sweeping across the entire state. CASTO Lifestyle Properties has recognized the need for such centers and currently has three projects under development in the Tampa / St. Petersburg market.

The first of these is Sarasota Bayside, an open-air, main street-style project in Sarasota that will feature top-tier retailers, restaurants and cultural establishments as well as office space and high-rise, luxury condominiums. This project is scheduled to open in 2008. Another project developed by CASTO Lifestyle Properties is Main Street at Lakewood Ranch, a mixed-use lifestyle center in Lakewood Ranch. The development features 120,000 square feet of upscale retail, an eight-screen movie theatre, restaurants, a day spa, 46,000 square feet of office and 64 condominiums. Lakeside Village in Lakeland is another mixed-use project developed by CASTO Lifestyle Properties. The new entertainment/lifestyle center spans 500,000 square feet and features 380,000 square feet of retail and entertainment space, including an 18-screen Cobb Theater, Belk’s, Kohl’s, Bed Bath & Beyond, 80,000 square feet of office plus residential and hospitality components. “You are seeing a lot of mixed-use projects. That’s what the communities are calling out for and what the want to embrace,” says CASTO Lifestyle Properties’ Brett Hutchens.

RMC Property Group is also forming a presence in the Tampa / St. Petersburg market with two major centers currently under development: Broadway Promenade in Sarasota, and Summerfield Crossing in Riverview. Broadway Promenade, which is a joint venture between RMC and Ran Development, will be a mixed-use center at the northeast corner of 34th Avenue and Tamiami Trail. The center will feature 47,000 square feet of retail, 4,135 square feet of office space and 187 luxury condominium units. Summerfield Crossing recently opened its first phase this summer and plans include a 120,000-square-foot second phase to open late 2008. Currently the tenants include Publix, Hollywood Video, Subway, The UPS Store and McDonald’s.

A new lifestyle center, The Shops at Wiregrass Ranch, is being developed in Pasco County, Florida.

Central Florida — Orlando

The Orlando / Central Florida market is seeing similar growth as the rest of the state. With population numbers soaring, lot of new, mixed-use developments are popping up all over this growing region. “The tendency towards mixed-use-type developments continues to be strong, especially in the state of Florida, due to the residential component,” says George Tullos, vice president of marketing and sales for Charleston, S.C.-based James Doran Co. “We’re finding that the integration of the residential component into the town center and lifestyle-type development continues to be very strong.”

James Doran Co. is planning to accomplish that kind of development with its Winter Springs Town Center in Winter Springs, just northeast of Orlando. This project will be a new mixed-use community situated on 54 acres located at the intersection of State Road 434 and Tuskawilla Road. Opening in two phases, the project will combine shops, restaurants, offices, apartments and condominiums in a downtown-style setting. One of the unique components found in this development is the Mediterranean-style architecture that creates the feel of old-world Florida. The project will also include parks and green space, an amphitheater, an approximately 4-mile recreational trail named Cross Seminole Trail, and rooftop decks and balconies to provide views of the surrounding wetlands.

Paramount on Lake Eola will offer 34,000 square feet of retail.

The Sembler Company is the developing its largest project to date in Winter Garden. Winter Garden Village at Fowler Groves will feature over 1.5-million square feet of retail as well as 240 town homes. The project is expected to open in October of next year.

Lake Nona Property Holdings is currently developing a 7,000-acre master-planned community in southeast Orlando. Lake Nona will include 1.5 million square feet that will feature department stores, specialty retail, dining and entertainment venues. The project will also feature 9,000 residential units and 950,000 square feet of office space.

As can be seen in the other Florida markets, the amount of growth in the state is creating such a high demand for retail that it does not take a mixed-use community to provide the quality and experience residents are looking for. New Plan Excel Realty Trust has taken the redevelopment route and currently has two retail projects in this region: Brooksville Square and Pointe Orlando.

New Plan Excel Realty Trust is remerchandising Pointe Orlando to add new plazas and restaurant anchors.

Brooksville Square in Brooksville is one such project. New Plan redeveloped a former Kmart into a 45,600-square-foot Publix and 14,400 square feet of new retail shops. The entire center, which is scheduled to open this winter, will span 156,361 square feet. Another redevelopment project by New Plan is Pointe Orlando. The 420,000-square-foot center will be remerchandised and significantly renovated to include new feature plazas and restaurant anchors. Capital Grill and Muvico are among the tenants listed for the center, which will officially open during winter 2007.

The Panhandle — Northern Florida

What used to be considered by some as a sleeper market in Florida, the Panhandle/Northern Florida market is beginning to awaken. Developers are recognizing the opportunities this region has to offer and using the latest trends to attract residents and visitors. “For many years, the Panhandle had been a sleeping market. But now it’s doing very well and there are great developers in that area that are putting in some projects,” comments Fimiani.

One such project is Howard Group’s Grand Boulevard, a 52-acre lifestyle center that features 530,000 square feet of retail, medical and office space. “Whole integrated town centers are the future of retail,” says Williams. “In today’s busy society, consumers want to ‘live, work and play’ in one place. These mixed-use town centers integrate retail stores, restaurants, entertainment, lodging, offices and residential units all into one town center.” The $250 million development, which is located at the entrance of the Sandestin Golf and Beach resort in Destin, consists of two phases. The first phase opened this past June and features an 86,000-square-foot community center anchored by Publix, which also includes 50,000 square feet of office space. By spring 2008, 265,000 square feet of specialty retail, 121,000 square feet of office space, five signature restaurants and 350 luxury condominium units are expected to open in the development.

Oakleaf Plantation, an 850,000-square-foot mixed-use lifestyle center, is currently being developed by Colliers Dickinson. This center, which is located at Argyle Forest Boulevard and Old Middleburg Road in southwest Jacksonville, offers two multimillion-dollar athletic centers that feature waterparks, community clubhouses, fitness centers, soccer and baseball fields, and a basketball court. Along with a public library and an 18-hole championship golf course, Oakleaf Plantation represents a major theme occurring in northern Florida.

Destin Commons is currently undergoing the first phase of a 250,000-square-foot expansion.

Another significant development in this area is Destin Commons, a 400,000-square-foot mixed-use project developed by Turnberry Associates. Destin Commons, which opened in November 2003, is currently undergoing the first phase of a 250,000-square-foot expansion. Tenants include Bass Pro Shops, Belk and a 14-screen Rave Motion Pictures movie theater. Destin Commons also features 70,000 square feet of office space. “An established tourism market is what initially drew us to Destin, but we’ve been pleasantly surprised by the area’s recent residential growth,” says Turnberry’s Jim Gdula.

Even with a growing list of difficulties, developers are finding there is no shortage of demand for large retail centers throughout the entire state of Florida. “Over the past 5 years, Florida has grown by nearly 2 million people, bringing the population to approximately 18 million. Population growth and ranking as the top travel destination in the world make Florida the best expansion market for retailers,” says Gary Ralston, president of Florida Retail Development.

“There are three key factors,” says Gdula. “The state has a diverse population, a growing economy and not just domestic — but strong worldwide — tourism. Retailers are attracted to the state for many of the same reasons as developers. They want to be in growth areas that offer all the key demographic groups, from young professionals with children to baby boomers with considerable disposable income.”

“The traditional mantra of ‘retail follows rooftops’ is especially true in Florida currently,” comments Trammell Crow’s Peterson. “There are phenomenal numbers of people moving to the state every week and in turn this is where retailers want to be.”

The Shops at Midtown Miami Fills a Void The center court of the mid-block will be used as a common area. The area will house special events, valet parking, and will also be home to the center’s specialty leasing program. A number of urban markets around the country are rediscovering retail. Not just with high end fashion malls, but service, big box and grocery-anchored retail are entering the urban core as well. In Miami, Developers Diversified is creating The Shops at Midtown Miami, an innovative urban project that bridges the gap between power center and lifestyle center. The center, opening this fall, is located just north of downtown Miami at the junction of North Miami Ave. and Interstate 195, the primary artery to Miami Beach. There are more than 484,600 people living within 5 miles of The Shops at Midtown Miami, and more than 2.1 people million living within 15 miles of the center. Beachwood, Ohio-based Developers Diversified became involved in the project about 3 years ago. The REIT developed a unique plan that fit the city’s vision for the property: it would go vertical with the project, providing the retailers that residents needed, as well as the parking that the project would require. The site for the project was complicated — it was formerly a container storage yard for the port of Miami, so some environmental reclamation of the brownfield had to be done. “The concept was creating more of the urban fabric that didn’t exist on this 56 acres sitting in the middle of Miami,” says Dan Herman, senior vice president of development for Developers Diversified. The project received unanimous support from Miami’s city commissioners as well as the Miami-Dade county commissioners. While a complicated rezoning process went on for a number of months, Developers Diversified started the design and engineering phase of the project, as well as getting interest from national tenants. Early on, the company realized it would have to have both lifestyle and power tenants to fill the demand required by residents. The Shops at Midtown Miami, the company realized, would be the only power or lifestyle center between Aventura Mall and Dadeland Mall. Today, anchors for the project are Target, Circuit City, Ross Dress for Less, Linens ‘n Things, Marshalls, Loehmann’s, West Elm and PetsMart. A number of restaurants and local tenants will also eventually be located at the center. “Aside from the cultural renaissance which is taking place in this area of Miami, there is still a tremendously large population and trade area that  needs to be served,” says David Dieterle, senior vice president of leasing for Developers Diversified. “Really, there is no other big box retail within 10 miles of this site. There was clearly a need and demand for this type of retail.” The Shops at Midtown Miami is designed in three blocks that stretch north to south down North Miami Avenue. The north block, which contains a four-story parking garage and vertical retail and residential units, will house a 141,114-square-foot Target, Ross Dress For Less, Marshalls, Circuit City and Linens ‘n Things, as well as street-level specialty retail shops.. The mid-block will be more lifestyle oriented. Built around a public plaza featuring a waterfall and pedestrian amenities, the second block will be anchored by West Elm and Loehmann’s. Future tenants will be lifestyle and restaurant oriented. The south block will be anchored by PetsMart and a future anchor, and will house multi-level public parking structure. A fourth block with even more retail is planned in a future phase. “Each block of the shopping center will have a different tenant mix,” says Dieterle. “The tenants run the spectrum from value retail to local high end offerings and restaurants.” In addition to the retail, a separate developer has eight condominium towers planned on about 30 acres at the site; three of the towers are already sold out. Ross Dress For Less will be the first tenant to open on September 25. Circuit City, Target and Linens ‘n Things will open at the project October 8. Marshalls will open November 15 and PetsMart will open mid-December. Also, the first condominium tower adjacent to The Shops at Midtown Miami will begin occupancy late this year. Two other condominium towers will open in 2007. Because of its vertical nature, and the community where the center is located, The Shops at Midtown Miami has created some unique opportunities for Developers Diversified. The company is launching a specialty leasing program at the center. The retail merchandising units (RMUs) that will play a key role in that program will be located at the mid-block portion of the project, in the open-air, public plaza. There are 14 RMUs planned for the public court area. This plaza will double as an event park, and serve as the core of the project. Developers Diversified has also approached automobile dealerships and other sources about advertising opportunities at the center. It will outsource the advertising sales for the center. The company is also looking at auto dealerships to sponsor the center’s valet parking services. “This market has incredible potential for ancillary income generation through specialty leasing and sponsorships,” says John Kokinchak, Developers Diversified’s senior vice president of property management. “We believe that it will be a driving force within the development and be a very successful program.” The Shops at Midtown Miami is Developers Diversified’s  second mixed use urban development, its first being CityPlace in Long Beach, California, a few years ago. “Miami posed a unique opportunity for us,” says Herman. “The city had a long range vision and Mayor Diaz was a strong proponent of seeing this property developed. That, with the city and county’s support and the tenant interest, helped make this a reality.” —Randall Shearin

©2006 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.