FEATURE ARTICLE, AUGUST 2007

FLORIDA RETAIL DEVELOPMENT REPORT
As population numbers continue to rise in the state, Florida’s retail markets are some of the top beneficiaries.
Stephen O’Kane

It is the positive demographics that help keep Florida’s retail alive these days. For the most part, the weather and vacation hot spots continue to drive the population boost, even if the risk of certain natural disasters is present.

Developers are finding that available land is disappearing and construction costs are rising, yet there is still a high demand for quality retail developments. Everything from grocery-anchored centers to open-air and lifestyle centers continue to be created in order to cater to the large amount of people moving to or visiting the Sunshine State. While South Florida is seeing the largest growth with regards to population and new developments, retail growth is taking place throughout the state.

Miami — Fort Lauderdale — Southeast Coast

All along the southeastern coast of Florida, new and innovative projects are taking root. Add these to significant traditional retail developments, and you have the Miami-Fort Lauderdale market. Several companies have developed, or are developing, numerous retail destinations in this part of Florida, and they are being welcomed with open arms.

“Retailers are attracted to Florida because of our growing population, diversity of cultures, high disposable income levels and high quality of life,” says Pete Schlang, director of leasing for Boca Raton, Florida-based Woolbright Development. “The population densities are extremely high and continue to grow. Combine this with a selling season that is strong 12 months of the year, compared to 6 months in a northern state, and it’s clear why everyone loves Florida.”

Woolbright is developing London Square, an approximately 475,000-square-foot retail destination located at the southeast corner of 120th and 137th avenues in Kendall, a town located just south of Miami. The project will be anchored by Costco, TJ Maxx, Home Goods, Ross Dress For Less, Party City and Wachovia, and will feature a 60,000-square-foot office building anchored by Miami Children’s Hospital. Tenants are scheduled to open in the first quarter through the third quarter of next year.

Carter Square, another development of Woolbright in Kendall, is located at the southeast corner of Kendall Drive and 137th Ave. This center, which spans 70,000 square feet, is anchored by Staples, Walgreens, Starbucks Coffee, Panera Bread, Chipotle, Pei Wei and Coldstone Creamery. Tenants began opening this summer and will continue through fall of this year.

“Florida is attractive to new retailers due to the success that many retailers are having in our state,” says Schlang. “With our population growth continuing by approximately 100,000 people per month, and with several communities well below the national average of retail square footage per capita, developers will continue to build in Florida. We also have many communities where vacancy rates are less than 5 percent, again pushing developers to build.”

Palm Beach Gardens, Florida-based Menin Development Companies, which opened its 350,000-square-foot Downtown at the Gardens project in Palm Beach Gardens in 2005, also recognizes the potential of the South Florida market.

“South Florida is a unique market in terms of sales performance compared to typical demographic profiles,” says Daryl Kaplan, president of Menin Realty Services. “Typically, South Florida’s sales results outperform other markets with similar demographics. This is due to a combination of the tourist component as well as the Florida lifestyle, where people tend to spend more time focused on leisure activities, which include both dining and shopping.”

In Boca Raton, Menin is developing a new project called Verde as a joint venture with West Palm Beach, Florida-based The Goodman Company. This 900,000-square-foot mixed-use development, which is scheduled to open in 2010, will be anchored by an upscale specialty grocery store, a cinema and a hotel. According to Kaplan, the company is hoping to attract specialty retailers and restaurants that are looking for an alternative to traditional malls.

Beachwood, Ohio-based Developers Diversified Realty also is capitalizing on the potential of the Miami-Fort Lauderdale market with two significant projects. The Shops at Midtown Miami, which features 633,001 square feet of gross leaseable area, is a mixed-use development in Miami housing retail, restaurant, office and residential spaces. The company also has added outdoor public spaces, streetscaping, infrastructure and parking, creating a city within a city.

The company also is currently involved with a redevelopment project, The Fountains Shoppes, in Plantation. A portion of the 482,727-square-foot center is being demolished in order to create a new two-level anchor box. Another 34,000 square feet of retail space and a junior anchor store will also be developed for the project, which is scheduled to open by 2009.

CityPlace, a development of Related Urban, also is expanding. The 620,000-square-foot urban mixed-use project currently houses more than 60 retail shops and 20 restaurants as well as 583 residences, a 300,000-square-foot convention center and a 20-screen Muvico film complex. The $500 million project has 400 additional residences, 300,000 square feet of office space and a 400-room hotel under construction.

Delray Marketplace, a development of Indianapolis-based Kite Realty Group in Delray Beach, is another example of a large-scale retail center taking root along the Southeast coast of Florida. The lifestyle-oriented project will span approximately 318,000 square feet upon completion and will house anchor tenant Frank Theatres. An opening date has yet to be announced.

St. Petersburg, Florida-based Sembler has two projects in the Miami-Fort Lauderdale market, both spanning at least 400,000 square feet. Legacy Place is a 469,000-square-foot mixed-use center located on PGA Boulevard, directly across from The Gardens Mall in Palm Beach Gardens. The project, which opened last year, features anchor tenants and small box tenants, as well as local retailers and restaurants.

Boynton Town Center, a development of Sembler located in Boynton Beach, is another mixed-use center, which houses 400,000 square feet of retail, 10,000 square feet of office space and more than 1,100 residential units. The project is located at the northeast corner of North Congress Avenue and Old Boynton Road and was scheduled to open last month.

Naples — Southwest Coast

Moving across the state to the Southwest coast, development is not slowing. Several projects are being developed and redeveloped in the area to cater the growth, which is on a scale similar to that of the Miami market.

Courtelis will complete Brooks Town Center in Estero, Florida, next spring.

Miami-based Courtelis Company is very active in this market with four significant projects. Shops at Surfside, an 180,000-square-foot center currently under development in Cape Coral, will house tenants such as Belk, Home Goods and Kirklands. It is scheduled to open in October. Courtelis also developed Magnolia Square, a retail center in Naples that was scheduled to open this summer. The 150,000-square-foot project houses tenants including Sweetbay and Raymond James. Also in Collier County is Ave Maria Town Center, a 100,000-square-foot retail center. The project, which will house the interim campus for Ave Maria University in addition to retail space, is scheduled to open this fall. Courtelis is developing Brooks Town Center as well. The development, which will span approximately 80,000 square feet upon completion next spring, is located in Estero, just north of Naples.

“Florida remains attractive to retailers and developers due to continued population growth, tourism and foreign investment,” says Rod Castan, vice president of Courtelis Company. “South Florida has become a major international market, attracting not only the world’s top designers and restaurants, and world class retailers, but also investors in commercial properties from around the globe.”

Another significant development positioned along the Southwest coast of Florida is The Lutgert Companies’ The Mercato. The mixed-use project, which is located in Naples, will house 330,000 square feet of retail as well as 140,000 square feet of office space and 175 residential units. Notable tenants for the retail portion include Whole Foods, Capital Grille, McCormick & Schmick, Blue Martini, Coldwater Creek, Sur La Table, a 12-screen theater and a bookstore. The Mercato is scheduled to open by the end of next year.

“Florida’s growth rate is the obvious impetus for retail growth here,” says Dougall McCorkle, vice president of The Lutgert Companies. “Even though the region has some difficult times currently with the bust in the housing market, the mega-trend is still the same — a net migration from the ‘rust belt’ to the ‘sun belt’.”

The Collection at Vanderbilt, a project of Woolbright Development, also is taking root in Naples. The property, which is 50 percent pre-leased to a mix of boutique retailers and restaurants, will span 225,000 square feet upon completion. Tenants at The Collection at Vanderbilt will begin opening this fall.

The D’Jamoos Group, a family-owned company based in Naples, is taking advantage of the Southwest’s hot market. Currently, two mixed-use projects are underway in Lee and Collier counties. Estero on the River will be an 85-acre mixed-use development featuring 177,000 square feet of retail, restaurant and hotel space, as well as 87,000 square feet of general and medical office space and 36,000 square feet for civic use, including a new professional regional theater, Gulfshore Playhouse. Also in the works is São Grato, another mixed-use project that will feature approximately 73,000 square feet of retail space, more than 18,000 square feet of restaurant space, 35,468 square feet of office space and 224 residential condominiums. Completion dates for either project have not been announced.

Kite Realty Group is currently involved with a redevelopment project in the area. The company will redevelop Eagle Creek, an approximately 75,900-square-foot retail center housing tenants including Staples. The project is scheduled for completion this fall.

Tampa — West Coast

Located directly up the coast from Naples, the Tampa market continues to keep the trend of strong retail growth alive. RMC Property Group is currently developing Summerfield Crossings, a 215,000-square-foot retail project located at the intersection of Highway 301 and Big Bend Road in Riverview. Phase I of the project opened in late 2005 and Phase II is scheduled to come on line next fall. Tenants for Summerfield Crossings include Publix, Hollywood Video, Subway, The UPS Store, McDonald’s, Bank of America, AmSouth Bank, SunTrust and Wachovia.

RMC Property Group has worked in partnership with RAM Development on another project in the area. Broadway Promenade is a mixed-use project located at the intersection of U.S. Highway 41 and 10th Street in Sarasota. The 49,000-square-foot center, which opened in June, houses tenants such as Publix, Bank United and Dental Health Group.

One of the largest projects in the area is The Goodman Company’s Wiregrass Ranch, a 5,000-acre mixed-use project located at Bruce B. Downs Boulevard and State Road 56 in Pasco County, north of Tampa. The Goodman Company is partnering with Forest City Enterprises to develop The Shops at Wiregrass Ranch, an 850,000-square-foot lifestyle center that will be part of the master-planned community.

West End, another large-scale development, broke ground last month in Tampa. The $300 million project, a development of Tampa-based Morin Development, will occupy eight city blocks near downtown and will house 40,000 square feet of retail and office space, 550 apartment units, 340 condominiums and 60 townhomes. West End is expected to take 4 years to complete.

Kite Realty Group also is active in this market with its Bayport Commons development. The 281,000-square-foot retail center will house Target, Michaels and PetsMart. Completion is scheduled for this fall.

Marcus & Millichap is noticing the retail activity in the Tampa market as well. The company has brokered the sale of Town Center, a 304,000-square-foot retail center in Lakeland. The 98 percent-occupied property, which is anchored by Big Lots, Family Dollar and Dollar General, was sold by Howe Whitman to a private European investor for $32 million. In addition, Marcus & Millichap negotiated the disposition of University Drive, a 73,000-square-foot retail property located in Sarasota. The center, which was 90 percent occupied at the time of the sale, is shadow-anchored by Albertson’s. Medallion Homes sold University Drive for approximately $18 million.

Orlando — Central Florida

Florida’s growth continues inland to Orlando and Central Florida. Numerous large-scale projects are planned or underway and the population is driving the need for such destinations.

“Florida continues to benefit from a general large-scale long-term national migration trend from the North to the South, and the state’s Hispanic population growth echoes one of the nation’s strongest trend lines,” says John Crossman, president of Orlando-based Crossman and Company. “In addition to Florida’s explosive population growth and appealing demographic profile, there are also a number of Sunshine-State-specific factors that make Florida a particularly compelling prospect for potential developers. One of the nation’s most popular vacation and convention destinations, tourism is always an important factor in Florida’s retail equation.”

Crossman & Company is involved with a large project located in The Villages, a 25,000-acre residential community that spans across three counties in Central Florida. Buffalo Ridge is a 1.2 million-square-foot project currently under development. Phase I of Buffalo Ridge opened in January with tenants that include anchor Wal-Mart Supercenter and McDonald’s. Phase II of the project is scheduled for the first quarter of next year and will add Beall’s. There are two more phases planned for Buffalo Ridge, but no completion dates have been set.

Sembler also is creating a large-scale retail project in the Central Florida market. The company’s Winter Garden Village at Fowler Groves in Winter Garden will span 1.15 million square feet upon completion this October. The open-air project, which is located at the northeast quadrant of County Road 535 and the Western Beltway, will house tenants including Super Target, Lowe’s Home Improvement Warehouse, Barnes & Noble and Beall’s.

Colony Plaza, another of Sembler’s developments in Central Florida, is an example of how traditional grocery-anchored centers continue to thrive. The project, which is located at the northeast corner of County Road 466A and Morse Boulevard in The Villages development, opened this spring. Colony Plaza spans 54,340 square feet and houses Publix and Anthonys.

A joint venture between The Goodman Company and Phoenicia Development is creating a traditional retail center as well with Plaza Collina in Clermont. The project will span 950,000 square feet and will be anchored by Wal-Mart. Completion for Plaza Collina is set for next spring.

Another joint venture, this time between RMC Property Group and Redstone Investments, is developing Dupont Lakes Shopping Center located at the intersection of Howland and Elkcam boulevards in Deltona. Continuing the solid Central Florida trend of grocery-anchored retail projects, which caters more to the residents in the area, Dupont Lakes Shopping Center will be anchored by Publix and house other retailers such as Bank of America, McDonald’s, Pix Convenience and Taco Bell.

“From a retailer’s and a developer’s point of view, population growth spells opportunity,” says Mitchell Rice, chief executive officer of RMC Property Group. “This, among other positive indicators such as the weather and tourism, are why companies are continuing to develop in Florida.”

RMC Property Group is teaming with NK Ventures and ZOM Inc. to develop another Publix-anchored shopping center in the Orlando market. Located on East Pine Street in Orlando, The Paramount on Lake Eola, will span approximately 47,000 square feet. The development is scheduled to open in summer 2008.

Northwest Florida

Retail in Northwest Florida has been booming during the last few years. The addition of two new lifestyle centers have brought many new national retailers. One of the nation’s most successful outlet centers, Silver Sands Outlets in Destin, is located in the area and continues to break new ground with top retailers. With 17 million visitors in 2006 to Florida’s Emerald Coast, the area has continues to be a top tourism destination in the Southeast. New full-time residents are moving in as well, with a permanent population base of 853,000 in the trade area. Annual population growth rate for Walton County is 9 percent, while neighboring Okaloosa County boasts a 10 percent growth rate. A new airport will open in the area in 2009, bringing more visitors and commercial traffic to the area.

The newest center to open in the area is Grand Boulevard at Sandestin, a 430,000-square-foot lifestyle center developed by The Howard Group. The Howard Group acquired the land for Grand Boulevard during a 10-year period and developed the center to serve locals and visitors alike. The center is split between a community retail section and a town center. The community retail section, anchored by Publix and a wine store, opened in 2003. The town center opened this summer. It anchors include Coldwater Creek, J.Jill, Orvis, Brooks Brothers Country Club, and five destination restaurants, including Fleming’s Prime, Mitchell’s Fish Market, P.F. Chang’s China Bistro, Cantino Laredo, and Tommy Bahama Tropical Café and Emporium. Two Marriott branded hotels opened on the property in summer 2006.

“Twenty years ago, these tenants would not have looked at this market,” says Myra Williams, vice president of The Howard Group. “Our biggest goal is to attract restaurants and retailers who are not in this destination. They will be embraced by the community because there are nothing like those retailers around here.”

The Howard Group has plans to continue to evolve Grand Boulevard through 2010. A third phase will add more residential and luxury hotels to the property, plus additional dining and retail space.

Construction is underway on a significant expansion to Destin Commons, a 400,000-square-foot open-air lifestyle center in Destin, which is anchored by Bass Pro Shops, Belk, Hard Rock Café and a 14-screen Rave Motion Pictures theater. A project of Turnberry Associates and Legendary Inc., the Destin Commons expansion will add 205,000 square feet of retail and office space. Phase I of the development will feature a parking garage and office space, while Phase II will feature additional retail and office space. Plans for the expansion also include a 200-room hotel. Phase I of the project is scheduled to be completed in November, with construction on Phase II beginning shortly thereafter in January.

From new lifestyle and grocery-anchored centers to expansions and redevelopment, Florida is experiencing growth in almost every region. Developers are always keeping an eye on the possibility of a bump in the road or a slowing down of the growth, but for now Florida’s retail shines on.


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