Rental and occupancy rates in the Tampa retail market remained steady throughout last year, according to Patrick Berman, retail specialist with Cushman & Wakefield. Most new retail projects are either build-to-suit or largely pre-leased, which minimizes development risk and keeps the market at a sustainable level of equilibrium. This conservative approach to development should provide some protection from the overbuilding of retail space that occurred in the late 1980s.

The most significant new retail development in Tampa Bay is International Plaza, a 1.2 million-square-foot lifestyle regional mall scheduled to open in September adjacent to Tampa International Airport. International Plaza, which is being developed by The Taubman Company, is significant because it brings three upscale department stores to the Tampa Bay area for the first time: Nordstrom, Lord & Taylor and Neiman Marcus. The arrival of these high-end retailers sends a message that Tampa Bay has reached an impressive milestone of affluence and sophistication, says Berman.

Other significant developments include the recent opening of Centro Ybor, a 240,000-square-foot retail entertainment center that has energized Ybor City, an historic district north of downtown Tampa. Channelside at Garrison Seaport, scheduled to open by March, is an important component in the revitalization of downtown Tampa. The Bay Walk development in downtown St. Petersburg recently opened. Bay Walk provides local residents and visitors with a much needed entertainment venue including a movie theater, restaurants and unique retail stores.

The majority of retail development is taking place in under served residential neighborhoods that are experiencing rapid population growth such as northwest Hillsborough County and the Brandon/Valrico area. Retail developers select these high-growth residential communities because a strong demand exists for a convenient supply of household goods and services.

In keeping with Tampa Bay's conservative approach to retail development, these new centers are very low risk propositions. A typical retail development is a 65,000-square-foot neighborhood center with a grocery store anchor taking 75 percent of the gross leasable area and with the balance of the space pre-leased to a dry cleaner, restaurant, hair salon and video store. With most of the space in the new shopping center leased before construction begins, financing is easy to obtain and development risk is minimized.

Vacancy rates vary in Hillsborough County from a low of 5.2 percent in the Brandon/Valrico submarket to a high of 8.8 percent in central-east Tampa. Overall, the county's vacancy rate is 7.7 percent. In Pinellas County, the lowest vacancy rate, 3.6 percent, is found in the northern portion of the county, and the highest vacancy rates, 14.1 percent, are found in the middle of the county. The overall vacancy rate is 8.5 percent. Vacancy rates in other areas include 4.8 percent in Sarasota County, 9 percent in Pasco County and 6.7 percent in Manatee County.

Retail development follows residential development, so the submarkets to watch are southeast Hillsborough county (Brandon, Valrico, Apollo Beach), northwest Hillsborough county (Countryway & Westchase) and northeast Hillsborough (Tampa Palms and New Tampa). In the past 18 months thousands of new residential units have been built in these submarkets and thousands more are planned.

The strongest commercial corridors in Tampa are North Dale Mabry in Carrollwood, State Road 60 (Brandon Blvd.) in Brandon and Bruce B. Downs Blvd. in New Tampa and Tampa Palms. All three corridors have affluent demographics, substantial traffic counts and easy access to downtown Tampa and other employment centers. Local space occupancy rates along these major retail corridors average over 97 percent. In Pinellas County the principal commercial artery is U.S. Highway 19, which also serves as a major commuter route.

Tampa Bay's retail market continues to grow and prosper driven by employment growth -- the city led the nation in percentage job growth creation in 1999 -- as well as a strong tourism industry and growth in population.

There is, however, a major trend that is a real danger to Tampa Bay's retail market: the bankruptcy and consolidation of retail anchor tenants. In the past several years, a significant number of retail anchors have disappeared from the market including Montgomery Wards, Uptons, Roberds, Carmike Cinemas and Jumbo Sports. This trend is further exacerbated by a lack of new retail anchors entering the markets.

The loss of so many retail anchor tenants in such a relatively short period of time has been a severe hardship for a number of retail landlords and developers, Berman adds. The loss of a major anchor can turn a successful shopping center into a financial disaster literally overnight. Tampa Bay needs to do a better job of attracting retail anchors to its market.

Patrick Berman serves as retail specialist with Cushman & Wakefield.


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