Katie Foxworth

Hot on the heels of California, Florida continues to attract retail developers who consider the Sunshine State the perfect locale for their next open-air town center concept. Yet another prominent trend cannot be ignored: developers are also taking what’s already there and making it even better — whether they’re bringing older retail properties into the 21st century or filling in otherwise overlooked urban pockets with new infill projects. So, at a time when the economy lags and new construction nationwide generally drags, Florida has turned up its game and raised the bar — and shows no signs of slowing down.

“There’s a tremendous appetite to redevelop some of these larger parcels of land that are in good locations,” says Steve Ekovich, a first vice president with Marcus & Millichap and regional manager for Florida. “A lot of these older shopping centers have great locations, but they just need to be scraped and rebuilt. That’s what you’re seeing a lot of.”

John Crossman, senior vice president of Trammell Crow Company’s Florida retail investment services division, says core retail growth remains positive and consistent, noting that Wal-Mart, drugstores and grocery stores, in particular, continue to grow. “If we see that, why do we redevelop?” he asks. “Because a lot of suburb areas are tapped out. You’ve got core areas that need to be built back in and redeveloped. At the same time, we’ve had really explosive mall growth throughout the state in the last 10 years, but you can’t keep throwing millions of square feet of regional hubs on the plate every year. There is a point where you build them, then let things catch up, then you build them again.” Crossman will lead the 2003 ICSC Florida Conference this month in Kissimmee.

Population continues to surge as well, which requires more retail to meet the growing demand. Florida is attractive to developers and retailers because it is under-retailed compared to the population base, says Richmond McCoy, president and CEO of UrbanAmerica. “You have a tremendous inflow of people moving here in record numbers, primarily from the Northeast and Midwest. You have a large immigrant population that continues to come in, and you have the Hispanic population, whose incomes are rising. Florida has many of the same positive demographic and economic conditions as California; ultimately, I think you’ll see a lot of the same types of values here.”

Here’s a statewide snapshot of what we’re seeing:

South Florida

South Florida is arguably the most happening place in the state for retail development. According to Marcus & Millichap’s 2003 National Retail Report rankings, Fort Lauderdale placed Number 5, followed by West Palm Beach at Number 8 and Miami at Number 15 in the nation’s top retail markets.

“The three counties of South Florida — Miami-Dade, Broward and Palm Beach — are particularly strong because of the density, migration of people from the Northeast and the influx of Latin Americans,” says Doron Valero, president of Equity One, Inc. “People should definitely keep an eye on the tri-county South Florida market, which continues to grow and drives the growth of the entire state.”

West Palm Beach

Urban infill has been successful in the past in West Palm Beach, as evidenced in part by CityPlace, a $550 million mixed-use complex developed by The Palladium Company 3 years ago. Today, demand for urban living is even higher.

“To live downtown and have all the amenities, to be out of traffic, to be able to work longer hours but then have the ability to get really quickly to a play and those kinds of things, there’s a lot of appeal in that to a lot of demographics,” notes Crossman.

“I think infill is one of the strongest opportunities now for growth-minded retailers and restaurateurs,” adds Charlie Aug, chairman of Garrick-Aug Associates Store Leasing, which recently purchased a 6,800-square-foot building at 1900 Palm Beach Lakes Blvd., for which it is seeking a restaurant or freestanding retailer. “The market’s right there around them. They don’t have to wait for the city to grow to them; they can just put the key in the door and a lot of good business is out there right away. I think these infill opportunities are the best you’re going to see for quite awhile. You buy a fully matured market when you sign your lease. That’s a good deal.”

Redevelopment is also hot. Gallo Architects & Development Consultants, based in Deerfield Beach, Florida, has completed a redesign of Pine Trail Square, a 150,000-square-foot center in West Palm Beach, located at one of the most highly trafficked intersections in Palm Beach County. According to William Gallo, principal, the center’s outdated look will be revamped and refurbished to enhance its curb appeal. (Please see sidebar on this page 64 to read about Gallo’s revitalization of Broward County.)

Equity One is redeveloping Oakbrook Square Shops in North Palm Beach.

In nearby North Palm Beach, Equity One is redeveloping Oakbrook Square Shops, a center formerly anchored by Jacobson’s before it declared bankruptcy and closed its South Florida locations. Equity One was able to bring in Stein Mart as a replacement anchor; the department store opened its newly built-out space earlier this year. Publix and Eckerd also anchor the 210,115-square-foot center, while Home Goods recently signed a lease to occupy 28,000 square feet of second-floor space. Equity One is working on a major renovation of the center, expected to be completed by November.

Developers Diversified Realty’s Shoppes at Jupiter Falls will open in 2005 in Jupiter.

A few miles north of North Palm Beach, Developers Diversified Realty is well underway on The Shoppes at Jupiter Falls in Jupiter. Destined to become one of the premier open-air retail destinations in northern Palm Beach County, this 700,000-square-foot center is on track to open in 2005.

Fort Lauderdale

Population growth continues to draw retailers to Fort Lauderdale, according to Marcus & Millichap’s 2003 National Retail Report, and retail property values should rise accordingly. Despite tourism numbers that have yet to bounce back to their pre-September 11, 2001, highs, retail sales were up 4.1 percent in the last year, with growth of 3.8 percent expected for 2003. The report also indicates that low construction and limited land availability make Fort Lauderdale a strong retail investment market.

Ekovich says the Fort Lauderdale-to-Miami corridor is a phenomenal place in which to own or develop retail. “That area seems to be, of all the areas in Florida, the most resilient in terms of its ability to bounce back from 9/11,” he says. “It seems to be the most resistant to economic cycles because it continues to have such a high influx of employment and population into that area.”

Another perk along the east coast of South Florida, says Ekovich, is its natural barriers to entry: the Everglades and the Atlantic Ocean. “You have all these people cramming into a defined area,” he says. “That’s what is causing values to go up and that’s what makes development attractive.”

Alan Esquenazi, partner and vice president of Miami-based Continental Real Estate Companies, agrees that South Florida’s unique barriers to entry make for scarce product. “You have the Everglades to the west and ocean to the east — you can’t just keep growing it,” he says. “Rents are going to continue to increase in South Florida because there’s nowhere to grow unless you start to grow vertically.”

Jim Edwards, executive director with the Hollywood Downtown Community Redevelopment Agency, says the real strength in the South Florida market is residential, which, in turn, fuels retail growth. Yet both must take into account South Florida’s unique barriers to entry. “In South Florida, particularly Broward and Dade counties, suburban development has hit the Everglades to the west, as far geographically as it can go,” he says. “So developers, eager for new projects, are coming back east all the way within a mile or two of the beach and finding opportunities for new investment, infill, reconstruction and restoration.”

Clearly, high barriers to entry (for example, lack of space) spark the need for efficiently designed urban infill. (Just ask developers in New York City.) There’s also such strong population growth, notes Carol Greenberg Brooks, president of Continental Real Estate Companies, that everything is forced to come back to the urban center. For example, Maitland, Florida-based Keene Construction Company has completed a Publix store at Las Olas in downtown Fort Lauderdale to serve the city’s growing population. The urban design of the 44,000-square-foot grocer features elevators and two levels of parking.

“There has been more propensity in the last 2 years to do downtown retail than there was 4 to 5 years ago, simply because the commutes are longer,” Ekovich says. “Many of the cities tend to offer tax incentives to do redevelopments of downtown, so we’re seeing more and more developers make that effort.”

UrbanAmerica, which specializes in downtown urban renewal projects, is one such developer. The company is currently underway on a refurbishment of Lauderdale Lakes Mall, a 250,000-square-foot power center in Lauderdale Lakes, just west of Fort Lauderdale. Anchors include Sports Authority, Office Depot, Smart & Final and Big Lots Furniture, with 30,000 square feet of vacancy being marketed to national retailers. UrbanAmerica also sold 14 adjacent acres, on which 246 townhomes are being built. The new housing is sure to enhance the center’s customer base, says UrbanAmerica’s McCoy.

Boca Raton, Florida-based Woolbright Development, which predominantly focuses on the acquisition of grocery-anchored centers in need of renovation and/or re-leasing, recently acquired the 95,000-square-foot Publix-anchored Sea Ranch Centre in Lauderdale-by-the-Sea, Fort Lauderdale. The company plans to upgrade the center’s landscaping and fill in vacancies, says Mike Fimiani, principal and vice president of leasing.

In downtown Hollywood, two mixed-use projects are underway, including Young Circle Commons, a park on a traffic circle called Young Circle, which will undergo a $12 million restoration/renovation into Broward County’s first arts park. Approximately 30,000 square feet of art and cultural facilities, including an amphitheater in the park, are planned, as well as 75,000 square feet of ground floor retail. “Obviously, that circular park is a significant amenity that creates values in the private properties that surround it,” Edwards says. “And it creates an attractive front door for condominium development.” Retail will also have exposure on the circle.

Ground will break on the mixed-use La Piazza II, located on Young Circle in downtown Hollywood, by year end.

The second downtown Hollywood project, also on Young Circle, is La Piazza II, a mixed-use project that will feature 300 condominium units and 60,000 square feet of ground floor retail. Edwards says construction will begin on La Piazza II by year end.

In affluent Boca Raton, north of Fort Lauderdale, a development entity of Boca Raton-based Sutton Management, Sutton Boca One Developers Inc., is underway on The Reserve at Boca Raton, a 144,000-square-foot upscale center located at the southeast corner of Clintmore Road and U.S. 441. “We like to call it ‘the country club of shopping centers,’” says Carol Horn, marketing director for The Reserve. “[Sutton] has been very, very selective about who comes in. They could have filled up the center twice over if they just wanted to fill up the center.” Tenants include Publix, In Good Taste (a local gift emporium) and several restaurants, including Healthy Bites Grill, Villa Rosano and Tempura House. The center is on schedule to open in January 2004. “It’s worth waiting for,” Horn promises.

Miami & Fort Myers/Naples

What is Miami retail without South Beach, and what is South Beach without Collins Avenue? Not nearly so interesting. And, thanks to Cushman & Wakefield, Collins Avenue is about to get even more interesting.

That’s because the foundation is out of the ground for a major new retail development on Collins Avenue, marking the first time in more than a decade that large first-generation retail space will be made available along one of the nation’s most famous and prestigious shopping thoroughfares. Physically large in scope, The 500 Block of Collins Avenue will span a full block and offer 60,000 square feet of retail space on two levels, plus three to four levels of parking on top. It is slated to deliver space to tenants by February 2004.

“We’re developing a very exciting project here, and it’s going to be very different from what anyone has ever seen in South Beach,” says Gene Spiegelman, senior director of retail services with Cushman & Wakefield, which is leasing the space. “We’re treating the project as sort of a gateway to Collins Avenue and the Ocean Drive district because as you come up the causeway, you’ll see a huge origami-like metal screen wrapping the corner of the building. It’s going to be a beacon.”

Andrew Kahn, Cushman & Wakefield’s director of retail services, says Collins Avenue has historically been an attractive place for specialty retailers like A/X Armani Exchange, Gap, Banana Republic and Urban Outfitters. “We like the activity that we see in the market,” he says, noting that the 500 Block will also incorporate restaurants and a café. “A great new addition to the Collins corridor is the Emeril Lagasse restaurant that will be opening at the Loews Hotel at the end of September.”

UrbanAmerica and Continental Real Estate Companies are redeveloping Northside Shopping Center, one of Miami’s oldest malls.

UrbanAmerica has tapped Continental Real Estate Companies to lease its redevelopment of Northside Shopping Center, one of the oldest malls in the city of Miami. When it first opened in 1959, the Sears-anchored center was the first regional mall in the Southeast. Today, the open-air 500,000-square-foot center is anchored by Whole Foods in an urban neighborhood surrounded by an African-American demographic. UrbanAmerica’s McCoy says his company plans to bring the center into the year 2003.

“We have about 150,000 square feet that we are refurbishing and seeking to attract big box tenants,” he says. “We are repositioning the property — both in image and in actual refurbishment — so we will be able to offer a very attractive package to national tenants that want to come in and operate in this very strong marketplace. We’re really excited about the level of interest that we’ve gotten to date.”

Continental Real Estate Companies (CREC) is also busy managing, leasing and overseeing construction of a major redevelopment called the Shoppes at Mayfair in the Grove, a 240,000-square-foot retail/office project in the Coconut Grove area of Miami.

“DRA Advisors, the ownership entity, will be investing nearly $14 million to convert the former mall into a mixed-use office, retail and dining complex,” says Brooks. “[We’re] extremely excited about spearheading this renovation.” CREC has pre-leased 60 percent of the office space, and the retail component is 80 percent leased.

Mayfair, which is centrally located near several other upscale Miami neighborhoods (including Coral Gables, Key Biscayne, Brickell Avenue, Miami Beach, Pinecrest and South Miami), will see its two upper levels of retail space converted into Class A office space, while all shops and restaurants will be relocated to street level. Retail tenants include Ann Taylor Loft, Banana Republic, Bath & Body Works, Benetton, Borders Books & Music, Mezzanotte, The Limited, Wet Willie’s and Improv Comedy Club. The mixed-use project was formerly called Streets of Mayfair, built in 1979.

On the south side of town, Miami Beach-based Koniver Stern Group is leasing the retail portion of Urban Investment Advisors’ Miracle Mile in Coral Gables. The more than 100,000-square-foot project includes 40,000 square feet of retail space, 30,000 square feet of office space and 184 luxury apartments. Tenants include Atlanta Bread Company, Baja Fresh, GNC and Houston’s.

Also in Miami, Developers Diversified Realty is developing the Buena Vista Shops, which promises to be the first and only retail experience of its kind in the city when it opens in 2005. The 26-acre site fronts Miami Avenue, a few blocks north of downtown Miami and adjacent to the city’s bustling design district. The 750,000-square-foot center will be visible from Interstate 195, the primary east-west thoroughfare for traffic to and from Miami Beach.

Also located just north of downtown and near the design district, Koniver Stern Group is leasing the retail portion of Biscayne Village, a mixed-use project under development on Biscayne Boulevard by Finger Companies. Opening summer 2004, the project will contain 20,000 square feet of retail and 435 residential units.

Koniver Stern has two other Miami projects in the works, including Mary Brickell Village, a 225,000-square-foot center being developed by Constructa for winter 2004 delivery. Tenants include Café Blue, Gelato Bacio, Oceanaire, P.F. Chang’s, Red Stone Grill and Starbucks. The second project is One Miami, a 150,000-square-foot retail project with restaurants and a proposed theater. MDM USA is developing One Miami, which will be surrounded by 4,500 new condominium units. Delivery begins spring 2005.

The North Miami Beach office of Equity One is active along the east coast of South Florida, starting with the Shops at Skylake in North Miami Beach. Equity One completely demolished the mall in 1999 and rebuilt from the ground up. The phased redevelopment is now anchored by Publix, RadioShack, Blockbuster, McDonald’s and Wachovia. The next phase, expected to be completed this year, will include a 45,000-square-foot LA Fitness and another 26,000 square feet of office and retail space. Once all phases are complete, the total project will span 174,199 square feet.

Equity One is also underway in neighboring Pembroke Pines on Crossroads Shopping Center, formerly University Mall. “When [we] purchased this center, it was abandoned and showed no signs of life,” Valero says. “Our focus was to redevelop and revitalize the center to create a neighborhood location.” Equity One plans to spend $5 million to redevelop the property, including the construction of an Eckerd drugstore and a new Goodyear Tire Center, as well as remodel and refurbish the rest of the 326,307-square-foot center. A Lowe’s Home Improvement store is currently under construction. The redevelopment is expected to be completed in the fourth quarter of this year.

Just south of Pembroke Pines, in Miramar, the Boca Raton office of Holliday Fenoglio Fowler has arranged a $5.09 million acquisition/construction loan on behalf of Miramar No. 1, LLC for 10 acres located at Palm Avenue and Miramar Boulevard. The lender was BankAtlantic. A Walgreens will be built on the site, along with other retail, restaurant and office uses. The property will include six outparcels upon completion, which is expected by May 2005.

Also in Miramar, Baumgard Development has purchased 9 acres that wrap around the corner of Miramar Parkway and Red Road (Hiatus Road). Baumgard plans to build a mixed-use complex with retail, office and medical uses. Coral Gables, Florida-based Investment Management Associates is the leasing and management agent for the property.

The west coast of Florida is also going strong, led by Fort Myers and Naples. “The whole area between Fort Myers and Naples is growing tremendously,” says Tom Wilder, principal with Boston-based The Wilder Companies. Currently, his firm is underway on a new 350,000-square-foot town center in Estero, nestled about halfway between Fort Myers and Naples, just northwest of rapidly growing Bonita Springs.

“The Bonita market is trying to pull together Naples and Fort Myers and bring them together as one,” says CREC’s Esquenazi.

Central Florida

The years between 1994 and 2002 saw six major malls enter Central Florida’s market and, while new retail construction has slowed from this frenetic pace, it is still growing to keep up with the area’s rapid population growth. It’s not just about tourists anymore in Central Florida.

“The economy there is quite diversified,” says UrbanAmerica’s McCoy. “Historically, up until probably 5 to 7 years ago, it was mainly driven by tourism, but it’s become a much more diversified economy now. I think that bodes well for us as owners and our tenants.”

Furthermore, while South Florida is somewhat constrained by high barriers to entry, Central Florida offers nothing but opportunity, according to Amanda Mrozek, senior associate with CREC.“I think you’ll see the Central Florida corridor between Tampa and Orlando being infilled with nothing but development — strictly due to the population growth that’s expanding into those markets,” she says.

“You’ve got 1,200 new residents per week in Central Florida,” adds Trammell Crow Company’s Crossman. “To do a grocery store, you need 10,000 people. So basically, every 8 weeks there’s demand in Central Florida for a new grocery store.”

Case in point: Avalon Associates has begun construction on a 44,000-square-foot Publix at its Avalon Park town center development in east Orlando. Approximately 100,000 square feet of Phase I is either underway or completed. Publix should open by year end.

“I think traditional grocery-anchored centers still have applicability anywhere you have huge population growth, and Florida certainly has that,” points out Brett Hutchens, president of Casto Southeast.

Orlando

According to Marcus & Millichap’s 2003 National Retail Report, Orlando’s retail market has showed marked improvement, moving up two spots in the rankings to Number 26. Job growth is positive in Orlando, although development has slowed from 2.4 million square feet of retail space completed in 2002 to 2.1 million square feet expected this year. Tourism remains at low levels, but a steady stream of new residents keeps the Orlando outlook bright.

“Orlando has a population of 1.7 million, but we have enough retail to handle about 2.8 million,” Crossman notes. “We’re the size of Indianapolis, but we have enough retail to handle Denver. If you live here, that’s a good thing. It’s a good place to be.”

Trammell Crow Company has completed the sale of 23 acres adjacent to the Florida Mall in Orlando for $7.5 million. Recognized as one of Central Florida’s most high-profile locations, the site is currently home to a 175,000-square-foot industrial building; before that, it was home to a Chrysler parts distribution center for more than 30 years. The purchaser, Ram Development Company, plans to demolish the site and redevelop it for retail uses.

Casto Southeast, which operates primarily in Central Florida, is seeing a lot of deals in the region. It has just completed Winter Park Village, a 524,000-square-foot center in Winter Park, just outside of Orlando. Tenants include Cheesecake Factory, Regal Cinema, Borders Books, P.F. Chang’s, Ann Taylor and Pier 1 Imports. The center, which opened in various stages beginning in 2000, is 100 percent leased.

The Wilder Companies is doing several deals in the south Orlando market, including The Loop in Osceola County along the Osceola/Orange county lines. The 440,000-square-foot open-air center is modeled after the company’s first Loop project, which opened north of Boston in 2000. The project will feature a streetscape design with wide sidewalks, lush landscaping, street lamps and outdoor cafes. “It’s meant to be very pedestrian-friendly, but it also has elements of convenience in terms of where the parking is laid out,” says Wilder.

Clermont, located west of Orlando, is one of the hottest markets for new construction, according to CREC’s Mrozek. “There are over 5,000 new home starts to date this year, with an anticipated growth in population of 125 percent.” Four new grocery-anchored centers are going up in Clermont, as well as a new Wal-Mart Supercenter and a new SuperTarget.

Mrozek says Sanford, Florida, just north of Orlando, is also active, especially around Simon Property Group’s Seminole Town Center. The outskirts of the regional mall and the completion of the tollway system (SR 417) infrastructure has turned the property and land around the mall into hot commodities. “Emphasis should not be overlooked on how important a role the road systems have played in the progress of retail development in Central Florida,” Mrozek adds. Lowe’s and Target are actively looking in the Sanford market, while a Wal-Mart Supercenter has just broken ground there.

In Ocala, RMC Property Group is redeveloping Forty East Shopping Center, located at Silver Springs Boulevard and NE 36th Avenue. The 140,000-square-foot center is anchored by Publix, Dockside Imports, World Gym and Jo-Ann Fabrics. The shopping center will receive a new façade and parking lot upgrades, while Publix plans to replace its existing store with a brand new 45,000-square-foot store, scheduled to open by Thanksgiving. Ben McLeish, vice president of Grubb & Ellis’ retail services group in Tampa, says it’s not unusual for Publix to do just that: level its existing store and rebuild in the same shopping center.

Tampa Bay

According to Grubb & Ellis’ Spring 2003 Research Report, redevelopment and so-called “de-malling” are widespread in the Tampa Bay area. For example, Clearwater Mall in Clearwater is being transformed into a multi-anchored power center, while Tampa Bay Center, located opposite the Tampa Bay Buccaneers’ football stadium, was sold to First Allied (the same family owns the Super Bowl Champion Bucs) to be redeveloped as a mixed-use project.

“What’s happening with a lot of these older malls that can’t [compete], they’re turning them into large power centers or open-air community centers,” says Marcus & Millichap’s Ekovich. Marcus & Millichap just finished the proposal for First Allied on its new purchase opposite the stadium. “They asked us to give them some ideas of what to do with that space. Our concept was one centered around big box retail, outparcels, scrimmage fields, office and hotel uses.”

Town centers are also on the rise, notes Ekovich. “The idea is that you can walk to the town center and get an ice cream, get your insurance done and all those things built around a live-work environment.” One such town center is in Westchase, one of the largest planned developments in the Tampa Bay area. The retail component, called Westpark Village, is 39,522 square feet and 100 percent leased. The leasing agent is Trammell Crow Company. Tenants include Blug Gill Grill, YMCA, West Park Galleria, Bellagio Restaurant, Sylvan Learning Center, West Park Salon, Starbucks, Freedom Insurers, One Scoop Or Two, West Park Bagel, Bay West Realty and several others.

“As traffic becomes more of a problem, you’ll see more of these infill lifestyle and town center concepts,” Eckovich continues. “You’re going to see more and more interest in retail with offices or apartments over top because people want convenience.”

In Sarasota, just south of Tampa-St. Petersburg, Casto Southeast has several projects underway. One is Lakewood Ranch Town Center in the Lakewood Ranch development. The 200,000-square-foot mixed-use center features 120,000 square feet of retail space, 50,000 square feet of office space and 44 condominiums. It will open in late 2004 or early 2005. The company is also busy with an urban Whole Foods development in downtown Sarasota. It includes 20,000 square feet of street level retail and 94 condominium units on top. Also in Sarasota, Casto Southeast has begun work on a 27,000-square-foot project on St. Harmon’s Circle, where it plans to redevelop the former Jacobson’s department store building for multiple retail uses. Chico’s has signed a letter of intent to join the project, as talks continue with other retailers.


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