SOUTHEAST SNAPSHOT, JUNE 2006
Tampa Retail Market
The Tampa Bay MSA of nearly 2.7 million people is projected to increase to nearly 3 million people by 2010 and was recently ranked the 12th largest media market in the U.S. and No. 1 in Florida. The unemployment rate has declined to 3.8 percent at the end of 2005 and is projected to push down to 3.4 percent this year, according to economy.com.
This rapid population growth and high employment rate have been the driving forces behind the markets recent retail expansion. The overall vacancy rate has dropped to 6.3 percent, with little to no vacancy in well-positioned and well-anchored centers. Rental rates have increased 1.2 percent from the fourth quarter of last year and continue to rise. The increase in lease rates is partially due to the simple supply and demand imbalance in favor of landlords and partially due to rising construction materials and land costs which developers are passing on to the retailers. Continued upward pressure is anticipated on lease rates in the near term.
Pinellas County, which includes Clearwater and St. Petersburg, is 98 percent built-out. Therefore, the primary source of new product is the redevelopment of obsolete properties. The two most recent examples of successful redevelopment are the former Clearwater Mall (Sembler) and the former Parkside Mall (Boulder Ventures), both of which are now Target-anchored power centers. Crossroads Mall (Boulder Ventures) has been razed and will begin the redevelopment process this year.
Hillsborough County’s growth is predominantly located in the northwest and southern portion of the county. In Southern Hillsborough, U.S. Highway 301 and Big Bend Road is the strategic intersection. Carlisle Retail Group is developing a 120,000-square-foot shopping center called The Shoppes of Southbay, which will be anchored by a Sweetbay Supermarket. DeBartolo Development also has announced a retail power center on the southwestern side of the intersection.
Pasco County has seen the most dynamic growth due to its availability of land. The Wesley Chapel area continues to dominate the retail development scene with more than 3 million square feet of retail under development or in the planning stages. The State Road 54 corridor from Wesley Chapel to New Port Richey has exploded with multiple retail developments taking place from neighborhood centers to regional power centers. Echo Development is close to breaking ground on a regional power center of approximately 1 million square feet at Interstate 75 and State Road 54. Another hot bed of retail activity is the State Road 54 and Suncoast Parkway area. Redstone Investments purchased Suncoast Crossings, a ground up development, with plans to build 450,000 square feet of retail anchored by Super Target. Paradise Development has announced a Sweetbay Supermarket-anchored shopping center and The Hogan Group is building their new headquarters along with a mixed-use project on the eastern side of the Suncoast Parkway in the Odessa market.
Several new retailers are descending on Tampa Bay. Hanford is in the process of converting its Kash N Karry stores to the Sweetbay concept and, in addition to the conversions, anticipates more than 70 new stores within the next 24 to 36 months. These new stores have successfully positioned themselves in the grocery space between Publix Supermarkets and the space occupied by Fresh Market, Wild Oats and Whole Foods. Kohl’s Department Stores’ much anticipated entry into the market has been receiving a lot of attention, and Dick’s Sporting Goods and LA Fitness have secured positions for their entry into the market.
— Pat Duffy is president of Colliers Arnold in Tampa, Florida, and co-chair of the Colliers USA Retail Services Group.
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