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Retail development market heats up in Florida

By Kevin Kenyon

The developers of the Dolphin Mall in Dade county say the 1.65 million-square-foot value-oriented megamall will be "the first of its kind."

Sparked by a vibrant economy, steady population growth and abundant access to capital, the Florida retail market is flourishing, resulting in a dizzying number of projects up, down and across the Sunshine State.

Such positive market conditions, experts say, have spurred intense competition from retailers of all kinds, including big box, supermarket and drug store chains, many of which are engaged in statewide battles for quality retail space.

It has also created optimism among developers.

"It's the best of times," said Stephen H. Bittel, president of Miami-based Terranova Corp. "Everyone has access to long-term, low cost, nonrecourse capital, making every project seem possible and every developer or investor a player."

According to Information Decision Systems, a San Diego-based demographic firm, Florida's population has swelled 14.4% since 1990, and is expected to grow another 7.4% by 2003. What is more, these newcomers not only consist of the traditional retirees, but include a good many young families, too.

Terranova, for its part, is engaged in a wide range of activities, from management, leasing and tenant representation, to sales and financing, and each is performing at record levels this year, according to Mr. Bittel.

"All the activity is a reflection of the broader economy, and at times like these, if you're not having a record year, you need to get out of the business," he said.

And while the potential for overbuilding exists, Mr. Bittel added that the strong population growth could help stave off that problem.

"Another aspect to consider is that clearly the people coming here are not the historic retirees, although there are certainly many of those still coming -- but we're seeing a lot more families, as well as a real growth in businesses relocating to Florida," he explained.

The state is also benefiting from a booming economy in South America, according to Oscar R. Rivera, a partner with the Miami-based law firm Siegfried, Rivera, Lerner, de La Torre & Sobel, P.A., and ICSC's Florida state director.

"Right now the economy in South America is vibrant, which helps us immensely," he said. "I've heard figures as high as 40% of our economy is based on South America -- so when South America does well we do well."

The cumulative effect of these factors is evident through a snapshot look at some of Florida's major markets.

Jacksonville

In Jacksonville, the market continues to be hot, with big boxes still searching for locations, according to Brian T. Platock, senior associate for the Jacksonville office of CB Richard Ellis.

New to the market last year were OfficeMax; Bed, Bath & Beyond; Borders; Tinseltown USA (a 20-screen theater); Lowe's; and Hollywood Video, he said.

In addition, Mr. Platock added, Harris Teeter, Winn-Dixie and Publix have been active players in the supermarket category, while Walgreens and Eckerd have been waging a battle for sites in the drug store category.

"Right now Jacksonville is booming -- we're seeing a lot of new players coming in, and a lot of development either proposed or currently under construction," he said.

That includes the city's first value-oriented megamall -- Main Street Florida -- a joint development between Aspen, Colo.-based Lord Associates and the Oliver Group of Destin, Fla.

Slated to open in summer 1999, the 1.2 million-square-foot open air center will be anchored by Muvico Main Street 24 Theaters; Jeepers Restaurant & Family Entertainment Center; Sockeyes Beach & Sport; Books A Million; Group USA; Bed Bath & Beyond; and Burlington Coat Factory.

The project, which is located near Jacksonville International Airport, will eventually include 12-14 anchor stores and more than 150 manufacturer, value and specialty retailers.

Also expected to attract attention is The World Golf Village, which should have a profound impact on St. John's County and the entire First Coast area, according to Mr. Platock. The project, which will feature a 75,000-square-foot World Golf Hall of Fame, museum and Imax theater building, will include a 300-room resort hotel.

Atlanta-based Cousins Properties is developing the 80,000-square-foot retail end of the project -- The Shops at World Golf Village -- in a partnership with W.C. Bradley Co., Columbus, Ga.

Miami

Farther south in Miami, the demand for retail space is no less intense, according to Paco Diaz, first vice president at the Miami office of CB Richard Ellis.

"Prices are rising," he said. "Space that was going for $17 or $18 [per square foot] a couple of years ago is now going for about $25 to $28 per square foot, and vacancy is down to about 6%."

New retailers to the market include Wild Oats, Whole Foods, and Beverages & More, Mr. Diaz said, adding that like Jacksonville, Winn-Dixie, Publix and Albertson's continue to be active players in the grocery arena, just as Walgreens and Eckerds are in the drug store category.

Miami, for its part, will not be left out of the mall frenzy. The Dolphin, a 1.65 million-square-foot project located near Miami International Airport in Dade County, is scheduled to open in fall 1999. (See story below.)

The megamall, which will feature an entertainment zone in the center of its racetrack design, is being developed by Michael Swerdlow Cos., Hollywood, Fla., and Lord Associates.

Another project of note is The Shops at Sunset Place, which Indianapolis-based Simon DeBartolo Group is developing at the site of the former Bakery Center in South Miami.

The 500,000-square-foot retail and entertainment complex, expected to open later this year, will feature a 24-screen AMC Theatre complex, FAO Schwarz, Barnes & Noble, the only NikeTown south of Atlanta, and Dade County's first Imax 3D Theater.

Orlando

In Orlando, neighborhood centers continue to be hot, due to the rapid expansion and relocation of major grocery stores, including Publix, Albertson's and Winn-Dixie, according to officials at the office of CB Richard Ellis there.

Population growth appears to be the driver behind much of Orlando's retail activity. According to the Greater Orlando Chamber of Commerce, the population of metro Orlando has reached about 1.4 million, almost double the 804,000 people here in 1980.

Such growth has sparked a number of major projects, including Simon's Waterford Lakes Mall, a 1.3 million-square-foot center which will include Sears, Roebuck and Co., Burdines, Parisian and Dillard's as anchors. It also will feature 100 specialty tenants, a 24-screen Regal Cinema and two NHL regulation ice rinks. It is expected to open sometime next year.

Simon also recently expanded Florida Mall to include a 101,450-square-foot Saks Fifth Avenue, and is adding a 200,000-square-foot Burdines anchor and an additional 180,000 square feet to the 1.7 million-square-foot center.

Other new projects to the market include Oviedo Marketplace, an 820,000-square-foot mall that opened in March (developed by The Rouse Co., Columbia, Md.) and Pointe Orlando, a 455,000-square-foot shopping, dining and entertainment complex that made its debut last year.

Oviedo Marketplace was built in a partnership between Western Asset Management Corp, Phoenix, and Excel Realty Trust, San Diego.

In addition, Belz Enterprises, Memphis, Tenn., is expected to break ground later this year on Festival Bay, a 1.1 million-square-foot lifestyle/entertainment project.

Fort Myers/Naples

Meanwhile, in the Fort Myers/Naples trade area, business has taken off since big box tenants began arriving in droves in 1995, according to Gary Dewey, senior vice president at the Fort Myers office of CB Richard Ellis.

"When major retailers come to the Florida market, they typically go to Miami, Orlando, Jacksonville and Tampa first, but we're usually next," he explained.

Consequently, Fort Myers, a market of 400,000 people, has witnessed a great deal of activity. However, the Naples market (190,000 people) is receiving more attention, because it now ranks in the top five in the United States in terms of housing starts, he added.

Evidence of the big box invasion can be seen at Page Field Commons, a 300,000-square-foot retail and entertainment center being developed next to Page Field airport.

The center, which is expected to open during the first quarter of 1999, is being developed by Cleveland-based Forest City Enterprises and Wasserman Associates, Providence, R.I.

According to Mr. Dewey, tenants will include CarpetMax, Eckerd Drug, Hallmark Cards, Just for Feet, Linens & Things, Party City, Old Navy, PetsMart, Pier 1 Imports and Toys 'R' Us.

Palm Beach County/Fort Lauderdale

The Palm Beach County/Fort Lauderdale market has also been active lately, according to David Donnellan, vice president at the Boca Raton office of CB Richard Ellis.

After peaking at close to 15% in 1992, the market's vacancy rate has steadily declined, and now stands between 8%-10%, he said.

New tenants to the market include Books A Million, HomePlace, Regal Cinemas, Durango Grill and Wild Oats, which replaced several Wholly Harvest locations.

Once again, competition between Winn-Dixie and Publix, and Eckerd and Walgreens is said to be intense.

In the theater category, however, there is a danger of saturation, with AMC, Muvico and Regal vying for space and customers, Mr. Donnellan said, adding that if all potential projects were completed the market would be left with nearly 250 screens. (See story, page 14.)

One of the more significant retail developments is Wellington Green, a 1.7 million-square-foot regional mall, which is projected to open in Palm Beach in late 2001.

Anticipated anchor tenants for the project, which is being developed by The Taubman Co., Bloomfield Hills, Mich., are Dillard's, JC Penney, Burdines, and Lord & Taylor.

In Pompano Beach, Swerdlow is in the process of redeveloping Cross County Mall into a 500,000-square-foot power center, according to Mr. Donnellan.

Tampa

The Tampa retail market has witnessed continued expansion among big box retailers and category killers, although at a slower pace than in recent years, according to officials at CB Richard Ellis' Tampa office.

Active retailers were said to include The Home Depot, Lowe's, Best Buy, Borders, Barnes & Noble, and CompUSA, in addition to Walgreens and Eckerds.

Atlanta-based JDN Realty is in the process of building a 500,000-square-foot power center in Brandon, which will be anchored by Lowe's, JumboSports and Publix.

Urban Retail Properties, Chicago, is developing Citrus Park Town Center, a 1.3 million-square-foot mall in northwest Tampa which will be anchored by Burdine's, Dillard's, JC Penney and Sears. The center is expected to open early next year. Urban has also announced plans for a large power center across the street from the new mall, CB Richard Ellis officials said.

Taken as a whole, the breadth of activity in the Florida marketplace appears to be staggering, and all indications suggest that the rapid pace will continue -- barring any setbacks in the economy. That should, observers say, keep the Sunshine State sizzling for years to come.

"Development certainly continues to move forward," said Mr. Rivera, Florida's ICSC state director.

"Major properties are being renovated and expanded, and we're still seeing a net positive of citizens moving into the state all the time, so there's plenty to be positive about on the retail front," he said.