A shift in shopping center development
Justine Griffin/Sarasota Herald-Tribune
If there was advantage to the Great Recession for retailers — and suffice it say there were few — it is that the dearth of consumer spending and new store openings allowed chains and developers an easier time redeveloping properties.
During the lengthy lull of the downturn, expansion plans came to a screeching halt for national and statewide retailers, and companies instead invested in their existing properties.
Consumers were the ones who saw gains as stores were renovated and expanded to add new offerings to keep shoppers coming back into the stores they knew.
Executing such plans are often easier to do when retailers are strapped for capital and expansion into new markets is risky — this time driven by the housing collapse and its slow return.
“Redevelopment is hard to do in a hot or bullish market,” said John Crossman, president of Crossman & Co., an Orlando-based retail developer that has built Publix centers across Florida. “When the vacancy factor is 1 percent or very low, it’s hard to move tenants around, especially if you are rebuilding an anchor.”
That dubious “luxury” is not likely to last much longer.
This year marks the first time retail developers and executives have seen steady growth and interest in developing new properties.
The shift was visible at the 2013 International Council of Shopping Center’s ReCon Convention held in Las Vegas in May.
“The major difference I saw this year, compared to the past four or five years, is that people are excited about the potential for new projects and some are actually working on new projects,” said Dale Scott, a director with Tarpon Springs-based Hawkins Construction, the company that rebuilt the Longboat Key Publix last year.
Brands new to the Sunshine State had steadily trickled in over the last year, such as California-based grocer Trader Joe’s, which opened its second Florida store in Sarasota last summer, and Wawa, the Pennsylvania-based convenience chain that will open its first Southwest Florida store in Bradenton later this year.
Costco Wholesale expanded into Sarasota in 2012, too, by opening its first Sarasota store in Westfield’s Sarasota Square Mall, while Lululemon, a high-end yoga apparel dealer, also has opened a showroom in Sarasota as it tests the market and may open a full-line store here in the future.
“This is a great indicator that the industry is finally turning around,” Scott said.
A leading example
A prime example of a retailer that focused on its existing stores before risking expansion into new markets was Lakeland-based Publix Supermarkets Inc.
Florida’s dominant grocery store chain has renovated grocery stores from coast to coast during the last five years, including several in Southwest Florida.
The most notable was the Publix on Longboat Key, which reopened in December. In April 2011, the entire Avenue of the Flowers plaza closed so it could razed and rebuilt with a new façade.
The 9,000-square-foot Publix, now open at 525 Bay Isles Parkway, is a store unlike any other in Sarasota and Manatee counties in that it offers a more upscale shopping experience for the residents and visitors in the affluent communities of Longboat Key.
“That is the perfect market for a new prototype store,” said RJ Walker, director of business development with Hawkins Construction.
“If Publix was going to try something new, that was a good place to start.”
The store originally opened on Longboat Key in 1980. This is the first time it has been renovated in its 33-year existence.
The Sembler Co., a St. Petersburg-based developer, also demolished the Publix grocery store in Nokomis this spring with plans to rebuild a brand new store in the same space. The store at 1091 N. Tamiami Trail closed March 30.
“Publix has invested in a lot of rebuilds in Florida. Before Nokomis, we did a similar rebuild in Port St. Lucie,” said Ron Wheeler, chief executive of Sembler, which has built nearly 50 Publix stores in its 30-year history. “There aren’t that many other retailers that will demolish a store and rebuild one relatively the same size in the same space. That’s where Publix is unique.”
A third Publix in the Southwest Florida, the store in the Landings plaza on South Tamiami Trail, is now undergoing renovations by segments in an effort to keep the store open throughout the rebuilding process.
But Publix is not the only chain renovating stores in this region.
Electronics retailer Best Buy has struggled to reinvent itself since online giants eBay Inc. and Amazon.com have gained speed while brick & mortar stores suffered.
The Best Buy on Tamiami Trail in Sarasota is one of the first in the nation to house a Samsung Experience Shop, making Best Buy the latest retailer to jump on the “store-within-a-store” trend. Inside the store, Samsung will sell the brand’s smartphones, tablets, cameras, laptops and other electronic accessories within its own designated space in the Best Buy big box store. It will also host a customer-support area, similar to what shoppers see at the Genius Bar in Apple stores.
As segments of the economy like housing and tourism continue to recover in Florida, so will retail development, says analyst Jeff Green of Jeff Green Partners.
“Retailers took a hit when they opened new stores in brown-field locations during the good days, hoping that real estate markets would take off, but they didn’t,” Green said.
In Southwest Florida, retailers that bought in to Lakewood Ranch neighborhood development, such as smaller chains and independent stores on Main Street, struggled to find the customer base they needed.
Now, as the suburban market finds traction again and expands, the market for retail in that area has improved, Green said.
“Sarasota is unique in that it is the only place on the East Coast that’s getting a new mall next year,” Green said, referring to the $315 million Mall at University Town Center being developed off University Parkway near Interstate 75 by Manatee County’s Benderson Development and Taubman Centers.
“That means the market for retail is improving there and there’s enough affluence in that area to support an upscale mall.”