Carla Vianna | Daily Business Review
About 20 locations from Miami to Jupiter will be up for grabs once the debt-laden sporting goods retailer closes its doors in bankruptcy. Averaging 40,000 square feet, the large stores threaten to inflate the market by nearly 1 million square feet when big-box retailers are physically downsizing.
A dwindling market for department stores makes finding a tenant for extra-large spaces more difficult than releasing boutique-size shops catering to lifestyle brands, said Gunster real estate attorney Brian Belt. The Miami shareholder said big-box stores sit on the market longer, which could hurt smaller tenants nearby that counted on the foot traffic generated by their bigger neighbor.
If landlords fail to attract a sizable retailer, the large spaces may be retooled into gyms or other uses that “don’t generate as much income,” Belt said.
When Sports Authority shuts its doors, hundreds of stores across the U.S. may go dark — and stay dark.
South Florida, however, is somewhat immune to the “retail apocalypse,” said Alan Esquenazi, a principal at CREC who has represented Sports Authority in the past.
Brokers are confident the retailer’s South Florida locations won’t sit vacant for long.
Esquenazi said Sports Authority “traditionally went for high-profile, great locations.”
These include the street-level store at the popular Shops at Midtown Miami and a spot at Dadeland Station in suburban Kendall. The bankrupt retailer also has a presence at Dolphin Mall and Sawgrass Mills.
Steven Henenfeld, CREC’s director of retail leasing, said the closings open prime sites for tenants looking to upgrade their position in the market and give landlords the opportunity to push up rents when a newcomer moves in.
“South Florida in general will fare better with respect to Sports Authority’s vacancies than a lot of other markets because our retail numbers are very, very strong,” Belt said.
Retail vacancies dropped to 3.2 percent in Miami-Dade County and 5.3 percent in Broward County during the first quarter, according to CBRE Inc.
A bankruptcy auction will be held June 29 for 320 of the chain’s 463 store leases, including 18 in South Florida totaling 715,000 square feet. New York-based A&G Realty Partners LLC will accept bids until June 23.
“After the June 29 date, we will have a better idea of what is going to be left available,” said CBRE senior vice president Paco Diaz.
Diaz said the top two contenders could be Dick’s Sporting Goods and Orchard Supply Hardware.
Lowe’s purchased Orchard Supply in 2013 and last year announced plans to add 40 stores, according to a retail report by Orlando-based Crossman & Co.
“Retailers at every end of the spectrum are reevaluating their footprints,” the report said. Healthy retailers are “exploring smaller stores to gain access to urban consumers where real estate costs can be prohibitive.”
While large department-store brands like Macy’s have struggled with underperforming assets — over the past five years the retailer closed 52 locations — discount retailers like Ross Stores Inc. boast healthy performances and could be viable contenders for Sports Authority’s defunct locations.