Florida Shines Through
The state’s retail growth corridors answer national wave of store closures with absorption, new developments.
By John Nelson, Katie Sloan and Camren Skelton
Master developer Miami Worldcenter Associates, led by Art Falcone and Nitin Motwani, will deliver Miami Worldcenter in phases over the coming years. The $2 billion Miami Worldcenter development is now under construction and will feature residential, retail, office and hospitality components.
Metro areas around the state of Florida are flexing their retail muscles with several high-profile projects that are popular landing spots for national and regional retailers and restaurants. Whether its Miami Worldcenter, Water Street Tampa, Butler Town Center or ONE DAYTONA, retailers and restaurants are flocking to these locations in droves because they’re attracted to the state’s employment growth, tourism and population growth, the latter of which is up by 9.6 percent from 2010 to 2016, according to the U.S. Census Bureau.
“We’re seeing net migration up across the board in Florida’s top metros,” says Brian Finnegan, executive vice president of leasing for Brixmor, a shopping center landlord with 55 properties in its Florida portfolio. “We saw a tremendous hit during the downturn, but now that’s up in all sectors — housing, tourism, employment. That’s been a huge plus for retail leasing, and we’ve seen it in our results. Our small shop occupancy in the state of Florida is up 350 basis points over the past two years, which is significantly outpacing the company average.”
It’s been an interesting summer for national retail real estate markets as landlords have had to adjust to the wave of store closures announced during the first quarter. For the most part, Florida’s retail industry specialists say that tight market conditions and favorable demographics have increased demand for the retail space that is becoming available.
“Florida is handling the wave of store closures relatively well. There’s still a significant amount of demand for retail space,” says Finnegan. “These vacant boxes are getting filled with better uses for the shopping centers. We had a Kmart deal in Naples that we replaced with Burlington, Party City and a Saks OFF Fifth. We look at what the community needs and we try to address that in our redevelopment efforts. When you do it right, it’s a win-win for everyone.”
Savvy retailers and restaurants are leading the charge in backfilling those stores and executing leases in new centers to take advantage of what the state has to offer, while also being mindful of the snares that can come with market saturation.
“Great retailers are taking action because they recognize the landscape is changing,” says Whitney Knoll, senior managing director of Crossman & Co., a retail leasing, brokerage and property management firm based in Orlando. “Publix is constantly thinking about what to do next, even though it’s the king down here.”
DEVELOPMENT DRIVES SOUTH FLORIDA
The retail sector is thriving in South Florida — developments are breaking ground, vacancy rates are low and rental rates are rising. From 2010 to 2015, retail sales grew by 34 percent in Miami-Dade County and are projected to grow by an additional 23 percent by the end of 2020, according to CBRE’s 2017 Southeast U.S. Real Estate Market Outlook.
The Miami market boasts one of the lowest availability rates in the country for retail space, according to CBRE, as well as one of the fastest rates of rent growth during the past five years. Retail property sales have slowed recently due to limited supply, and developers are filling the void with nearly 2.3 million square feet of retail properties currently under construction (and millions more in planning stages) around the Miami metro.
The upgraded Bal Harbour Shops will feature the first Barneys New York flagship store in the Southeast.
Rendering courtesy of Zyscovich Architects
Several large-scale mixed-use developments are underway in Miami, including Swire Properties, Whitman Family Development and Simon Property Group’s $1.05 billion Brickell City Centre and the $2 billion Miami Worldcenter by Miami Worldcenter Associates.
The first group of over 100 retailers and eateries opened last November at Brickell City Centre in the project’s 500,000-square-foot, open-air shopping center component. At completion, the development will include two condominium towers, two Class A office buildings and a hotel connected by Climate Ribbon, a $30 million elevated trellis of steel, glass and fabric that is designed to harness Miami’s bay breezes while deflecting direct sunlight.
Tenants at Brickell include a flagship Saks Fifth Avenue, Victoria’s Secret, Suit Supply, lululemon athletica, Cinemex, Coach, LIVE! and Porsche Design. A three-story Italian food hall that will feature a market, wine shop, gelato, cheese bar and restaurant is also set to open this year at the center.
Construction is underway on Miami Worldcenter, led by developers Art Falcone and Nitin Motwani. At completion, the project will deliver 450,000 square feet of retail, a 500,000-square-foot convention space, 600,000 square feet of Class A office space, a 1,700-room Marriott Marquis and 4.5 acres of open space. Both billion-dollar projects are set to deliver over the course of the coming years, and are transforming the retail landscape in Miami.
Roughly 20 miles outside Miami in Dania Beach, Kimco Realty is developing Dania Pointe, a 102-acre mixed-use project. The development is set to include almost 1 million square feet of retail and restaurants, Class A office space, hotels, luxury apartments and public event space.
Regency also has multiple developments and redevelopments underway around the Miami metro.
“Our redevelopment pipeline in South Florida is very strong and should keep us busy for a while,” says Tom Meredith, vice president, market officer at Regency Centers Corp. “We’re currently redeveloping Aventura Shopping Center, which is anchored by Publix roughly 15 miles outside Miami, and Countryside Plaza in Cooper City, roughly 23 miles outside Miami. We’re also redeveloping Pine Crest Plaza and adding a Whole Foods Market, as well as Point Royal shopping center in Cutler Bay.”
Redevelopment efforts are also underway at Bal Harbour Shops in Bal Harbour, about 12 miles north of Miami. Whitman Family Development recently gained final approval for a $400 million enhancement plan at the upscale 450,000-square-foot, open-air shopping center. The redevelopment will add 340,387 square feet of retail space, nearly doubling the center’s footprint.
The upgraded center is set to feature the first Barneys New York flagship store in the Southeast, upgrades to longtime anchor tenant Neiman Marcus and new dining options, including Freds at Barneys. The plan also calls for a new plaza at the shopping center’s main entrance.
Despite all of this new development, retail space is still very slim for tenants seeking to expand in South Florida.
“The climate for retailers in South Florida today is pretty challenged, simply because there’s not a lot of space,” says Sabrina Stimming, senior vice president and director of retail leasing at CREC. “Vacancy rates in the market today are just under 4 percent — around 3.7 percent. Landlords that have space available are definitely in the driver’s seat right now.”
Several markets across the metro are considered prime targets for expanding retailers.
Brickell City Centre’s 500,000-square-foot, open-air shopping center houses
more than 100 retailers and eateries, including a flagship Saks Fifth Avenue store.
“Wynwood is hot right now, mostly for restaurants,” says Stimming. “The most in demand markets are Brickell, Aventura and Doral. Solid, core markets with a history of retail performance like Kendall and Boca Raton are also seeing interest from retailers.”
Service tenants continue to expand at the highest levels around South Florida. “Boutique fitness and specialty medical tenants continue to expand throughout the market,” says Meredith. “The pizza craze is out of control and healthy eats concepts and breakfast chains like First Watch continue to expand. Even the wireless chains are back.”
The outlook for the foreseeable future is positive around the Miami metro.
“The market in South Florida is very strong, but deals are taking longer to get done,” says Meredith. “Demand for small shop space remains very strong here in South Florida. We are finding even the local mom-and-pops are becoming much more deal savvy, which is adding time to lease negotiations.”
“I’m positive about the market in South Florida,” adds Stimming. “We’re reading a lot lately about doom and gloom in retail, but we seem to be bucking the trend down here in South Florida due to strong fundamentals like population density, tourism, immigration, lack of land for development and just generally limited supply. Despite what we’re hearing nationally, retail is alive and prospering down here.”
CENTRAL FLORIDA DRAWS A CROWD
Tourism is alive and well in Central Florida, with a record number 68 million travelers coming to O-Town last year to take in Universal Studios, Walt Disney World and Sea World, among other destinations. That increased traffic has boosted retail and restaurant growth in the region.
“If the number of people moving here and vacationing here go up, retail follows,” says John Crossman, president of Crossman & Co. “We had a record year for tourism; more people came to Central Florida than New York City in 2016, and it’s not even close. And Disney and Universal keep adding attractions to their parks.”
At the same time, Orlando is hiring at an impressive clip. Total nonfarm employment in the Orlando-KissimmeeSanford region posted a 4 percent yearover-year growth rate in June, outpacing the state of Florida’s employment growth by 110 basis points and the U.S. rate by 240 basis points in that same time frame, according to the U.S. Bureau of Labor Statistics.
A lot of the employment growth is centralized in the Lake Nona and Hamlin districts, which are on every retailer’s radar.
“Existing retailers and new entrants alike have both Lake Nona and Hamlin at the top of their hit lists — all my clients want to be there,” says James Mitchell, senior vice president of CBRE’s Orlando office. “They’re both in the top 15 nationally in terms of new housing permits as well.”
In Lake Nona, a 17-square-mile development on the east side of Orlando — titled Lake Nona Town Center — has attracted high-tech employers like Amazon, Lowe’s Home Improvement is under construction on Narcoossee Road, and Super Walmart and Sam’s Club just opened. A Super Walmart also opened in the Hamlin community on the west side of town in the Winter Garden submarket. Publix and Cinépolis USA are opening new locations in Hamlin as well.
In addition to the rise in tourism and job growth, improving market conditions are driving Orlando’s new retail development. The metro experienced more than 500,000 square feet of net positive absorption in the first quarter and improved its vacancy rate from 5.3 percent to 5.1 percent, according to CoStar.
On the northeast side of Central Florida in Oviedo, Hill Gray Seven is underway on Stonehill Plaza. Mitchell is leasing the development and is seeing a lot of interest from national retailers.
“We’re already 80 percent pre-leased,” says Mitchell. “We’ve signed First Watch, Floyd’s Barber Shop, Burger Fi, Pacific Dental and Tazikis Mediterranean Café.”
To the south in Kissimmee, Williams Co. Southeast is developing a 225,000-squarefoot project pre-leased to Hobby Lobby, Outback Steakhouse and Panera Bread. The project is expected to open in October. Also in Kissimmee, Crossman & Co. recently inked a lease with Toys “R” Us to join The LOOP, an open-air shopping destination that is home to national retail brands such as Regal, CVS, Petco, Old Navy, Famous Footwear and Ross Dress for Less.
On the north side of town in Winter Park, several national retailers have backfilled a former Kmart anchor space within Sterling Organization’s Center of Winter Park, a 245,000-square-foot power retail center. Marshalls/HomeGoods, Ross Dress for Less and Five Below are taking nearly 100,000 square feet left behind by Kmart. Crossman says that backfill opportunities in Orlando’s infill markets like Center of Winter Park are hot commodities.
“The closing stores in the first quarter have been gobbled up — if a retail space becomes vacant it has been quickly snapped up,” says Crossman. “Those are gobbled up because there’s so much pentup demand.”
The growth is not limited to Orlando’s surrounding submarkets, as downtown Orlando has several high-profile attractions underway, including the 68- acre Creative Village development that will bring student housing, office buildings, a 15-acre campus for University of Central Florida, Valencia State College’s culinary institute and supporting retail and restaurant space.
The $500 million Dr. Phillips Center for the Performing Arts is undergoing a multimillion-dollar expansion, and in February Orlando City Soccer Club, Orlando’s MLS franchise, opened a 25,500-capacity soccer stadium about two blocks from the Amway Center.
“The Orlando City MLS stadium was received better than anyone could have imagined — the team actually increased the seating in the facility during the planning stages because of the amount of demand it received,” says David Barilla, assistant director of the City of Orlando’s Downtown Development Board and Community Redevelopment Agency. “Vendors downtown tell us that game nights are the most profitable. There’s a culture around the team, fans march down Church Street before the game and then take in the match. The hotels are also seeing an uptick during the international friendly games that the stadium hosts.”
Walgreens recently opened a Main-andMain location downtown at the corner of Church and Orange streets, and Earth Fare has also signed a lease for a new downtown location.
On the experiential front, Ace Café opened a new 35,000-square-foot location in June in downtown Orlando, its first in North America. The London-based restaurant concept brings together car and motorcycle enthusiasts, rock-and-roll aficionados and typical restaurant-goers in a “motor-diner” setting. The restaurant expects to host 400,000 people annually.
“Ace Café focuses on the motorist market by hosting events around cars and motorcycles,” says Barilla. “The restaurant will host a Mustang night, Corvette night, etc. People from a 500-mile radius will come down for those events to participate in those special evenings. The café also has a BMW store and Triumph store. It’s targeting its retail based on its target demographic.”
The first phase of construction for Water Street Tampa will begin this year, with over 4 million square feet scheduled for completion in 2020. Subsequent phases of the project are slated for completion by 2027.
ONE DAYTONA NEARS FINISH LINE
The most significant retail project in Daytona Beach remains ONE DAYTONA, International Speedway Corp.’s (ISC) massive mixed-use development located near Daytona International Speedway, home of the DAYTONA 500 NASCAR race. ISC recently invested $400 million to redevelop the racetrack and has since teamed up with Legacy Development to help bring ONE DAYTONA to fruition.
According to Chelsea Phelps, Legacy’s director of marketing, ISC is targeting both best-in-class and first-to-market retailers and restaurants within the project’s 300,000-square-foot retail and entertainment district. Rock Bottom Brewery will open its first location in Florida at the project, which will also house Guitar Center, P.F. Chang’s, Oklahoma Joe’s BBQ, Venetian Nail Spa, IT’SUGAR, Built Custom Burgers and Tervis, among others. ISC recently added Ben & Jerry’s, Sprint and Pink Narcissus, a Lily Pulitzer signature store to the tenant roster, which is becoming more dynamic daily.
“We’ve seen a lot of momentum not just on the leasing side but also overall opportunities present in the marketplace,” says Jeff Boerger, ISC’s vice president of corporate development. “We are planning to open in the fourth quarter of this year, and we’re confident we’ll open at near-to-full capacity. It’s nice to be in this position.”
In 2011, ISC purchased the nearby Volusia Point shopping center to hold as a redevelopment opportunity. The publicly traded firm is embarking on a $12 million campaign to renovate and rebrand the center, now known as Shoppes at ONE DAYTONA. New tenants signing on at Shoppes include First Watch, Zen Nails and Fantastic Sams, which opened in March. The existing Smoothie King store will undergo an exterior renovation as part of the redevelopment.
“Shoppes will remain more servicebased, and our existing tenants are excited about the redevelopment,” says Boerger. “It will help elevate the entire campus and create more jobs for the community.”
ONE DAYTONA’s two primary retail anchors, Bass Pro Shops and the 12-screen Cobb Daytona Luxury Theatres, have been open for several months and have driven significant traffic to the campus. Bass Pro Shops spans more than 67,000 square feet and in addition to its typical outdoor merchandise, features murals depicting nature scenes from the Daytona Beach area and the racetrack.
“The Bass Pro Shops and Cobb Luxury Theatres are exceeding expectations,” says Boerger. “We’re encouraged by the response. When the rest of the retail opens we’re sure the stores’ revenues will increase even more.”
Other uses at ONE DAYTONA will include a 145-room Marriott Autograph Collection hotel and a 105-room Fairfield Inn & Suites by Marriott property, as well as 276 residential units. ISC owns an additional 120 acres on the site that it will hold for additional development opportunities.
Like ISC, Sutton Properties is also underway on a retail project that will provide a one-of-a-kind atmosphere. The developer purchased a 38-acre tract at the entrance of Minto Communities’ upcoming Latitude Margaritaville, a 7,000-home development for adults age 55 and up that is inspired by singer Jimmy Buffett’s laid back, beach-centric lifestyle.
Situated off LPGA Boulevard near Interstate 95, the new 200,000-squarefoot project will feature a grocery anchor, service-oriented retailers and a Margaritaville restaurant in its first phase. Phase II will be more of a lifestyle center that will feature entertainment concepts, specialty retailers and dining with outdoor seating. The development will be designed to accommodate golf carts, which is expected to be the preferred method of travel for residents at Latitude Margaritaville.
“Retail in general may be a little more challenging than it was in the past, but with the Margaritaville brand support, it’s going to be a slam dunk retail development, and it will be very fun to do as well,” says Sam Sutton of Sutton Properties. (See page 52 for more.)
Other projects that opened recently include the 350,000-square-foot Daytona Beach Tanger Outlets mall that opened last November. On the investment sales front, Publix Super Markets purchased a Publixanchored center in New Smyrna Beach and Festival Properties Inc. purchased Volusia Marketplace, a 131,361-squarefoot center leased to Big Lots, Cost Plus World Market, T-Mobile, Panera Bread and Chipotle Mexican Grill.
Butler Town Center is Butler Enterprises’ open-air lifestyle development that will house retailers and restaurants
like P.F. Chang’s and a revamped Regal theater in a Main Street-style complex.
NEW MIXED-USE DEVELOPMENT TRANSFORMS TAMPA
Miami isn’t the only Florida city with a billion-dollar development in its pipeline. Strategic Property Partners (SPP) is underway on a $3 billion mixed-use project that is redefining Tampa’s retail market.
Water Street Tampa, the product of a real estate investment joint venture between Cascade Investment LLC and Tampa Bay Lightning owner Jeff Vinik, will span 50 acres and add over 9 million square feet to the Tampa Bay skyline. Located on the Garrison Channel and Hillsborough Bay in downtown, the development will feature office, retail, cultural, residential, entertainment and hospitality space, making it a true livework-play environment, according to John Stoner, director of leasing at Clearwaterbased Bruce Strumpf.
“The living units will be the driver,” says Stoner. “They will bring the restaurants, bars, entertainment, grocery, furniture, drug stores, title companies, insurance providers and the retailers that support the more affluent homeowner. It will have an environment where people will be living, working and shopping all within walking distance.”
The first phase of development on the property will break ground this year, with subsequent phases slated for completion by 2027.
“There is so much buzz around Mr. Vinik, and his vision for shaping Tampa into a ‘real metropolis,’” says Joe Morrow, investment associate at Tampa-based Franklin Street. “I’ve always thought of Tampa as a small town with the amenities of a big city — we have steady population growth, a low cost of living and a higher quality of life.”
Anticipation of Water Street Tampa has also prompted redevelopments in other neighborhoods in the region. In the SoHo district, one project will transform a former gym into a mixed-use development: The Morrison. Leasing of the development is being spearheaded by Franklin Street.
“When it comes to choosing a retail site, location, visibility and access are most important,” says Morrow. Located at 936 S. Howard Ave., The Morrison is situated within the walkable Hyde Park neighborhood, home to the upscale shopping and dining destination, Hyde Park Village.
The Morrison will feature 13,890 square feet of retail space, 6,950 square feet of office space and 46 residential units. Spanish-inspired tapas restaurant Bulla Gastrobar and Mediterranean chain Zoe’s Kitchen will open their first locations in the Tampa market at the development, and Club Pilates and Blind Tiger Café will open their second and third locations, respectively.
The Channel Club, a mixed-use development that will include 323 rental units and a 36,000-square-foot Publix, is currently under construction in Tampa’s Channel District. The project is scheduled for completion in December 2018. Blackwater Resources is underway on plans for Mitchell 54 West, a mixeduse development that will include shops, restaurants, a movie theater, Class A office space and roughly 800 homes. The 330- acre project is expected to break ground later this year.
Boutique grocers are also expanding their presence in the metro. Sprouts Farmers Market opened its first Tampa location at Carrollwood Commons shopping center in February, and has subsequently opened locations in south Tampa and Palm Harbor.
According to CoStar Group, 18 buildings totaling 126,935 square feet were completed in the Tampa/St. Petersburg retail market during the first quarter of 2017. CoStar reports that the metro’s rental rates ended the first quarter at $14.83 per square foot, representing a 2.6 percent increase from the fourth quarter of 2016 and a 5.9 percent increase from three quarters ago.
“We will continue to see a positive trend in Tampa’s retail rental rates,” says Stoner. “Occupancy is going to remain fairly steady and put an upward pressure on those rental rates.”
Retail vacancy decreased in the first quarter of 2017, ending the quarter with a positive net absorption of 467,579 square feet , according to CoStar. Over the past four quarters, the market has seen an overall decrease in the vacancy rate, going from 5.1 percent in the second quarter of 2016 to 4.7 percent in the first quarter of 2017. As the availability of retail space in the marketplace shrinks and both new and existing retailers and restaurants look to expand in Tampa, the search for the ideal location has become more competitive.
“In today’s market, you must be willing to pay, but you may not have as much time to analyze the decision as you once had,” says Morrow. “The space you may want will not be available for as long.”
Ford’s Garage, a restaurant chain licensed by Ford Motor Co., is one of the restaurants expanding its presence in the Tampa region. The development is located in Wesley Chapel’s planned mixed-use development, Cypress Creek Town Center. With Model Ts hanging from the ceiling, smoke coming out of the mufflers and car horns that actually honk, the restaurant caters to the experience consumers are craving from today’s retailers.
“You go in and see antique gas pumps,” says Stoner. “They have all of the old replicas — you can even eat in the bed of an old Ford pickup truck.”
Other planned restaurants in Cypress Creek Town Center include Chuy’s, an Austin, Texas-based Tex Mex restaurant, and Mellow Mushroom, an Atlanta-based pizza chain. German-based grocer Aldi and an organic boutique grocer have also proposed plans to build within the development.
The newest iteration of the massive Butler Enterprises development at Interstate 75 and Archer Road in Gainesville is Butler Town Center, an open-air lifestyle development that will house retailers and restaurants like P.F. Chang’s and a revamped Regal theater in a Main Street-style complex. Set to open by late 2018, the project will be bookended by two apartment developments known as The Terraces at Butler and The Residences at Butler.
On the ground floor of The Residences will be North Central Florida’s first food hall, Stengel Field Food Hall. The site of Butler Town Center was once Stengel Field, a dirt airstrip that opened in the 1920s during the golden age of aviation when legends like Charles Lindbergh and Amelia Earhart were in their heyday.
The 13,000-square-foot food hall, which will feature a Pitts Special acrobatic airplane hanging from the rafters, will house between 11 to 15 vendors, including chef Bert Gill’s L’Avion French bistro concept, which translates to “The Plane” in English. Food halls can be a transformative addition to the community fabric, but Deborah Butler, owner of Butler Enterprises, warns that food halls are not simple undertakings.
“At a food hall you have to have restaurant management; it demands it because it’s a different animal,” says Butler. “You’ve got to do your homework because it’s not a simple food court.”
Gill will oversee the operations of the food hall and curate the vendor mix. The food hall is expected to include kiosks for fresh flowers, fruits and vegetables, a craft beer taproom and a rotating list of food concepts.
The new food offerings are expected to pair well with the center’s new Whole Foods Market. In April, the grocer scratched its plans to open a 29,000-squarefoot Whole Foods 365 concept at Butler Town Center, instead opting to develop a typical 41,000-square-foot Whole Foods Market location. The new store will be the first Gainesville location for the Austinbased grocer, which was recently acquired by Amazon in a $13.4 billion deal.
“Gainesville is ripe for a high-end grocer and we have the spending power to support it, it’s a great fit,” says Butler. “We’re looking at retailers that understand that people want the latest and the greatest and know how to reinvent themselves to keep up with what people want.”
According to Butler, the new Whole Foods has helped spur additional interest in Butler Town Center from retailers because it’s a known entity and is widely admired by customers. Ray Hayhurst, senior vice president of Avison Young’s Orlando office, feels Gainesville has proved to be a popular landing spot for grocery concepts of all kinds.
“Given the demographic makeup of the city, it is not surprising that many of the specialty grocery chains have opened stores in Gainesville, including Luckys Market, Earth Fare, The Fresh Market and Trader Joe’s, along with several local specialty grocers,” says Hayhurst.
Gainesville’s retail market is in a favorable position for new construction as its fundamentals are trending in the right direction and there are barriers to entry due to the city’s infamously long entitlement process. About 2.4 million square feet of retail space was delivered in the past 12 months, according to CoStar. That figure is more than three times the five-year average of 653,794 square feet.
“The Gainesville market is so unique to other Florida metros because of the 12-county region. We’re the heart and economic hub of North Central Florida,” says Butler. “Gainesville is ready for more development.”
The market is absorbing the new wave of construction and then some, with absorption totaling nearly 2.5 million square feet in the past 12 months, more than four times the five-year average, according to CoStar.
Landlords like Butler Enterprises are able to push rents in Gainesville. According to CoStar, triple-net rental rates ended the first quarter at $16.84 per square foot, up nearly $3 per square foot over the trailing five-year average. The metro’s vacancy rate was 3.7 percent at the end of the first quarter, down 150 basis points compared to the five-year average.
Butler’s success is partly owed to the nearly 50,000 students at the University of Florida (UF); Santa Fe College, which recently became a four-year institution; and the medical care community including University of Florida Health Shands, the Malcolm Randall Veterans Medical Center and North Florida Regional Medical Center. UF Health will also open a $415 million project involving new heart and vascular and neuromedicine hospitals in 2018. The healthcare and higher education communities have provided the spending power to support the Butler development, as well as Celebration Pointe, a massive mixed-use project underway on the other side of I-75.
In May, Celebration Pointe Development Partners announced a group of restaurants and retailers that will open this fall during Phase I of Celebration Pointe. The new tenants will be situated in the development’s City Walk section near the new Bass Pro Shops, which opened in November.
The restaurants include Liquid Ginger Restaurant; Miller’s Ale House; Kilwins Quality Confections; Reggae Shack Café; and MidiCi Pizza. The retailers include Lee Nails, Azulene Day Spa and Uniform Destination.
Other uses at Celebration Pointe will include nearly 1,000 residential units, a 140-room Hotel Indigo, 300,000 square feet of office space and a new Regal theater.
GROWTH IN JACKSONVILLE
As with other cities in Florida, Jacksonville is experiencing strong population and wage growth. The market has experienced a 2 percent growth in population annually over the past two years. That same pace is expected to continue for the next several years, according to CBRE’s 2017 Southeast U.S. Real Estate Market Outlook.
Wage growth was 10 percent over the previous year in 2016 according to CBRE, and supply and demand metrics are still well below what was seen in 2006 in Jacksonville, indicating that the market as room for expansion and a population with a growing level of discretionary income.
Occupancy rates have gone up yearover-year to 91.1 percent and the retail sector currently has 748,000 square feet of new space under construction, according to JLL’s 2016 Florida Retail Report.
An upcoming mixed-use development in St. Johns County, roughly 30 miles outside Jacksonville, titled the Pavilion at Durbin Park is looking to add 2.4 million square feet of retail to the Jacksonville market. The project by Gatlin Development Co. and Gate Petroleum will also include 2.8 million square feet of office space, 999 multifamily units and a 350-key hotel. Plans for the property also include green space, bike trails, lakes and entertainment venues.
Regency Centers Corp. is also wrapping up several developments around the Jacksonville metro. “We are finishing up a few developments in town,” says Patrick McKinley, vice president, market officer at Regency. “We are adding 27,000 square feet of retail at our Nocatee Town Center project in Jacksonville. Notable tenants include Starbucks Coffee, Orangetheory Fitness, Tijuana Flats, Jersey Mike’s and a few locals like Artsy Abode, Gwen Berlin and Timoti’s Seafood Shack. We will be complete with landlord work in August, and we are already 97 percent leased.”
“We are adding a First Watch pad building in our Bartram Park Shopping Center and we are close to finishing our redevelopment at Old St. Augustine Plaza where we eliminated small shop space to make way for a LA Fitness pad,” continues McKinley. “We are also about to add an additional 10,000 square feet of space at our Seminole Shoppes project in Neptune Beach. Kickoff is set for August with an early 2018 delivery.”
Much of the space that comes on line in Jacksonville is quickly absorbed. This is the fourth year of strengthening net absorption for Jacksonville, and demand is expected to be stable in the most sought after submarkets, according to CBRE. Vacancy has also trended down below 6 percent.
“The activity for space in well positioned and well-merchandised, grocery-anchored centers is strong,” says McKinley. “To give you a sense, we had five move outs in the second quarter. Three of the spaces have newly signed deals, one is at lease and the other is currently being marketed.”
Hot neighborhoods in Jacksonville that are expected to continue to see strong demand are the Beaches, Town Center, Nocatee, North St. Johns County, San Marco, Riverside and Brooklyn, according to McKinley. “Certain markets are getting over restauranted,” he says. “There are a handful of markets around town that hit all the hot buttons for restaurants with strong performing restaurants in operation. The problem is that the restaurants still keep coming and the proverbial pie is just getting split up into smaller pieces. Great operators with unique food, first class service and of course good food will be fine, but run of the mill operators will start to feel the squeeze in these markets over the next 12 to 18 months.”