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Overleveraged retail center owners are finding it impossible to service their debt. General Growth Properties, which owns Mizner Park in Boca Raton (above), has warned that it may have to file for bankruptcy. [Photo: Matt Dean] |
“For the first time in a long time, upper-income consumer confidence has been shaken,” says Rick McAllister, president and CEO of the Florida Retail Federation. While the price of gas and groceries slowed spending by low-income and middle-income consumers for much of 2008, the bottom fell out of Florida’s retail industry last fall when turmoil on Wall Street sucked 40% to 50% of the wealth from investment portfolios. Nordstrom shoppers began trading down to Macy’s; Macy’s shoppers traded down to JCPenney; and JCPenney shoppers moved to Target, says Bart Weitz, executive director of the David F. Miller Retailing Education and Research Center at the University of Florida. Of today’s retail slowdown, he says, “I believe it’s definitely the worst in the last 25 years and particularly in Florida.”
Retail Occupancy —
Occupancy Rate |
Market
|
2007 |
2008 (midyear) |
Miami
|
95.2% |
94.8% |
Jacksonville
|
94.1 |
93.1 |
Orlando
|
93.0 |
92.7 |
Palm Beach
|
94.3 |
92.6 |
Tampa-St. Pete
|
93.3 |
92.5 |
Tallahassee
|
92.1 |
92.4 |
| Fort Lauderdale |
93.0 |
92.1 |
| Source: International Council of Shopping Centers, August 2008 |
Florida markets that have a strong visitor base, says McAllister, will have an advantage. But he warns that the stronger dollar might limit retail purchases by international visitors. Perhaps in the best position are stores that sell everyday household necessities, particularly in a value-oriented setting. Grocery retailers’ sales remain strong and are starting to benefit from lower commodity and transportation costs. But new grocery players are creating increased competition for established chains like Publix, Winn-Dixie and even Wal-Mart. International discount grocer Aldi, which carries about 1,400 items and requires a 25-cent deposit for grocery carts, ventured into Florida for the first time in 2008 with 25 stores and a Haines City distribution center. “We are definitely planning on opening more stores in the central Florida region in 2009,” says Melanie Nimrodi, an Aldi spokeswoman. Value retailer Family Dollar, which has 363 Florida stores, is adding refrigerated coolers to its stores and expanding its selling space for food items.
“What we’re really trying to do is reflect what people need and what people are buying,” says Josh Braverman, public relations manager for Family Dollar. “There’s a lot of activity planned for Florida in ’09.”
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