Booming Business

Richard Westlund | 9/1/2007

Throughout Florida, retail rental rates are high, vacancy rates are low and there’s a healthy supply of construction in the pipeline — including urban mixed-use projects. And while retailers face higher property taxes and insurance bills, those issues haven’t slowed development plans or leasing activity in Florida, says Steven Henenfeld, associate vice president of Continental Real Estate Cos. in Coral Gables.

Lake Sumter market square at The Villages. “The Villages has become a major retail destination,” says John Crossman, president of Crossman & Co.

National consulting firm Marcus & Millichap recently rated Fort Lauderdale second behind New York City on its 2007 National Retail Index of 42 major metropolitan regions based on employment growth, vacancies, construction retail sales and other market indicators. Other high-ranking Florida cities include West Palm Beach (11), Miami (20), Tampa (23), Orlando (27) and Jacksonville (33).

John M. Crossman, president of Crossman & Co. in Orlando and president of the Central Florida Commercial Association of Realtors, is finalizing plans for Brownwood Paddock Square, a 350,000-sq.-ft., retail, restaurant and entertainment center in The Villages, a central Florida retirement community with 67,000 residents. “The Villages has become a major retail destination,” Crossman says. “Some of our stores do sales volumes equal to their counterparts in midtown Manhattan.”

Florida’s growing population and strong tourism industry make it highly attractive to retailers, despite the housing slowdown. “The residential crush was investor driven, but the number of people moving to Florida has remained the same — about 1,000 people a day,” Crossman says. “Since it’s estimated that you need about 10,000 people to support a new supermarket, that means we need a new grocery store every 10 days to keep up with demand.”

In addition, retailers in tourist areas benefit from visitors who spend an estimated five times as much on vacation as they do at home. “Retailers also look carefully at their merchandise returns,” Crossman says. “A good department store wants to keep those returns below 10%, and in Florida the average is less than 5%. After all, if you go back to Iowa, New York or England, you won’t return your purchase here. Therefore, a Florida store in a tourist area may have the same operating costs as other stores, but the margin will be 5% higher.”

Tags: North Central