Retailers, Developers Compete for Space Left Open by Disappearing Big-Box Stores
The downtown Miami Macy's, the Sears in Boca Raton, and multiple Toys R Us and Winn-Dixie stores throughout South Florida either have closed or will close. But the retail spaces won't stay vacant.
April 16, 2018 at 06:00 AM
5 minute read
The store space available in South Florida after the announced closures of Toys R Us, Babies R Us and Winn-Dixie stores won't stay vacant for long — if at all.
Retailers from grocery stores to Target Corp. are competing to buy the leases on these locations, according to Alan Esquenazi, CREC principal in Coral Gables.
“If you are a retailer in America and you are doing well and you are considering expansions in the primary markets — and South Florida is a primary, active market — their eyes are on all these vacancies and all of these boxes,” Esquenazi said.
Toys R Us and Babies R Us stores are liquidating nationwide with multiple stores closing in South Florida after the company filed for bankruptcy protection last fall. Winn-Dixie stores also are closing throughout the Southeast, with at least six set to close in South Florida after its parent filed for protection.
And in the ever-evolving retail market, Winn-Dixie and Toys R Us stores aren't the only ones closing.
The downtown Miami Macy's at 22 E. Flagler St. and Sears at 5900 W. Glades Road in the Town Center at Boca Raton also shut down as part of nationwide downsizing.
It's unknown exactly which newcomers will move in, but retail brokers and experts shed some light on which tenants might move in.
For one, Target Corp. pursued a Toys R Us lease in West Kendall in an auction but lost, according Esquenazi.
Despite this, new small-format Target stores, which at about 40,000 square feet are about half the size of the traditional Targets, are one option for the soon-to-be vacant retail spaces in the region, said Katy Welsh, Colliers International South Florida senior vice president of retail based in Boca Raton.
Another option is supermarkets, Welsh added.
Grocery stores are a strong and coveted tenant since they are more resistant to e-commerce. (Even though shoppers have the option of home delivery, experts agreed this will have no impact on most grocery stores as most shoppers still prefer to buy their groceries in-store.)
Esquenazi agreed with Welsh that grocery stores are most likely to replace the Winn-Dixie stores.
“If you are a supermarket retailer, you are watching these Winn-Dixies very closely. They are going to be very ambitious about pursuing a Winn-Dixie box,” Esquenazi said.
BOON FOR OTHERS
The closings announced this year are turning into good news for landlords, Welsh said.
“When these boxes go out, that is an opportunity for the mall owner to recapture that space. … The owner of the mall has an opportunity to recapture that whole piece of dirt and redevelop it,” Welsh said. “And those boxes, specifically Macy's and Sears, are tremendous opportunities for landlords and they have been waiting for a while to get those boxes back.”
New York-based Aetna Realty Group LLC plans to renovate the old Macy's building and build two 50- to 55-story buildings on the site, according to Miami Today.
The 467,158-square-foot structure has been a department store since 1917 when Burdines opened its flagship store.
Seritage Growth Properties, a real estate investment trust that owns the 174,337-square-foot Sears and the next-door auto service center in Boca Raton, wants to convert the space into an outdoor shopping and entertainment complex, according to the Palm Beach Post.
The owners can redevelop their spaces and generate more revenue from future tenants in a move that should boost business for surrounding retailers, Welsh said.
When it comes to the Toys R Us and Winn-Dixie locations, in case anyone still is in doubt about whether the openings will fill, just speak with Esquenazi. A tenant he represents is under contract to acquire a Toys R Us in Orlando that's on the chopping block.
He also represents other retailers negotiating to move into South Florida Toys R Us locations, he said.
EVOLVING RETAIL
While a few closings have been announced since this year, the situation isn't anything new for the retail market, Welsh said.
“Retail has always evolved. First, we had the open-air mall. Then we had the closed mall. … Then we went to the strip centers. Then we went back to the mall. Let's just say from 1950, it has always evolved,” she said. “We've always had retailers that come and retailers that go.”
In the current climate, the surviving retailers are evolving with the times, she added. And she has seen everyone from grocery stores to malls get more creative.
Following in the footsteps of Lucky's Market, a Whole Foods Market in Boca Raton has beer on tap and a wine selection available at the front of the store, and shopping carts are equipped with cup holders.
“It's making the whole shopping experience more of an entertainment experience. Instead of someone going, 'Eh, I don't want to go to the grocery store,' it's, 'Huh, I'll have a beer or a glass of wine while I am walking around doing my shopping,' ” Welsh said.
It fulfills the desire for an experience apart from the standard errand, she said.
“ That's what happened to some of these retailers that are going out of business,” Welsh said. “They just didn't keep up with the times.”
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