Know Niche When it Comes to Retail Centers

Special to the Atlanta Business Chronicle
Southeast real estate Roundup
Nov. 5-11, 1999 Page 47C

One of the most significant trends in Florida’s urban and suburban real estate markets in recent years has been the development of entertainment/retail activity centers. Typically built around a combination of movie multiplexes, game rooms and upscale restaurants, these destinations already have had a major impact on decision-making by retailers, lenders, developers and local governments. They will continue to play an influential role in the economies of their host communities for decades to come.
    Significant as it is, however, this relatively new phenomenon often is misunderstood. There are distinct differences between the various sub-types of the genre.
    VARIATIONS WITHIN THE THEME
    At first glance, the various entertainment/retail centers may look similar, but each is a unique entity, developed in response to a specific set of geographic and demographic circumstances. At a minimum, there are three distinct types of destinations:
    URBAN CENTERS: Many urban areas have redeveloped or are in the process of redeveloping their historic retail cores, usually with the support of local government and redevelopment agencies.
    While typical real estate cycles may last anywhere from five to 10 years, this is a unique product type that has not been developed before—a lifestyle concept representing fundamental changes in consumer habits. So it is impossible to predict the duration of the cycle.
    This brings us to the critical issue of timing.
    The early entries into this industry created  natural gathering points. Whether urban, suburban or small-city downtown, the first entertainment/retail center focused demand that was previously scattered among various separate locations and attractions. In South Florida for instance, Cocowalk, one of the first entries in the field, opened to incredible sales per square foot as the center concentrated activity in a single area.
    By contrast, later entries into the market have the opposite effect: they spread demand from one or two concentrated points and redistribute it among various contenders. Today, residents of Kendall or South Miami, who only a few years ago might have driven to Cocowalk, are now going to the Shops at Sunset Place.
    THE LONG TERM VIEW
    The effect of a center and its ultimate prospects for success depend on a variety of factors. A good location, strong design and the right tenant mi are prerequisites, and timing plays a critical role. But today’s institutionally generated centers will have the experience and the financial wherewithal to weather the changes that will take place.
    In the long term, virtually all of the existing locations will eventually be successful, even if some need to wait for their surrounding communities to “grow into them.” As they do, we may see weaker tenants shaking out or changing their concepts, but that is a natural and expected part of any new product type.
    Examples range from Mizner Park in Boca Raton to the Riverwalk area in Ft. Lauderdale, to Coconut Grove, Lincoln Road and Ocean Dive/Washington Avenue in Miami Beach, as well as Clematis Street in West Palm Beach, Ybor City in Tampa, and Jacksonville’s San Marco area.
    Suburban centers: In contrast to the historic downtown, which in most cases has no single private-sector entity backing it, these suburban centers typically are institutionally generated and systematically developed in a way that tries to replicate the development pattern of the urban center.
    Examples include Cocowalk, Mayfair and the Shops and Sunset Place in the Miami market, along with the Oasis at Sawgrass Mills, a major entertainment, retail and restaurant promenade in Sunrise.
    SMALL CITY/REGIONAL CENTERS: Cities outside the major urban zones, such as Gainesville, have downtowns that have developed around food, beverage and entertainment facilities to become regional destinations. Like their counterparts in more heavily urbanized areas, these centers are driven by demand for a single, convenient venue where patrons can dine, go to the movies or other entertainment such as live performances (or game rooms for the younger set), and shop in attractive stores offering fashionable name brands.
    IMPORTANCE OF TIMING
    Entertainment retailing is still a young phenomenon—it began little more than 10 years ago at places like Cocowalk and Disney’s Pleasure Island. This phenomenon really began to accelerate within only the past three years or so.