There’s something about Florida that grocery chains cannot resist.
Safeway is among the newest brands to open stores in Florida, including one in Largo. Lucky’s Market opened in Naples and is expanding across the state. Sprouts Farmers Market is laying roots in Tampa Bay, and discount grocer Aldi is opening more stores in Florida than ever before.
So at what point does Florida have enough?
“The big story is the progression of the grocers in Florida,” said Paul Rutledge, first vice president with real estate company CBRE Inc. in Tampa and the Florida state operations chairman for the International Council of Shopping Centers. “Everyone is taking notice. But we still don’t know how customers are going to respond” to all the new choices.
Rutledge will join thousands of others in the retail and commercial real estate industries in Orlando today for the ICSC Florida Conference, which began at the Orange County Convention Center on Sunday and lasts through Tuesday. Grocery stores and restaurants are likely to be the hottest topics this year, Rutledge said.
“Competition is good. When Wawa came into the state, it changed everyone else. RaceTrac upgraded their product, others dropped prices, they impacted Thornton’s business model too,” Rutledge said. These new grocery players will do that, too, he said.
Rutledge spoke to the Tampa Bay Times by phone last week about retail trends in Florida before the conference.
So how many more grocery options can Florida realistically handle?
Publix is clearly still the front-runner, the lead horse of the state. It’s brands like Winn-Dixie and the former Sweetbays that are going to be the most challenged to find their niche with all these new competitors. Then you have this group that’s battling for the value shoppers. There are only so many that can go up against Walmart. I think the big question here is what do customers want? We’re reaching a point where they’re going to have all this variety, but we don’t know what they’re going to do. Florida has so many generations now of shopping age, from the baby boomers, Generation X, to millennials and there’s even an argument to be made for Gen Z. Until we actually hit this level of variety, I don’t think we’ll know what customers want. But we do know that not everyone will survive. Even with the state’s population growth, we don’t need six times as many grocers.
What’s the biggest challenge facing retailers in Florida right now?
Real estate. I can’t say it’s impossible to find in the state, but Florida is not the underdeveloped swampland it once was. There aren’t many intersections that are not in transaction right now. Some of these empty box spaces offer a big opportunity. The Kmarts, the Sports Authorities, those are spaces these new grocery chains will be looking at. It’s not as easy now to plow over green space and put in new plazas. Maybe in Pasco County, but you don’t have the density you have in Tampa. You want to be at Kennedy (Boulevard) and Dale Mabry (Highway) or in Brandon, at State Road 60 or Bloomingdale. That’s where you can get customers.
The same is true with the fast-food guys. PDQ came in looking for good real estate. But Walgreens and CVS have picked up significant corners and prices are going up. The recession is definitely in the rearview mirror, and landowners are making that evident by raising their prices. A lot of these new grocery stores want to buy, but it’s hard enough to find space to rent, let alone buy.
With retailers like Sports Authority and Macy’s closing stores, what does that mean for the future of shopping centers?
Let’s look at Sears, JCPenney, Macy’s and other big box spaces. Malls are prime retail hubs. I don’t think of a mall as a mall so much anymore and instead think of it as a community center. I’ve put a Lowe’s next to a Macy’s before, and they were okay with the deal because the retailers didn’t compete with one another, and they actually benefited from the mutual traffic. Any good retail will fit well with another good retailer. So don’t be surprised to see something like Lucky’s Market going into a Sears location. Or a TJ Maxx or Marshalls bringing new energy into a more traditional mall. I think you’ll see more of this untraditional redevelopment at malls in the next five years or so.
Why is Florida behind in these new trends for redevelopment?
You’re seeing some of this kind of redevelopment here, like the Seminole City Center, which is a great retrofit of that space. What Jeff Vinik has planned for downtown Tampa is going to be great. It’s taking retail and going vertical, which you don’t see a lot of in Florida yet. What if every mall added 250 apartments and 2,000 square feet of office? You see these centers in California, all over Texas, Virginia. The problem in Florida is that these malls have very restrictive covenants and are under 20-year rules that are no longer in touch with what development looks like today. To get some of this stuff rezoned is really painful and very politically charged. Few people want to take on these redevelopments because of that. It’s only people with vision that are willing to stick it out.
Source: Tampa Bay Times