Carrie Smith
It’s certainly no secret that Florida has experienced one of the nation’s slowest economic recoveries during the past year. According to the Bureau of Labor Statistics, the unemployment rate in Florida in March stood at 9 percent, well above the national average.
Still, there are signs of recovery and indications of what the state’s consumer demand will look like as the state moves toward a “new normal.” Smart retailers and shopping center owners are quickly understanding the key traits of consumer behavior in 2012, and adjusting their offerings to match.
Restaurant growth is taking off around Florida, led by chains that can leverage name recognition and the marketing support of a major brand. Many consumers seem more than happy to spend major portions of their discretionary income at restaurants despite having many other entertainment options.
In the past, restaurants often looked to take over failed locations that had equipment they could recycle. But in this cycle of growth, the chains are laser-focused on top-grade locations and more than willing to spend money on new facilities.
Retailer reinvention
But while consumers spend money at restaurants, it appears they are less willing to open their wallets for full-priced clothing. This shift in consumer demand is evident by the continued expansion of discount chains such as Bealls Outlet and T.J.Maxx, while a number of traditional apparel retailers come up with new concepts such as selling accessories and jewelry.
A prime example is Cato’s Versona Accessories concept, which has opened in a number of locations around the Southeast, including Marietta, Georgia; Lakeland, Florida; Columbia, South Carolina; and Mount Pleasant, South Carolina. These are classy, full-size locations, but with a more narrowly focused line of merchandise.
The idea is that a woman can reinvigorate an outfit with a new necklace or clutch, saving money while staying fashionable. This is a goal many consumers share in this “new normal.”
The growth of the Versona chain is part of a general trend of growth by specialty niche retailers, which also include chains selling merchandise such as pet supplies and baby products. So, while consumers may not be wandering around retail centers looking to buy just anything, like many did during the economic boom, retailers have honed in on what their customers want and are catering to that specific need.
Landlords, tenants adapt
With retailers modifying their strategies to meet the needs of consumers, it’s becoming more common for landlords to rework space for retailers to reduce the amount of leasable square footage. This way, the price per square foot still matches market norms, and the landlord eats the “dead space” that’s been created in the back of the store.
While many retail chains are showing signs of recovery, there are also a growing number of prospective mom-and-pop retail owners looking to lease space again and start an enterprise, much like before the Great Recession. But many don’t realize that the rules have changed. If a prospective tenant doesn’t have a history of success for a concept, or at the very least a solid business plan, landlords are loathe to lease top-grade locations for what they see as an iffy proposition.
Many mom-and-pop retailers will be forced to look to Class B and C locations. The good news is that many of these centers are cycling through the foreclosure process, or have lenders that are more willing to work with owners to achieve more attractive lease rates. Smaller retailers who spend less on rent are more inclined to spend money on marketing to attract shoppers.
Certainly, high unemployment continues to be a major impediment to economic recovery in the Sunshine State. While Jacksonville wasn’t hurt as badly in the downturn as other markets such as Tampa and Orlando, the entire state has been affected.
As the state slowly rebounds, necessity retailers such as grocers and drugstores continue to do well. Meanwhile, medical office tenants continue to gobble up prime locations, in some cases turning failed retail locations into medical office facilities. A key sign of the next stage of recovery will be when employers other than health care-related companies and government agencies start to hire again and lease larger spaces.
Urban infill going strong
Regardless of their niche, retailers are realizing that locations in or near walkable areas give them an advantage in appealing to consumers, particularly people in their 20s or 30s who tend to value livability and spend less time in their cars.
One example of this trend is in Riverside, located on the edge of Jacksonville’s downtown district. The neighborhood offers a vibrant, bustling atmosphere that features everything from shoppers to runners to moms with baby strollers moving about.
For both existing and new retailers expanding in Jacksonville, this urban infill area is a go-to destination for merchants. Shoppers have become more reluctant to make the drive across town. Instead, they want to live, work and play in a more pedestrian-friendly environment.
— Carrie Smith is regional managing partner at Franklin Street in Jacksonville, Fla., specializing in retail tenant and landlord representation. She oversees more than 1.5 million square feet of retail space and works with retailers throughout Florida and the Southeast.