TAMPA, FL—Redevelopments are taking over the Tampa Bay area, with several shopping centers either beginning or wrapping up projects this year. From strip centers to malls, all kinds of retail properties are being redeveloped, but the lion’s share of activity is focused on non-performing assets located in key corridors. So says Brian Bern, a senior director at Franklin Street.
“Several anchor tenants and big box chain stores have exited the market, leaving behind spaces that are too big to backfill,” Bern tells GlobeSt.com. “Landlords are being forced to reposition their assets as size requirements and anchors have changed.”
As Bern sees it, with little new product under construction redevelopment is a strategic way for landlords to attract new tenants to their centers. Since less class A space is available, he says, it’s important for class B and C properties to have attractive landscaping, signage, and facades to attract new tenants. By completing even minor improvements, landlords can increase sales and boost traffic at centers.
Bern points to Publix as a good example of a retailer that has been actively redeveloping a large portion of its stores in Florida. Publix acquired 49 Albertsons stores in Florida in 2008. Since then, the grocery store chain has slowly been redeveloping the properties to the Publix layout, including a more modern design that makes room for the added services many of its stores now offer.
“Publix also has been renewing its leases at centers the chain is currently located in, closing temporarily to redevelop the stores and reopening within the year,” Bern says. “For example, Publix renewed its lease in December 2013 at Indian Rocks Shopping Center, located in Largo. The store closed last month for a 45,000-square-foot redevelopment, and will re-open this fall.”
Here’s the backstory: After the store decided to renovate, RMC Property Group, the owner, moved to redevelop the entire strip center. The 100% occupied retail center will get new facades, signage, and an additional 3,000 square feet of new space for lease. Bern says he chain of events is not uncommon for Publix-anchored centers, as landlords realize the importance of access and a good layout to retain and attract tenants.
Bern again points to an example to back up his statement: REITs like Regency Centers and Kimco Realty have been actively looking for well-located, under-performing assets to redevelop, like Tri-City Plaza, a retail center in Largo that is owned by Kimco. He says REITs are spending their money on redevelopments to make sure they have profitable centers to hold for the long-term.
For example, Tri-City Plaza is undergoing two phases of redevelopment that will include demolition of several buildings and construction of some new ones. Bern says new retail spaces will be larger in order to attract a different kind of tenant.
“Southgate mall in Sarasota, which is owned by Westgate, is one redevelopment project that everyone is watching,” Bern says. “Westgate announced last May it will revamp the mall to combat a decrease in sales by adding on 46,000 square feet of restaurant and entertainment space, transforming the traditional mall into more of a lifestyle center. The redevelopment will also include landscape and façade upgrades.”
Bern explains that when anchor Saks Fifth Avenue leaves the mall in late 2014, about 40,000-square-foot space will remain. While replacement tenants have not been officially announced, he says the local media has speculated that either a movie theater or an expanded food court could backfill the space.
“In 2014, redevelopment will remain the hottest form of construction in the Tampa Bay area as landlords seek to improve sales and tenancy,” Bern says. “We saw record levels of leasing activity in the first quarter, which we expect will continue as newly redeveloped projects come on-line.”