"Central Florida will remain among the most attractive retail markets in the nation," says Steven M. Ekovich, vice president/regional manager, Marcus & Millichap. The reason: Ongoing population and employment growth.

"Unlike many regions, Central Florida has the luxury of continued population growth without relying completely on job creation," Ekovich says. "While the tourism industry has experienced some difficult times, the population shifts that have tilted the country to the south will continue to fuel the region's economy."

Another retail watcher, John M. Crossman, senior vice president/retail services director, Trammell Crow Co., Orlando, tells GlobeSt.com "overall, the (retail) market is surprisingly steady."

However, Crossman looks for a shakeout in the power center sector. "Power centers are the concern area," Crossman says. "Look for at least one major power center tenant to leave the market in early 2002."

Others, such as Bed, Bath and Beyond, will expand cautiously. "On the other hand, some retailers, like Ross, who tend to thrive in down markets as much as up markets, should continue to expand," Crossman says.

New heavyweight anchors will also be entering the Orlando market when the 1.3 million-sf, 405-acre Mall at Millenia is tentatively scheduled to open in late October. Bloomingdale's, Macy's and Neiman Marcus are the big draws. "They will give us a very good read on our market when they open up," Crossman tells GlobeSt.com.

In the Tampa region, 80 miles west of Downtown Orlando, new retail construction will slow slightly this year "due to an economy that has gone from an expected rebound to a deeper decline," Ekovich of Marcus & Millichap says. About 3.5 million sf of new product started in 2000, but only 2.5 million sf is expected to surface this year.

Orlando's retail starts will also be slow compared to last year's pace when four million sf of new product broke ground. "Luxury shopping centers have been in demand for some time in Central Florida, but it remains to be seen if the timing is right for several projects," Ekovich says.

In Lakeland-Winter Haven, retail construction is crawling and is "forecast to pale in comparison to the 700,000 sf started last year," the M&M executive says.

Tampa retail vacancies over the past two years have ranged between 10% and 11% and are expected to continue that pattern this year, even though consumer spending remains lower than usual, Ekovich says.

In Orlando, "although construction is forecast to slow slightly, the tourism trade that heavily impacts the (retail) market will enter a period of uncertainty and retail occupancy will suffer," Ekovich predicts. Vacancies will remain stable at 9% to 10% in the 45 million-sf metro Orlando market.

Sarasota, south of Tampa, will see vacancies of about 11% "as continued construction is met by solid demand," the M&M broker says. "While the next six months will be particularly trying for markets more reliant on the tourism industry, retail properties in Sarasota will remain solid performers due to the region's strong demographics."

The Lakeland-Winter Haven hub, 60 miles south of Downtown Orlando, has the highest retail vacancy in Central Florida at 15%. However, "the area has made great strides in reducing the statistic over the past 18 months," Ekovich notes. "Vacancy rates should continue to decline as demand outpaces supply."

Instant Insights /

GlobeSt.com UPDATE: New Retail Starts Slow but Market Robust, Marcus & Millichap Says

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