What this means is that retail vacancy remains high, at 10.3%,but has stabilized over the past three quarters and constructionactivity is minimal. Meanwhile, retailers which are expandinginclude convenience stores and discounters, such as 7-Eleven, whichplans to open or convert about 45 stores by 2012. The Dollar Storesegment plans to open about 1500 stores nationwide during 2010.

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There are a number of new phenomena in retailing today inCentral Florida and elsewhere. Landlords are experimenting with"pop-up" stores, which occupy small spaces for short periods, whileWalgreens and Target are significantly expanding into the grocerysegment.

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The unemployment picture does not help Central Floridaretailers. The unemployment rate for the Orlando-Kissimmee MSA was12.5% in February 2010, compared to 9.2% in February 2009. Thestate of Florida's unemployment rate was 12.2% in February 2010compared to 9.3% in February 2009.

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Net absorption for the first quarter of 2010 turned slightlynegative for the overall Central Florida market, after positiveabsorption in the fourth quarter. Five submarkets had positiveabsorption, while seven continued to have declining demand forspace.

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Construction activity remained unchanged from fourth quarter2009 with a total of 117,449 square feet. Not surprising, given thecurrent state of the economy and of retail, much of theconstruction activity involves renovations of outdated centers orconversions of vacated space.

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While the demand for retail space is relatively low, somemedical users are taking vacant retail space. Landlords like thesetenants, because they pay higher rents and are more stable thanconventional retail tenants, according to the Colliers report.Although it can be expensive to convert big box space for medicaltenants, few big box retailers are expanding today, which meansthat the benefits usually outweigh the cost.

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