$1B in New Retail Planned in West Orlando

Although the 1.3 million-sf, $250 million, 405-acre Mall at Millenia in south Orlando stole the headlines in late 2002, the limelight for most of 2003 and 2004 will be at the western end of the 49-million-sf retail market, from suburban Ocoee, FL to Clermont, FL in neighboring Lake County.

"This area will be hot for several years," Colliers Arnold research analyst Bobby Palta tells GlobeSt.com. "The development of this area shows no signs of slowing down."

Publix, Target, Walgreens and Home Depot are among the national retailers already on the scene. Wal-Mart is trying hard to gain a foothold and probably will overcome local development opposition this year, area brokers tell GlobeSt.com.

Northern Osceola County, 20 miles south of Downtown Orlando, is also a sleeper location that national retailers have discovered. Wal-Mart is already present and also has a Sam's Club subsidiary under construction near its 250,000-sf Supercenter on U.S. 192. Minneapolis-based Target is expected to announced its entry later this year.

At U.S. 192 and State Road 535, one of the area's hottest commercial sites for the past five years, activity is expected to accelerate even quicker when and if the 850-acre Osceola Trace tract is developed into a one-million-sf, open-air shopping center by developer Rob Miller.

"The Osceoloa Trace development is well-positioned to serve this growing area," Palta says. In nearby Daytona Beach, FL, redevelopment efforts along the city's Oceanside strip are also moving quickly. A 110,000-sf Ocean Walk Shoppes venture complements the $9.5 million streetscape renovation.

The Colliers Arnold study supports a previous retail investment analysis of the Central Florida market by Marcus & Millichap Real Estate Investment Co. of Florida. M&M finds single-tenant, net lease sales of retail properties enjoying a banner year. The median price per sf for drug stores sold in the region in the first three quarters of 2002 was $258.87, versus $113.18 for other single-tenant properties.

Through Q3 2002, the average cap rate on retail investment transactions in Orlando and Tampa was 10.2% on multi-tenant properties, but only 8.9% on single-tenant properties.

"Buyers are willing to take a reduced cap rate in acquiring single-tenant, net-leased properties in exchange for what they perceive to be a stable and worry-free commercial real estate investment," Steven M. Ekovich, M&M's vice president/regional manager Florida, tells GlobeSt.com.