About 30 retailers are waiting for their stores to be finished. Developer Belz Enterprises of Memphis, TN expects the 39-store center to be at 70% occupancy by July, according to a published report. But area brokers and consultants tell GlobeSt.com that achievement will be challenging for Festival Bay.
"To be successful in this hyper-competitive environment, Festival Bay needs to be a 'Have to See' project," David W. Marks, president, Marketplace Advisors Inc., Orlando, tells GlobeSt.com. "If it doesn't make it on the visitors' top three list of fashion/entertainment destinations, it will have a very tough road ahead."
Marks, a former Trammell Crow Co. vice president, says Festival Bay marketers "need to focus first on the tourist market and secondarily on the Central Florida market." He agrees with other industry analysts that most local shoppers don't recognize the mall's name or its location in retail-suffering North International Drive, once part of metro Orlando's premier tourist corridor.
"North International Drive is presently feeling the effects of the slowdown in tourism in Central Florida and the competition from two well-positioned projects--the Mall at Millenia and Orlando Premium Outlets," Marks says. "The focus for shoppers on North International Drive has been for apparel goods. With the tourist market not growing but contracting, and the addition of these two major projects, something had to give."
Marks says "it appears that North International Drive has been a casualty of this market shakeout" with a large number of vacancies. "Festival Bay has its work cut out in this difficult environment," the consultant says.
For example, Festival Bay "has positioned itself as a hybrid project that is a combination of fashion and entertainment" but both categories have "fierce competition" in southwest Orange County. On the cinema side alone, nearby Downtown Disney, Universal Orlando's CityWalk and Pointe Orlando together have almost 100 movie screens.
"Festival Bay's best opportunity for success is to focus on entertainment uses that turn the project into a two-hour-plus tourist destination that tourists can go to after a day at the theme parks," Marks says.
He questions whether the shopping center should have formally opened with less than a full house of tenants. "The way they have opened the project is unusual, anchor by anchor, and with many of the shops not finished," Marks tells GlobeSt.com. "Having only a part of the shops ready takes away from the experience."
Still, he says, "what will really matter is what the (shopping) experience is when the majority of the stores open over the next few months." Unanswered is how much sales per sf Festival Bay may expect to generate once it is operating with a full tenant roll.
"Typically, regional malls look to generate sales of over $300 per sf for their specialty shops," Marks says. "Sales per sf for Festival Bay will depend on how well the project is received primarily by the tourists and secondarily by the locals."
Like Marks, John M. Crossman, a senior vice president in the Orlando office of Trammell Crow Co., thinks Festival Bay may be opening at the wrong time but may also be in a position to capture future market share if North International Drive changes character.
"Overall, I am very concerned about the entire north end of International Drive," Crossman tells GlobeSt.com. "That area has had a tremendous increase in competition, a decrease in tourism and the centers are tough to get to." He says customer access and signage are much better for Mall at Millenia and Premium Outlets.
Festival Bay is "not a 'build and they will come' project," Crossman tells GlobeSt.com. "They will have to work hard and long to get their piece of the pie."
The Trammell Crow executive says "some of the centers on North I-Drive may close and never come back as retail. Why would a big-box tenant want to backfill any of the over one million sf of retail space that is not part of Festival or Belz?"
However, he says not all of the one million sf is vacant, but "demand is down and supply is increasing." He projects that "if some of the retail is eventually turned into hotels or timeshares, this will certainly help" Festival Bay.
Crossman calls Festival Bay developer Belz Enterprises "a great landlord" who has "some great tenants, but it is going to be a tough fight." He says, "If they win and pull this off, there will be losers--other I-Drive centers may never recover."
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