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KISSIMMEE, FL-Florida remains a strong retail market despite the downturn in several markets compared to two years ago, according to the 2008 Florida Retail Report, released in conjunction with the ICSC 2008 Florida Conference here. A slowdown in development and a focus on smaller boxes will help absorption, and keep vacancy rates relatively healthy, speakers at the conference say.

“There are still a large number of projects that are scheduled to deliver over the next 12 months, however, and could cause statewide occupancy to decline further through 2009,” wrote Justin M. Greider, associate director with Holliday Fenoglio Fowler Orlando, in the report.

Value, however, is important. The small box now dominates today’s climate, with retailers of less than 15,000 sf primed to do well. Drugstores, dollar stores, auto parts retailers and grocers opening smaller units are expanding.

“Customers are increasingly attracted to stores that are in very convenient neighborhood locations, especially freestanding stores,” wrote Gary M. Ralston, president of Florida Retail Development in Maitland, FL. “Most real estate analysts fail to appreciate the magnitude of the ‘small box’ retail sector.”

Dollar stores, Ralston noted, are beginning to face the same use restrictions faced by grocery stores because of expanded product specifications including refrigerated cases and coolers. In addition, dollar stores are moving to freestanding locations, much as drug stores did a decade ago. Currently there are approximately 18,000 dollar stores in the state, reported Ralston, led by Dollar General, Family Dollar and Dollar Tree.

Grocery stores are moving to adapt to the smaller format nationwide, according to the report, with 1,000 Aldi locations and the promise of 500 Tesco stores, all between 10,000 and 15,000 sf, to open over the next five years. Even Wal-Mart is jumping on the small box bandwagon, testing its 15,000 sf Marketside grocery format, says Ralston.

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