Silverspot Theatre construction at the Promenade at Coconut Creek (Melanie Bell)
As malls around South Florida move to transform themselves into “lifestyle centers” that combine shopping and entertainment, real estate brokers say urban street retail is thriving with rising occupancy and leasing rates.
Along Delray’s Atlantic Avenue, leasing rates have risen 15 percent in the past year reaching $50 to $70 per square foot, and occupancy is around 95 percent, according to data from CBRE Inc.
On Fort Lauderdale’s Las Olas Boulevard, vacancy stood below 5 percent at the end of last year. And on Miracle Mile in Coral Gables, asking rates have jumped 10 percent in the past 18 months, reaching up to $60 per square foot on triple net leases for stores with easiest access to pedestrian traffic.
“Urban street retail is the hottest thing going,” said Roxanne Register, vice president of CBRE Inc. in Boca Raton. “If older malls don’t start restructuring, they’ll face their demise. The new developments and new mixed-used projects are now emulating what used to be urban or downtown streets, which declined but are now on the rise again.”
Their rise comes as several developers across South Florida consider new ways to revitalize existing malls or reposition failed ones.
At the 240,000-square-foot Promenade at Coconut Creek, the saving grace during the recession was a reduced reliance on boutiques and strategic focus on big-box tenants to anchor the outdoor retail shopping center. A 10-year lease renewal with category killer and footwear retailer DSW Inc. and the addition of specialty tenant Guitar Center for a top corner spot helped the Garrison Investment Group property survive the downturn.
“We needed to make a hard decision,” said Mitchell Salmon, managing director of New York-based Garrison Investment Group. “The most significant thing we needed was a traffic generator. That’s what determines if a lifestyle center survives. We couldn’t rely on boutique shopping because these go soft with the economy.”
Promenade’s answer: a multiplex cinema unlike any other for miles around, featuring a first-class restaurant, lounge and bar.
“Shopping centers are changing direction,” said Greenberg Traurig shareholder Barbara Hall, a Fort Lauderdale attorney specializing in land use and environmental law. “The goal is to have entertainment.”
To meet that goal, Garrison Investment contracted with Naples-based Silverspot Cinema for a 47,000-square-foot multiplex off Cullum Road at the southern end of Promenade. The $11.3 million theater is slated for completion by December, according to Coconut Creek public records. Planners say it will bring 200,000 customers a year to the Promenade.
“That kind of traffic is going to solidify the shopping center in the long run,” Salmon said. “Once the theater opens, we’re going to have a completely new dynamic. It’s a symbiotic relationship that will attract higher-caliber customers, restaurant guests and be very good for the long-term value for the mall.”
Promenade isn’t alone. Regal Stadium 12 opened in January at Westfield Broward, formerly known as the Broward Mall, in Plantation.
Across South Florida, other retail developers are also broadening their focus.
At Plantation’s long-vacant Fashion Mall a $300 million makeover is underway to transform the failed shopping center to a mixed-used development with branded hotel, condominium tower and top-tier office space.
And in Palm Beach, Newton, Mass.-based New England Development on Feb.14 unveiled phase one of its new concept for the former Palm Beach Mall. The new Palm Beach Outlets opened with 100 stores and a roster of high-end tenants like GUESS Factory Store, Cole Haan and Saks Fifth Avenue OFF 5TH. Additional development in the next year is set to bring the center to nearly 1 million square feet, divided almost evenly between indoor shops and a power center with space strategically leased so big-box tenants face surrounding thoroughfares.
“They’re lining up I-95 with big boxes facing out,” said CBRE vice president Lisa Ferrazza.
As malls try to find their footing and make the best use of valuable real estate in an age of rising Internet commerce, brokers say urban street retail zones are already seamlessly meshing office space, residential development and multiple entertainment options with commercial space.
“Urban street retail is really the original live-work-play setting,” said Register, a CBRE broker who handles leasing for Delray Village Shoppes, one of multiple new developments rising within walking distance of the bustling Atlantic Avenue.
“At the end of the day, urban street retail has an experiential factor that others don’t,” said Barbara Tria, commercial broker associate with Coral Gables-based Kerdyk Real Estate and incoming president of the Realtors Commercial Alliance, an arm of the Miami Association of Realtors. “It’s just more dynamic. As our consumer base trends toward generations X and Y, there’s an experiential factor they look for when they shop or explore the retail world. Urban street retail provides that.”