Trader Joe's
Trader Joe’s (J. Albert Diaz)

Even though they’re about 30 miles and several cities away, the creators of a major live-work-play development in Plantation are excited about the changes to the retail landscape that will come from a gourmet supermarket chain under construction in Delray Beach and set to expand this year across South Florida.

The suits at US Capital Holdings Group, the firm behind the $300 million development at Broward’s former Fashion Mall, are applauding the Hawaiian shirt-clad executives at Trader Joe’s, the quirky retailer targeting South Florida for growth—at long last in the view of patrons accustomed to shopping at its other stores nationally.

“Not only is Trader Joe’s one of the hottest retailers in the U.S., they are such a unique tenant and have such a loyal customer following, they will no doubt attract other higher-quality tenants to the market,” said Jennifer Moran, US Capital Holdings Group’s director of leasing. “They are a great addition to any mixed-use project.”

Brokers say the gourmet grocer with reported annual sales in the $8 billion range from more than 350 stores and a roster of affluent, educated and sophisticated clients attracts other high-end tenants.

The chain has honed its skills at catering to well-heeled customers to such a level that shoppers tell stories of traveling across town—or even farther—to stock up on Trader Joe’s fare. When the first South Florida Trader Joe’s opened in suburban Miami last October, it snarled traffic in the Pinecrest neighborhood.

Trader Joe’s “is a phenomenal brand with a cult following wherever they go,” said Barry Wolfe, vice president of investments and senior director of the national retail group at Marcus & Millichap Real Estate Investment Services. “You see people signing petitions to bring them in.”

Florida Joe

Nearly 2,300 people signed an online petition by Nadine Whiteman, a Broward woman who launched a Facebook page that garnered 893 likes, thousands of visitors, media attention and strong support for her lobbying effort last year to bring a Trader Joe’s store to the Fort Lauderdale area.

It’s that strong customer loyalty, often described as cult-like, that draws long lines and celebratory atmospheres at Trader Joe’s openings.

“They’ll definitely have an impact,” Wolfe said. “If you have a shopping center and bring Trader Joe’s in, that’s a grand slam.”

The retail chain is notoriously tight-lipped about everything from its suppliers to its branding, and the same goes for its real estate footprint.

“We don’t disclose what goes into selection of a location,” said director of national publicity Alison Mochizuki, who was mum on every other company plan for South Florida.

But she confirmed the Monrovia, Calif.-based chain plans at least six new stores by the end of this year in Miami-Dade, Broward and Palm Beach counties. After it committed to Florida expansion, South Florida customers made cross-state treks to shop at its Naples store.

The company launched in South Florida last October when it opened a 13,500-square-foot branch in Pinecrest. It has stores in the works in Boca Raton, Delray Beach, Palm Beach Gardens, Pembroke Pines, Orlando, Tallahassee, Tampa, Wellington and Winter Park.

In Boca Raton, the company intends to anchor East City Center, a new mixed-used development with retail and office space owned by PCS Paladin Holdings LLC, with a 12,500-square-foot store at 855 S. Federal Highway.

Three other Palm Beach County launches this year will bring the chain to the southwest corner of PGA Boulevard and Prosperity Farms Road in Palm Beach Gardens, to anchor the Delray Place shopping plaza slated to open in October and add a 12,500-square-foot outlet at the southwest corner of U.S. 441 and Stribling Way in the Village Green Center in Wellington.

In Pembroke Pines, the company announced plans last November for a 12,500-square-foot store at Pines Boulevard and Flamingo Road in the Pembroke Crossing shopping plaza. It would replace Cost Plus World Market, an eclectic Oakland, Calif.-based specialty retailer that sold imported furniture, wine, books and housewares from its hub at 11960 Pines Blvd.

Retail Catalyst

Trader Joe’s early South Florida foray caused a stir when it opened at 9205 S. Dixie Highway in Pinecrest. Shoppers lined up for low-priced gourmet fare like Fadeaway wines, 16-ounce bags of organic blue corn tortilla chips for $2.99, 8-ounce tubs of crumbled bleu cheese aged for at least 60 days and priced at $3.49, cheddar cheese with caramelized onions, cowboy caviar salsa, 10 freshly cut daffodils for $1.29 and other deals from the store’s Fearless Flyer.

Part of Trader Joe’s success strategy is the meticulous use of its shelf and store space. While competitors like the Fresh Market and Whole Foods prefer stores ranging from 20,000 to 50,000 square feet, Trader Joe’s strategy operates on a smaller scale. Its typical store is about 10,000 to 15,000 square feet, Mochizuki said. About 80 percent of all the company’s inventory carries the Trader Joe’s brand.

“They’re definitely in a class of their own,” said Roxanne Register, vice president of CBRE Inc. in Boca Raton and broker for Delray Village Shoppes. “Everybody knows what a draw they are. When they move into a project, it’s a catalyst for other retailers to go into that project because of their draw.”

Transforming Agent

Years ago, Wolfe saw the chain transform a humdrum 150,000-square-foot neighborhood shopping center in Atlanta to a trendy real estate asset. Before Trader Joe’s arrival, the Class C center attracted Chinese fast-food restaurants, lawnmower repair shops, music stores and other mom-and-pop retailers.

“You’re not necessarily going to hit a home run with Trader Joe’s. They’re not a huge tenant. They’re not going to pay you a lot of rent,” Wolfe said. “It’s what happens around them.”

Within months of inking the Trader Joe’s deal for a 12,000-square-foot spot, brokers were fielding inquiries from RadioShack, Party City, Five Guys Burgers and Fries, Pier 1 Imports and other major national and regional tenants looking to follow the grocer. Real estate agents also reported an uptick in interest from local tenants—but this time potential renters were looking to make major upgrades to attract the supermarket’s affluent customers.

“Most developers would love to do a deal with Trader Joe’s,” Wolfe said.

But as Trader Joe’s prepares for South Florida expansion, marketers at confirmed sites aren’t saying how news of the chain’s impending arrival is affecting leasing.

Nevertheless, analyts say Trader Joe’s entry is shaping the broader retail investment landscape.

Along with high-end grocery brands, Trader Joe’s is helping to revitalize the sector, spurring competition for consumer dollars. And as these high-traffic retailers open, developers clamor to create space that will benefit from the anticipated flow of new shoppers.

In the case of Trader Joe’s, its Florida expansion could be a pioneering strategy.

“It’s exciting that we do have a new choice other than Publix,” said Brian Bern, senior director of retail leasing services in Franklin Street’s Tampa office. “Other brands are paying attention. There are other specialty tenants who are watching Florida and noting there is a lack of specialty brands in Florida. They’ll be keeping an eye on Trader Joe’s growth and how it’s faring in this market.”