Suburban retail giants like Wal-Mart Stores Inc. and Target Corp. are so anxious to get a piece of South Florida’s rapidly growing urban markets, they are willing to stray from traditional store formats that have prospered for generations.

South Florida retail observers say Wal-Mart is certainly not alone in responding to the region’s population shift toward urban living. Knowing the prototypical big-box format simply won’t work in dense cities where rental rates and land costs are usually much higher and parking is at a premium, major retailers are getting creative.

"Retailers want to be where people are and cannot ignore what’s happening with the suburban-to-urban shift," according to Mindy McIlroy, executive vice president at Miami Beach-based Terranova Corp.

For Wal-Mart’s proposed Midtown Miami location, which has met with considerable community resistance, gone are the familiar horizontal storefront sign and expansive parking lot. Architecture firm Gensler has designed a Midtown store with glazed brick and a glass storefront, while Zyscovich Architects is designing an adjacent liner building with more than 16,000 square feet of non-Wal-Mart shopping and restaurant space.

Last month Wal-Mart Stores Inc. filed an amended Class II permit application with Miami to account for the liner building.

"We continue to engage with the community in an effort to deliver a store that will not only offer a new, affordable shopping experience for customers, but also complement the existing Midtown Miami retail corridor," Steven Restivo, senior director of community affairs at Wal-Mart, said in a statement. Restivo was unavailable for further comment.

Last September the company announced plans to spend about $350 million to expand in South Florida, with a particular emphasis on urban locations in Miami-Dade County. Wal-Mart also plans to add Neighborhood Market stores, which are typically about 40,000 square feet and compete in the discount grocery sector.

The Neighborhood Market stores could be an option in urban settings where conventional big-box formats would not work. South Florida has eight of them, including locations in Boynton Beach, Coral Springs, Hialeah and West Palm Beach.

"Wal-Mart is the 800-pound gorilla in that category and is used to getting what they want," McIlroy said. "For them to exhibit that kind of flexibility, it speaks volumes about how they feel about our urban market."


Nationally, powerhouse retailers are testing urban-concept stores in cities like Chicago, New York and San Francisco.

Target Corp. has rolled out CityTarget stores — small-format, urban stores that emphasize fresh food and apartment necessities — in several metropolitan areas outside Florida. The CityTarget stores tend to be about one-third smaller than standard Target locations.

A Target spokeswoman declined to comment on the chances of a CityTarget opening in South Florida.

It is believed to be only a matter of time until similar concepts arrive in the region, however.

"Many eyes are down here viewing the great projects in the works, Miami specifically," said Alan Esquenazi, a principal at Coral Gables-based Continental Real Estate Cos. Esquenazi represents numerous big-box retailers in their search for space in the region. He also represents landlords.

Near Brickell, developer Swire Properties Inc. is building Brickell CityCentre and planning to include 520,000 square feet of open-air shopping space. In Miami’s Design District, a partnership between Miami-based Dacra Corp. and L Real Estate Advisors, a fund for Louis Vuitton Moet Hennessy S.A., has approval to build a $312 million project that includes about 140,000 square feet of new department store space and about 400,000 square feet of renovated retail buildings.

"Suburbs across the land are over-stored, and cities are underserved," Esquenazi said. "There’s a disconnect."

Besides the population trend and saturation of suburban markets, retailers are reacting to the scarcity of prime suburban land, according to CBRE first vice president Michael Silver, a board member of the Commercial Industrial Association of South Florida.

Vacant land also is hard to find in urban areas, but there are more opportunities for infill development, Silver said. Companies are looking to redevelop or extensively renovate older urban buildings, particularly in the area between downtown Miami and Midtown.

"A handful of sites can do a development like what Stiles [Corp.] did on Biscayne Boulevard," Silver said. Stiles constructed a vertical store at 1776 Biscayne Blvd. for Publix Super Markets Inc. The store opened last spring.

Silver noted he is marketing a nearby church site at Biscayne Boulevard and Northeast 18th Street, and many retailers have expressed interest.

"If you go to Wynwood and the Design District, they are selling buildings for $300 a [square] foot," he said. "These are old, functionally obsolescent buildings that are being converted to restaurants and retail stores."

Publix Variety

As the region’s dominant grocery chain, Publix has had a significant head start in urban South Florida. National retailers with ample grocery space like Wal-Mart are trying to cut into the regional market share of Publix and Winn-Dixie Stores Inc.

Publix has three locations in the Brickell area alone, and the stores look nothing alike.

The store at 311 SW Seventh St. has a parking garage on the ground floor with the store on the second floor, while the 131 SW 13th St. store a mile away has an L-shaped surface parking lot. In between the two stores, the vertical Mary Brickell Village Publix has ground-floor pedestrian access with a parking garage on top. A 35-story apartment tower is being constructed atop that Publix.

"Publix is a perfect example of a retailer who has penetrated urban markets," Esquenazi said. "They’ve got 20,000-square-footers, when the prototype is around 45,000 square feet, all over urban Miami. Those stores all have some of the highest sales per foot" for the chain.

The company applies the same flexible real estate approach to its merchandising, relying on its intimate knowledge of the nuances of South Florida markets, McIlroy said.

"They’re our hometown retailer. … They know what works," she said. Publix has "allowed managers of stores to have more autonomy."

Competitors want to follow suit but are struggling to come up with a formula that makes economic sense.

"The challenges [include] high rent. There is no land, so they are paying a fortune for rent," Esquenazi said. "If it is a small piece of land, they still have to have a certain footprint. Parking decks are expensive to build, and oftentimes there are zoning issues."

Ultimately, McIlroy said the largest retailers are going to figure out a profitable urban store model.

"If you look at Manhattan, the big boys are playing there, with vertical retail and second-floor spaces," she said. "Now they have to take those models created for Manhattan and transfer them down here. They know how to do it."