While Amazonian e-commerce options loom large, a pair of brokers finds success in experiential retail real estate. It helps to have a contained location.
Online shopping may be convenient. But it doesn’t seem to be totally scratching the itch many have when it comes to shopping. The latest pocket of proof comes in a mini-retail leasing boom in Babcock Ranch.
“People realized when they were locked in their houses for a while (they) still want a tangible experience,” says Eric Spritz, a vice president with Katz & Associates.
Katz & Associates, a boutique retail real estate brokerage and advisory firm with offices from New York to Boca Raton, is handling the commercial leasing — nearly 6 million square feet of space — for the solar-powered community of Babcock Ranch, which straddles Lee and Charlotte counties, northeast of Fort Myers off Babcock Ranch Road/State Road 31. Spritz and Jon Cashion, a principal at Katz, have been responsible for bringing tenants to Crescent B Commons, a 83,487-square-foot Publix-anchored shopping center in Babcock Ranch completed last fall. (The Crescent B name is a throwback to Crescent B Ranch, the name of the overall 91,000-acre site from the late 1800s through 1914, when Pittsburgh lumber magnate and politician Edward Babcock purchased it.)
The newest Crescent B tenants at the center are Heartland Dental, Great Clips and Pet Supermarket. And with the center nearly 100% leased, Cashion and Spritz have turned their attention to The Shoppes of Yellow Pine, a center in the community that will provide 130,000 square feet of retail space.
They’re sifting through leases and letters of intent that provide plans for multiple drive-thru positions, free-standing lakefront restaurants, box and outparcel opportunities and more. The Shoppes are expected to be complete at the end of next year.
The duo has had their fair share of challenges getting to this point. One is getting tenants to have a deeper understanding of what Babcock Ranch is all about. As a broker, for example, when Cashion is interested in an opportunity he throws the address into Google Maps or Google Earth to virtually take a look around. Right now, there’s not a whole lot to see at Babcock Ranch.
“It’s almost like they just miss it right away just cause they look at it and can’t quite understand it,” he says. “We just have to get them there.”
This happened recently while making a deal with a national coffee chain franchise. Once the corporate team visited and to tour and approve the site, the aspects and features of Babcock Ranch made them change their mind. Instead, it’s going to be a corporate store. Now, that lease is close to being signed.
Many retailers coming to Cashion and Spritz are from out of town, that’s why they will look up the property first. “They have to do their research a little more,” Spritz says, “because the real estate manager might be based halfway around the country.”
Part of the reason there’s a sudden surge in retail leasing is word travels. After Publix opened at Crescent B Commons a year ago, more businesses followed. “A lot of people don’t want to be the first person at the party,” Spritz says, “but once they see that the party’s awesome everyone starts piling in.”
Another factor in the leasing success? Spritz points to the fact that many retailers with an online presence are moving backward. Those companies are finding that brick and mortar has some advantages after all — both in a post-pandemic world and for customers who seek touch-and-feel based experiences.
“Most retailers use e-commerce as a supplement for their brick and mortar,” he says, pointing to Amazon, which announced a brick and mortar strategy in recent years, as an example.
Real estate giant JLL backs up this notion of a retail leasing surge, in a new report that shows over 250 million square feet of nationwide retail space has been signed in the last 12 months. JLL also estimates the final second-quarter 2022 leasing number will be at 78 million square feet — the highest since 2017.
“This is all Jon and I do,” Spritz says of the surge. “We can tell you that it’s alive and well.”
Especially at Babcock Ranch, which Spritz says has a bit of an advantage.
“I would argue that the fact that this is a more connected community than most, people are more willing to support local business,” he says. “I think the types of tenants that are open and operating (are) daily needs tenants. They’re the types of businesses that you’re not going to be able to get the product online or service online, at least not in an expeditious manner.”
Currently the types of tenants interested in settling in at Babcock Ranch have shifted from the initial interest. Now, Cashion and Spritz are seeing more food-related and entertainment type tenants because the density and population has been rising.
That contained density of Babcock Ranch is another advantage, Cashion believes. “I think the retailers in a setting like this actually have a better chance of succeeding versus being outside of it because you have the immediate customer base,” he says.
The developer of Babcock Ranch, billed as America’s first solar powered town, is Palm Beach Gardens-based Kitson & Partners. In addition to the commercial space, parks, schools and more, there are also 19,500 residences planned. The solar side, the company says on its website, includes an 870-acre solar farm, solar tree charging stations and the country’s largest solar-plus-battery storage system.
Plans for Babcock Ranch date back to the early 2000s, and Kitson & Partners, run by former NFL football player Syd Kitson, acquired the land in 2006. Site work and construction began in 2015, the community began marketing new homes in 2017 and the first residents moved into the town in January 2018. With strong sales boosted partially by the hot real estate market and Florida's population boom, Babcock Ranch has since made several national lists of top sales for master-planned communities.
“We’re just in the first inning,” Spritz says. “It’s a long-term project. There’s a lot more to be done and there’s demand for it.”