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For more than 20 years, book buyers in Tampa flocked to a Barnes & Noble location on Dale Mabry Highway and Kennedy Boulevard.
It was the kind of big bookstore the chain’s shoppers had grown accustomed to over the years. Shelves of books spread out in a space that seemed big enough to house a grocery store. There was a coffee shop. Plush chairs to lounge in, tables to chat at.
That store closed in late February. In its place, the bookseller opened a new store a couple of miles away. This one was smaller, fitting into a former Pier 1 location, and more intimate. The colors were lighter and, this may seem like a strange word to use when discussing a bookstore, browsing and buying books was streamlined.
What happened at that single Barnes & Noble in Tampa is indicative of what is happening with retail along the West Coast of Florida and the rest of the state. The vast number of people pouring into Florida is fueling growth as more retailers, both familiar and new, open stores, relocate rather than close or expand. At the same time, many retailers are adjusting to changes in buying habits by going with smaller spaces that satisfy traditional shoppers while servicing those adopting new ways of buying.
Coffee shops are adding more drive-thrus. To create efficiencies, fast food restaurants are creating separate prep lines for those dining in and for mobile orders. Clothing and electronic merchants are taking smaller spaces with the idea of doing more with less.
What this is doing, whether a retailer is selling books or roller skates, serving steak dinners or grouper bites, is creating choices for consumers as well as dispelling the notion that brick and mortar is a relic. It is both fulfilling the need to service an ever-growing number of customers while keeping costs down and addressing the realities of the new marketplace.
And in many ways because of the population growth, Florida is the epicenter of this new — yet still wholly traditional — approach to retail.
“Before (Barnes & Noble CEO) James Daunt took over in 2019 much of what was on display was corporate driven and you’d see the same things from store to store,” says Janine Flanigan, the chain’s director of store planning and design. “He gave the book curation back to the booksellers and allowed them to create their own displays. Really interesting displays and curated selections. If you have an interesting shop people will keep coming. Every community needs a great bookshop and that’s what we are delivering.”
In late 2022 the commercial real estate information website Crexi released a study that showed Florida had four of the top 10 cities in the nation to buy retail property in.
South Florida — West Palm Beach, Fort Lauderdale and Miami — had three of the cities, while Tampa/St. Petersburg was the fourth.
The factor that led Tampa Bay to be ranked among the top cities for retail are mostly the same ones powering the industry all along the Gulf Coast. The catalyst?More people.
According to the Florida Chamber of Commerce, 1,000 people per day are moving to the state. While this growth is blamed for rising housing prices and rents, it is also creating consumer demand.
This is especially true in areas that not too long ago were rural. With new housing coming online or in the approval process, these areas are facing an increased need for retail, from grocery stores to nail salons and everything in between.
Babcock Ranch is a good example of this dynamic. Developers of the 18,000-acre, solar-powered planned community on ranchland in Charlotte and Lee counties knew that to really create a home for residents it had to have places for them to shop.
Following that strategy, a Publix-anchored strip mall opened last year with a nail salon, pack and ship store and dog groomer along with a pizza restaurant and a Mexican grill. And there are plans to add a 120,000-square-foot mixed-use retail and commercial center to be called the Shoppes at Yellow Pine. Construction is also underway on a freestanding Pet Supermarket and Starbucks with a drive-thru.
“We need to make sure that we have all the retail and commercial uses here for everybody,” says Syd Kitson, chairman and CEO of Kitson & Partners, company behind the development.
Babcock Ranch is far from alone. From Pasco County down south to Collier County new developments naturally need retailers to service growing population centers.
And while new fast food chains and national chains get attention, the fastest growing retail segment in the state remains grocery stores.
According to JLL’s 2023 Spring Retail Report, Publix and ALDI ended 2022 with a mass expansion across the state.
Aldi has plans to open 20 stores in Florida this year, including in Bradenton and Lakeland, and Publix is on track with to open numerous stores. Kroger is also making headway, but it’s doing it without opening a single store. It's relying on delivery from merchandise at a Bartow facility. Even Winn-Dixie is getting in the game with two new stores in Florida. (At the same time Winn-Dixie recently announced it is closing a story in east Manatee County.)
But with all the positive retail news there are some warning signs.
The JLL report finds that across the Gulf Coast the rapid growth of retailers and the limited amount of space is causing rents to rise, and that may soon mean that retail will peak.
The Naples market, the report says, is near its peak and while occupancy was slightly down through 2022, demand continues to push rents higher. The Fort Myers’ market is not much different, with rents up 2.4% and occupancy at 95.9%. In the Sarasota market, rents are up 2.6% and occupancy is up 0.8% to 96.7%.
As for Tampa and St. Petersburg, the darlings of the Crexi report, “all-time record inventories are pushing up rental rates. The result will be fewer deals getting done at higher-than-ever rental rates.”
Other headwinds that could affect retail growth are more macro in nature, with higher interest rates slowing spending and causing retailers to slow down expansion.
Justin Thibaut, CEO of Fort Myers commercial real estate market LSI Cos., calls today’s retail market, with uncertainty in the banking industry and the financial world, a gambling venture, a “spin of the wheel, a roll of the dice… as we wait to see how the financial world shakes out.”
“In 2022, consumer spending was the highest we've ever seen during the holiday season. On the other hand, credit card debt hit national all-time highs as well,” he says. “The retail sector had been a solid bet in the real estate world, but it's beginning to show signs of more risk and more debt. And now, with interest rates skyrocketing, what does that mean?”
In the present, though, it is undeniable that the number of retailers, especially restaurant chains, that have entered Florida in the past couple of years is impressive.
Lee alone will get a Cheesecake Factory, Cooper’s Hawk Winery & Restaurant and a Capital Grille in the coming months. In Collier, 75 restaurants entered the county in 2022, according to LSI Cos. data. Pinellas got one of the chain's first Raising Cane’s and the popular Noodle & Co. is looking for franchisees to open up to 30 new locations in the Tampa and Sarasota markets. And 16 Handles, a New York self-serve yogurt shop, is opening in Englewood and Naples, according to the International Council of Shopping Centers.
As for more traditional retailers, a Barnes & Noble in Estero is closing and moving into a smaller location like the Tampa store did. And a Guitar Center opened in the Gateway Shoppes in Naples earlier this year while T.J. Maxx’s newest concept, HomeSense, opened in Sarasota late last year.
In some cases, companies are following their customers from up north to Florida. That’s what happened with Kelly’s Roast Beef, a Boston institution that recently opened in east Manatee County, with plans for nine more eateries in the region over two years.
Jeffrey Dervech, president of Dervech Real Estate, a commercial firm in Tampa specializing in retail, sees the wellness sector doing well in Florida along with fast casual dining, coffee shops and fitness, both gyms and boutique fitness concepts.
The one commonality, he says, is the retailers who are expanding are in large part taking smaller spaces where they can get established and grow with less overhead. And that is good for shopping center owners as well as chains looking to get a foothold in Florida.
Where in the past, a retailer may have wanted 20,000 square feet, the center can now lease that to four merchants looking for 5,000 square feet. That makes a center more dynamic which helps both landlords and the retailers.
“They're all working to become more efficient with spaces they have in the markets that they're in,” he says of retailers.
“It creates a better customer experience, right? If you have a big store, everyone's wandering around and it's hard. You want to have nice, well curated, merchandising aisles and lighting. You want it to feel good when that customer comes in.”
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