When retail and restaurant developers gathered this week in Orlando, perhaps no word was whispered more often or with such caution than “Millennial.”
This ultramobile and ultradigital generation of 22- to 33-year-olds are already giving fits to many retailers who are seeing them shift more of their buying online to places like Dollar Shave Club and Etsy and ModCloth. Understanding exactly why is at the top of the wish list for retail and restaurant developers lately.
“The only thing is, it’s less than clear what Millenials are thinking,” said Paul Rutledge, executive vice president of operations for the southeast division of development firm CASTO. “But it’s very exciting.”
Will they all abandon Publix and switch to Amazon.com for their groceries? Will they continue to “showroom” at stores by scanning for items, only to buy them online? Will they ever buy the traditional three-bedroom house in the suburbs and shop at the regional mall nearby?
That’s far from clear, but just the prospect is enough to already reshape some of the state’s largest and most interesting developments, and drive which retailers open where. Walgreen’s officials, for instance, say more of their new stores will look like the one just built in South Tampa on Henderson Boulevard — with everything from prescriptions and candy to fresh groceries and mini-health clinics. Discount grocer Aldi plans more sites in Florida as well, as does the upscale grocer Fresh Market — reflecting the often bipolar mindset of today’s shopper.
More new developments will be in the urban core of cities, and built as mixed use with retail, residential and office all packed into one place, just like Millennials like.
Meanwhile, some areas of the state are picking up gains faster than others, but overall, 2013 is “shaping up to be a positive year,” according to a report published this week by real estate services giant CBRE. That’s thanks to a steadily improving economy, with rising home prices, improving employment numbers and consumer confidence that’s reached where it stood before the recession.
“During the recession, people were working hard, but not making anything happen,” said John Crossman, president of the commercial real estate brokerage Crossman & Company. “Now they’re working hard, and finally making something happen.”
But anyone who’s shopped at the mall or through Amazon.com knows shopping isn’t what it was five years ago. Brick-and-mortar stores still count for more than 90 percent of all retail sales, but Internet sales are exploding, and half of sales begin when people “showroom” at stores to check out the look and feel of something before buying it online. “The challenge for retailers is to make sure that they provide the proper experience that people can’t get on the Internet,” said Ron Wheeler, CEO of the development firm Sembler, “and to make sure that they can integrate their Internet and their bricks-and-mortar sales, and vice versa.”
Personifying this are Generation Y millennials, the pack of people now 22 to 33, and they’re not only shopping like mad online, but reversing three generations of migration. Instead of moving to the suburbs like the past three generations have, Millenials are moving into the cities, often into vacant condo projects originally meant for wealthy empty nesters and urban executives. That’s hit the big-box retailers hard, and even the giants like Wal-Mart, Target, Home Depot and BestBuy are shifting to much smaller spaces.
That’s helping drive a slew of urban apartment towers in Tampa, plus neighborhood-sized redevelopment projects like The Heights along the river downtown.
Even larger, Miami is seeing a massive $1.05 billion Brickell CityCentre mixed-use development that will stretch 5 million square feet — roughly two or three times the size of a major city shopping mall — complete with 520,000 square feet of retail space and hundreds of condos, apartments and office spaces.
The catchwords remain “cautiously optimistic” in Tampa Bay. There are some interesting new projects, and lots of companies scouting locations, but there has been no all-out riot of development in the area. That’s left vacancy rates at 8.4 percent, barely up from 8.2 percent the same time last year.
In retail, this means value-focused shops are left as the fastest builders, like TJ Maxx, Marshalls, Wawa, O’Reilly Auto Parts and Rainbow USA. The rare exceptions being very high end projects like the new Life Time Fitness center going into International Plaza, or remarkably large developments like Bass Pro Shops and Top Golf in Brandon.
In restaurants, the Westshore area is a microcosm, with lots of new fast-casual places like Lime Fresh and McAlister’s, but also several high-end restaurants like Cooper’s Hawk and Eddie V’s — all opened within the 12 months.
Officials with the International Council of Shopping Centers, which organized this week’s trade show in Orlando, say direct attendance is one reflection of the growing action. More than 3,400 people showed up this year, which is 15 percent higher than last year.
Whether the current economy continues to support such new projects is yet to be seen, but the sentiment among thousands of retail officials in Orlando this week was that this year is a heck of a lot better than years before.