There’s a saying that “when one door closes, another opens.” In retail, it’s true.
If you live in South Florida, you may have noticed that some major chain stores such as Sears and Kmart leaving your neighborhood. At the same time, you could see new stores popping up, some with less familiar names such as “Aldi” and “Trulieve.”
Nationally, large stores are closing, “but there’s just as many, if not more, stores opening,” said Katy Welsh, senior director for Colliers International, a real estate and investment management company with South Florida offices.
“The general public says, ‘Oh no, another store closing!’ But we look at it as ‘thank goodness.’ Look at how much more money the shopping center is going to make with that space,” Welsh said.
Zach Winkler, retail lead in South Florida for commercial real estate services firm Jones Lang LaSalle, agrees. “People like to talk about the doom and gloom. But when I look at the numbers, it’s telling the opposite story. There are new concepts.”
Gyms, schools, urgent care centers, grocery stores, theaters, sports complexes and day care centers are leasing spaces once occupied by former Sears or other stores, according to the International Council of Shopping Centers in New York.
South Florida also is seeing different types of stores opening in strip malls. These include discount stores, smaller grocers, medical marijuana dispensaries and clinics, and fitness centers and game rooms, experts say.
Welsh said the tri-county region is attractive to retailers because of its year-round shopping and robust tourism. “Compared to the rest of the country, we have a strong market,” Welsh said.
Why certain stores are closing
South Florida residents have seen some of their local stores close as some chains filed for bankruptcy this year, including Charming Charlie, PayLess ShoeSource and Gymboree. The region also has lost some locations of major chains including Sears, Kmart, Office Depot and OfficeMax.
Winkler said that while PayLess ShoeSource stores are closing, the Sketchers brand is opening stores, such as the new store on Lincoln Road Mall in South Beach.
“There’s no doubt retail was overbuilt over the past 10 to 20 years. You combine that with the emergence of online shopping and that expedited the process of contracting the retail industry,” said James Miller, spokesman for the Florida Retail Federation.
“We’re seeing a leveling off to the right amount of stores that Florida should have,” Miller said.
There have been 7,426 store closures and 3,039 store openings nationwide so far this year — compared with 5,864 closures and 3,258 openings for all of 2018, according to Coresight Research, which specializes in retail research. U.S. store closures could reach 12,000 by the end of 2019, according to Coresight.
Coresight Research noted that stores such as Charming Charlie are “ubiquitous.” They just can’t compete with retailers including Amazon and Walmart also selling inexpensive accessories.
While the explosive growth of Amazon and online sales in general is having its impact, 90 percent of retail sales still occur in bricks-and-mortar stores, according to global management consulting firm A.T. Kearney.
Miller said Florida’s big advantage for retail is tourism. “We have a 100 million to 120 million shoppers coming in every year. Probably all of them leave with more than what they came with,” he said.
What type of new stores are opening?
Among the top retail stores expanding nationwide are: Dollar General, Dollar Tree, Family Dollar and Aldi, according to Coresight Research.
Dollar General, which has 850 stores in Palm Beach, Broward and Miami-Dade, plans to add about 975 stores through the end of the year. Angela Petkovic, a spokeswoman for Dollar General said she couldn’t say, for competitive reasons, how many of those new stores will be in South Florida.
Welsh said there also are more opportunities for smaller stores as big-box stores close or reduce space.
“When a Sears or Kmart closes, there’s a big piece of real estate,” she said. Landlords are filling those spaces with several smaller retail tenants. At the same time, many big-box stores such as Target are opening smaller stores aimed at a certain market, such as college students.
Target is opening smaller-format stores in urban areas, dense suburban neighborhoods and near college campuses, according to Liz Hancock, spokeswoman for the Minneapolis-based retail chain. Target plans to open about 30 of the smaller stores over the next few years. The smaller-format stores have a curated mix of food and beverage, apparel and accessories, health and beauty, and home décor.
In Florida, Target has opened college student-oriented stores near Florida State University in Tallahassee and the University of Florida in Gainesville. A smaller-format Target also is planned later this summer at BLVD at Lenox, a lifestyle and fitness retail development in Miami Beach, Hancock said.
Welsh said lifestyle and fitness stores are opening in strip shopping centers throughout South Florida. She is especially seeing growth in medical marijuana dispensaries and clinics, as well as hemp stores.
Trulieve and Curaleaf are among the medical marijuana stores that have been expanding. And new retailers are entering the market, including California-based cannabis company MedMen Enterprises, which in June opened a store in downtown West Palm Beach.
“Those tenants are hot right now and they’re everywhere. They’re paying good rent and landlords are very happy with them,” she said.
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