CREW Miami Luncheon Program, November 9, 2017
MODERATOR: Ana Barcelo, First VP, Retail, CBRE
PANELISTS: Oscar Rodriguez, Jr., Principal and Development Manager, Arena Capital Holding/RxR Capital Holdings; Francesca Madeo Valdes, Business Development Specialist, City of Coral Gables; Zach Winkler, Senior VP—Retail Lead South Florida, JLL; Philip Wyllie, Leasing Agent, The Graham Companies
The rise of e-commerce has changed the retail market place, but panelists confirmed that the demand for in-person retail experiences remains strong. They see South Florida as a “live, work, play, shop, eat” kind of place where even shoppers who favor upscale designer stores will take also advantage of a nearby Target or Walmart. That’s why price-conscious retail giants are adding stores with smaller footprints in urban cores, and adapting further by offering in-store pick-up for online shoppers. Landlords are welcoming service-oriented tenants such as gyms, casual restaurants, and banks into settings once dominated by traditional retailers, as malls focus on providing experiences that online shopping cannot deliver. Some are testing shared-space leases as a way to harness trendy retail concepts and the social media coverage these can generate.
Moderator Ana Barcelo opened by asking Francesca Madeo Valdes what kinds of tenants Coral Gables would like to add to its newly-improved streetscapes along Miracle Mile and Giralda Plaza. “Fashion, accessories, and chef-driven restaurants,” replied Valdes, adding that destination retail and new brands coming in are driving the market with innovative combinations of products. “We focus on asking customers what they want to see, rather than dictating what they should want.” The City of Coral Gables confirmed its support of retail property owners by hiring Valdes, who serves as an intermediary between landlords and real estate brokers, in addition to recruiting businesses. The City’s goal is to make all tenants stronger, and she helps newcomers get their spaces open by helping them interface with the permitting and planning and zoning departments.
Valdes noted that Coral Gables’ long history gives it a strong competitive edge in Miami-Dade County. “We are a true residential community with an established office community. New residents who patronize our downtown are in the $100,000-a-year average income bracket.” Coral Gables addresses today’s parking challenges by operating multiple parking garages just a half-block off Miracle Mile. These are served by little Freebie cars, summoned via smartphone, that drive visitors–at no charge–from the parking to their destination restaurants, theaters, and shops. An established free trolley service also circulates throughout Coral Gables, and now goes all the way to Coconut Grove and Brickell.
Asked what sets Miami Lakes apart, its native son Philip Wyllie said, “We are a pioneer in live-work-play community. We want anchor restaurants to create a favorable environment for a good overall experience.” The Graham Companies’ portfolio, which includes Miami Lakes Town Center, is now 50 years old. Although land is becoming scarce in the retail center, hundreds of residential units are being added there. Wyllie is not involved in leasing the retail component of Triple Five’s 195-acre American Dream mall and theme park, now in the final planning stages adjacent to Miami Lakes. He projects that the proposed Disney World-type project—with its planned submarine and ski slope–will create a vibrant experience in which retail will function. Wyllie expressed confidence that the profits of Miami Lakes retailers and service-oriented tenants will not suffer from American Dream’s presence, nor will the project affect the town’s local traffic.
Oscar Rodriguez affirmed that retail is very healthy, but it is a moving target that requires constant reinvention. He noted that strong internet businesses like Amazon and Bonobos are opening brick-and-mortar stores. “Amazon’s ability to dominate retail is limited because consumers can neither smell the fresh fruit they want to buy nor get their hair cut online.” His company specializes in properties that cater to mass market retailers like Target, Ross Dress for Less, and Marshalls, noting that 99 percent of service workers buy at those stores rather than from Amazon. “Shoppers who want discounts make up the largest pool of consumers, demonstrated the fact that the world’s richest retail businesses–Zara, H&M, Walmart—sell at low prices. The recession made buyers price-conscious; population shifts also affect retailers.” Rodriguez believes that restaurant, gyms, and lower price retailers will continue to prosper, and he ensures that by catering to his tenants’ needs daily to make sure they can succeed.
Barcelo asked whether international shoppers are influencing the Miami market. “International visitors spend average $265 per person per day here, and this is good for all South Florida businesses,” replied Zack Winkler. Asked what happens when big-box retailers close, he said that mall redevelopment is less viable than simply changing the tenant mix. “Malls can get more rent from multiple smaller retailers, so they are glad to see a Sears leave. Diversification is better for a mall because brick-and-mortar combinations continue to draw traffic. The future of retail is all about the experience.” When it comes to evaluating potential tenants, Winkler said, ”It’s a bet you have to make. We want all our retailers to succeed because their success contributes to our getting top dollar in rent.” As for restaurants in particular, he acknowledged that those are notoriously fluid businesses. For them, he believes that concept and execution are more important to their success than location or real estate.
—Susan Cumins, CREW Miami member since 1998