Florida retail real estate braced for extended slump

KISSIMMEE — Retail real estate follows residential trends, so Florida shopping center developers fear a spreading credit crunch will turn their current headache into a hangover.

"It's going to get worse before it gets better," said Robert Smith, senior vice president of Weingarten Realty Trust, a Houston developer planning to rebuild the old Crossroads Mall in Largo as a mixed-use project. "The days of just building a center and waiting for the market to catch up to fill it up are gone."

With more store closings and retail bankruptcies forecast for 2009, a glum group gathered here Monday for the annual International Council of Shopping Centers Florida dealmaking session. One speaker even suggested the savvy should work on their golf game until the market gets healthy in 18 months.

This isn't prime time for building more centers except in old neighborhoods poised for a comeback or spots with government incentives.

Most national retailers are scaling back growth plans again for 2009. The retail vacancy rate in the Tampa Bay area is expected to inch up a few more percentage points to as high as 8 or 9 percent, approaching the worst of the overbuilt early 1990s. Rents are declining — in some cases 5 to 10 percent — as landlords struggle to keep storefronts from going dark.

Developers love to sell their projects to investors so they can move on. But that's not happening in Florida, where a witch's brew of a slumping economy, rising ranks of jobless and escalating retail vacancies have caused sales of shopping centers to plunge 90 percent this year, far worse than a 62 percent drop nationwide.

Against that backdrop comes tighter lending terms while the government bails the banks out of the subprime loan mess.

"There is money to borrow if you are willing pay the price and put up 10 to 35 percent," said Raul Valdez-Fauli, chief executive of CNL Bank in Coral Gables. "This credit crunch is for real."

Stanley Tate, a Miami developer who left the board of Fannie Mae two years ago and chaired the advisory board of the Resolution Trust Corp. cleaning up the excesses of real estate lending in the 1990s, added ominously that developers face an easy-money, subprime loan crisis of their own:

"The residential market has not bottomed out yet, but $1.4-trillion in distressed loans will start to hit the commercial real estate market next year," he said.

For a few, growth ahead

Some retailers, like fast-growing grocers Aldi and Publix Super Markets, are spotting opportunity in others' troubles.

Discount cosmetics superstore Ulta, which has a store in the works for Wesley Chapel, plans to add 75 stores to its 283 in 2009. Rue 21, a teen fashion chain, plans to add 100 stores to its 300. Startup Winter Garden wine-tasting shop Put a Cork in It plans six to 10 new locations, including one in the Shops at Wiregrass in Pasco County.

Fast-casual dining chains are also on the move for 2009. Fort Pierce-based Hurricane Grill and Wings, which offers wings in 37 marinades, plans 30 Florida stores to its current 8. And Five Guys Burgers and Fries expects to more than double its Tampa Bay presence of six, while adding 175 stores to reach 315 nationally.

"For a family of four that doesn't want to spend $40 at a casual-dining chain, we'll feed them for less than $20," said Greg deCelle, chief development officer.

Mark Albright, Times staff writer

Comments on this article

by Candy	Aug 21, 2008 9:13 AM
Chris, How about almost a dozen nasty unethical Realtors in Western Florida ? Have they spoiled the bag they sit in, or the whole bag of Realtors ? That group makes a business from intimidation,untruths and various threats if deemed necessary.

by Deborah Edney	Aug 21, 2008 9:12 AM
I am amazed at what the SPT will and will not PRINT!! HOW CAN by Chis, 10 lines be printed? FOLLOW GL FOR OTHER ARTICULES AND SPT WON'T PRINT! Mention BERNIE MCCABE and the out of control CORRUPTION and SPT'S won't print it, I wonder WHY?????????????

by Joe Schmo	Aug 21, 2008 9:11 AM
You guys crack me up! Blame the realtors... Blame the lenders... Why aren't you blaming the idiots that signed the papers??? The documents stated what their terms were - period.

by Mrs. Doubtfire	Aug 21, 2008 9:11 AM
Jay's comment is peculiar. What's burgers and fries have to do with this story ? Please, find the correct article to comment on. The fall of Florida's Real Estate Market's the topic, all the fault of Realtors,Brokers,Lenders and inflated appraisals.

by Dawn	Aug 21, 2008 9:11 AM
If Chris the Realtor is sincere, other Realtors did damage the credibilty of his Profession and any other Realtor who abides by the "Realtors Code of Ethics."

by Noot	Aug 21, 2008 9:11 AM
I'd rather just bash realtors. You know why? Cuz they suck & this is America!

by Jay	Aug 20, 2008 4:21 PM
Five guys a family of four for $20??? It was $12 for just a burger, fries and drink just for myself.

by Chris

Aug 20, 2008 12:01 PM

I see a lot of mixed opinions. I am a realtor and proud of it! I have helped many customers primarily by educating them. I even got my mortgage broker license so I could assist my buyers and sellers with the process they would have to go through. I didn?t make the prices increase and believe me I ran into my fair share of bad realtors. However, one bad apple doesn?t make the whole bag bad. Realtor bashing is uncalled for. Why not look on the positive side of things and how we collectively as a team of Florida residents that care can make it better. Vote, volunteer, do your part and help out when asked. Lying on the couch crying will not make life better. Dishonesty is all around us, not only in the TV news, newspapers, magazines, but also on the internet. Teach yourself what is real. Read learn and think outside of the box and step up to the plate to make a difference.

by Keith	Aug 20, 2008 11:53 AM
To Fl Realtor: Point well taken. But the Realtors who knowingly worked with unlicensed lenders, and Realtors who posed as Lenders have some explaining to do.

by FL REALTOR	Aug 20, 2008 11:05 AM
THE BANKS ARE THE PROBLEM.THEY ARE NASTY.THE GOV'T NEEDS TO KNOW THEY ARE NOT HELPING THE CUSTOMERS. I AM A REALTOR AND A CUSTOMER AND THEY TREAT ME LIKE CRAP. THEIR ATTITUDE STINKS. THEY REFUSED MY PARTIAL PAYMENT & RUSHED THE FILE TO THE LAWYER

by Dawn	Aug 20, 2008 11:05 AM
Realtor, not all Realtors are unethical.One thing is for sure,Aclu in more than one State says any Realtor or group of Realtors acting out the way those do in Western Florida are without "ethics." and worse. ACLU.org, Truth.org

by Dorothy	Aug 20, 2008 10:01 AM
Please, please bring an Aldi's a bit further north of Tampa. They are the greatest. Save mega bucks on groceries. There are many in NYS and we save big $$ on groceries when we are up there in the summer. So, bring on Aldi's, you'll love em.

by Linda	Aug 20, 2008 9:59 AM
The brokers were "creative" and will continue to be out of unharnessed greed; regulators looking the other way all the while checking their own pockets. Everyone likes a good deal but greed, dishonesty need to tip their hats to the mess.

by Linda	Aug 20, 2008 9:59 AM
Its amazing now that during their high points, the "celebrated" realtors are very quiet now-hoping to rent out their properties they couldn't afford in the first place. Not to mention the ones who "left" the area.

by JT	Aug 20, 2008 9:58 AM
Of course people are not responsible for their actions unless they are rich. Why are all these people moving to Florida? If developers did not build people would be screaming about the homeless. Close off the border, no more sunshine for you yanks!

by fl realtor	Aug 20, 2008 9:58 AM
To Keith: The honest realtors are broke... Because of the lying buyers now honest folks can't get loans... my last contract for under 135k died and my buyer had over 6 figures in income... you ought to see the crappy requirements from the mtg comp.

by Keith	Aug 19, 2008 8:09 PM
Realtors, many of them, are similar to used car dealers. Dishonest.Is that clear enough for you,Realtor ? ethics? non existant!

by Keith	Aug 19, 2008 8:08 PM
Not sure which Board the "Realtor" belongs to, but as many as 18 "Realtors" on one of West Florida's Boards are downright nasty.They missed # 1,2,3 in ethics. Don't ask a logical question of them, you may be threatened,in writing.

by Realtor	Aug 19, 2008 5:57 PM
To all You Realtor bashers, Listen Up!all of you who LIED about your incomes (example, You make 30K and bought a home @ 300K) You're the problem,supply in demand, you lied and the brokers got creative, for you......

by keith	Aug 19, 2008 5:38 PM
In some scenarios the Realtors are affiliated with the lenders, but cozily leave that important detail out.

by Brad	Aug 19, 2008 4:41 PM
Realtors did not cause the problem... The mortgage lenders are the real problem. You can't sell a house if the bank doesn't give them the loan. Keith, You believe everything you read?

by Joey	Aug 19, 2008 4:41 PM
GREED on the part of realtors, speculators and banks, not to mention TAX assessors, Municipalities and politicians at ALL levels. We are like sheep taking it all passively. We deserve what we get for keeping quiet and putting up with it.

by Ann	Aug 19, 2008 4:24 PM
Patty is right on, fight this head on, proactively. Give visitors and residents reasons to come here, property taxes, incentives etc. all work to make FLA attractive amidst all others.Get your heads our of the sand politicans we need $ our pockets.

by keith	Aug 19, 2008 1:32 PM
The numerous boards of Realtors created the problems in Florida, along with their shady connections to questinable brokers and lenders.

by Patty	Aug 19, 2008 1:22 PM
Bring people to the state by fixing tax and insurance problems....now they're moving out or going just not coming....they have plenty of other choices. Give them a reason to come - and shop, etc.

by Bob	Aug 19, 2008 10:25 AM
Wait a second, there is a person who's blog name is K on (un)realstate blog and K says everything is fine in realestate, but now we are seeing the other shoe drop. I think the public is being mislead by the realtors such as K. Buy now, lose money!

by Murf	Aug 19, 2008 9:19 AM
Hard to feel sorry for developers after decades of unmanaged over-development has turned Florida into a crowded quaqmire of concrete and condos.