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In west Pasco, U.S. 19 becoming a retail ghost town

One recent Friday night, Commissioner Ann Hildebrand and some friends arrived for dinner at the Chili's in Trinity.

The line for a table was out the door, so they drove to nearby Pappa's Ranch restaurant. Packed. So was Trinity's Grille 54 and the Outback Steakhouse.

Almost felt like boom times.

But less than 10 miles west, it's a different scene.

"You go up and down U.S. 19," she said, "and that isn't the case."

U.S. 19, often dubbed west Pasco's Main Street, is struggling amid the recession, the buildout in other parts of the county and the changing demographics of nearby neighborhoods.

This weekend marks a dismal business-related milestone for the corridor: Target closed its doors after 18 years on the strip, leaving another gaping hole in a shopping center prominently located near Gulf View Square mall. It was one of only four Targets in the country to close.

Target joins a list of recently departed big names from U.S. 19: Linens 'N Things and Circuit City (both of which went out of business nationwide), Gap Outlet, Old Navy and Outback Steakhouse.

By no means is the area alone. Tampa Bay wide, landlords are dealing with the highest retail vacancy rates in a decade.

Last quarter, the region's retail real estate market hit a 9.6 percent vacancy rate. In Pasco County that rate was 11.8 percent, according to a report from real estate firm Colliers Arnold.

But in Pasco, the problem is even more pronounced along U.S. 19.

Around 15.4 percent of retail space was vacant at the larger multitenant shopping centers on U.S. 19 in Pasco last quarter, according to Colliers Arnold.

That translates into roughly 689,000 square feet of empty space along that corridor, the report says.

By contrast, back in late 2005, the retail vacancy rate on Pasco's stretch of U.S. 19 was only 6 percent, or around 275,000 square feet.

A lot of the strip's problems are tied up in its history. Many of the older strip malls developed in the 1960s as small centers that gave retirees a nearby place to pick up their medicine, dry cleaning and groceries, Hildebrand pointed out.

But the market shifted as the makeup of the neighborhoods changed from retirees to working families. Some of the malls, such as Embassy Crossing and Southgate, were redeveloped. But many others have not aged well.

"How do we reinvent these small shopping centers that aren't as vibrant as they once were?" she asked.

And some of the property owners say they have no reason to do so. Mehrdad Moshtagh, a property manager from Clearwater, for instance, represents two brothers who bought an old mall in Holiday, on the east side of U.S. 19 near Flora Avenue.

A few years after buying it, the brothers had talked about relocating their software company there, but decided the expense outweighed the benefits, he said. A couple of years later, Lowe's expressed some interest, but that idea, too, faded.

In the meantime, the mall is one of the more run-down centers on the strip. But Moshtagh said the owners are waiting for the economy to swing back and bring a potential buyer who could redevelop the site.

"Why should I go invest the cost to knock it down?" he said. "I think it benefits whoever the developer is to come in and do it themselves. For us, it would be a total loss."

So that mall sits, as does the old Service Merchandise building in Port Richey, vacant for years and now an attraction for graffiti artists.

A representative for a New York real estate company that has a ground lease on the property said it has signed a lease with Ashley Furniture to locate there.

Ashley Furniture did not return a phone call seeking information about its plans.

Little surprise that it's getting cheaper to rent space. Asking rental rates on U.S. 19 in Pasco are down, from a high of $12.88 per square foot in late 2007 to $10.74 last quarter, according to Colliers Arnold.

(Even the latest number is likely lower since landlords have been negotiating rates as much as 20 percent below asking price, the firm says.)

But longtime west Pasco real estate agent Greg Armstrong said some malls may be empty simply because owners can't reduce rental rates; they have bank loans that establish a certain rental income.

Armstrong said shopping patterns have changed so much — people are headed east to do their shopping, rather than to U.S. 19 — that he isn't sure what to make of the corridor's retail future.

He said he thinks the hardest place for retailers is on the west side of the highway, and said he wondered if buildings on that side would be best suited for employment.

The U.S. 19 corridor is targeted for infill and redevelopment under a new county marketing plan that divides Pasco up into market areas. But county officials have not invested in a redevelopment plan that would lay out a specific vision for the corridor.

The big push at some point will be giving developers financial incentives, and more density rights, to rebuild the stressed area, officials say.

"(U.S.) 19 is going to be tough to develop without a lot of economic incentives," said County Administrator John Gallagher.

Hildebrand, whose district includes portions of the corridor, said she doesn't get a lot of complaints about it. But as someone who lives nearby, she wants to see improvements.

"It's all been conversation," said Hildebrand. "We need to get cranking up."

Jodie Tillman can be reached at [email protected] or (727) 869-6247.

By the numbers

Fourth-quarter retail vacancy rates for U.S. 19 corridor in Pasco.

Year Percentage
2005 6.1%
2006 8.5%
2007 9.4%
2008 13.5%
2009 15.4%

Source: Real estate firm Colliers Arnold

In west Pasco, U.S. 19 becoming a retail ghost town 01/30/10 [Last modified: Saturday, January 30, 2010 3:11pm]
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