Writer: Yolanda Rivas
2 min read SEPTEMBER 2019 — At times when big retailers such as Sears, Charming Charlie’s and some malls are struggling to survive, Orlando’s retail sector continues to thrive. The city’s rapid population growth and robust economy present an ideal environment for retailers. Rather than having a negative effect on brick and mortar stores, e-commerce has had a positive impact in Orlando’s retail market, according to industry leaders who recently met with the Invest: team.
“We are seeing a blend of both online retail presence and brick and mortar, and that is a trend that we will continue to see for the next two to four years. Retail is going through an evolution, and that is not necessarily a negative thing. We will see significant changes over the next few years,” SRS Real Estate Partners Managing Partner and Market Leader for Orlando & Tampa Cindy Schooler, told Invest:.
Colliers International’s 2019 Q2 Central Florida Retail Market Report showed the area has a 5.3% vacancy rate. The report points out that Orlando’s regional growth has fueled investor demand for retail product to an all-time high. Rental rates have increased to $50 per square foot in Central Florida’s top retail corridors, while Orlando’s tertiary markets have increased in tenant demand.
“There are two specific factors to consider in terms of retail performance: the number of people moving and vacationing in the area. If those two numbers are up, then there will probably be an up retail market. In Orlando, those numbers keep going up and the retail market is doing very well. In Central Florida, we have healthy demographic growth and a big tourism industry that is making the retail sector substantially bigger,” John Crossman, CEO of Crossman & Company, told Invest: in a one-on-one interview.
Crossman explained the impact of “the halo effect,” which happens when an online retailer opens physical stores and, most times, their online sales go up. Similarly, when an online retailer closes physical stores, their online sales go down.
“When customers buy something online and return it to a physical store, they typically end up spending more money in the store. In the Orlando area, we’re not seeing people radically closing stores. We are seeing a combination between their physical and online presence,” he said.
An example of the e-commerce growth in Orlando is Kroger and Ocado’s second customer fulfillment center. Earlier this year, Kroger Co. and UK-based online grocery partner Ocado Solutions confirmed the location for a 375,000-square-foot fulfillment center in Lake County. The center will supply online customers only and its expected to create 506 jobs and add $63 million in annual economic impact.
Orlando’s tourism sector also provides a particular advantage for businesses to test new products, according to Schooler. “We are a test field in the area because of the tourist market. A lot of entrepreneurs bring concepts here and test their brands because of the diversity in the area. That allows clients to test lines that they would never be able to test in traditional retail markets,” Schooler said.
According to Colliers 2019 Q2 retail report, approximately 980,571 square feet of construction was underway by the end of the second quarter. This is the highest amount since before the Great Recession.
To learn more about our interviewees, visit:
SRS Real Estate Partners: https://srsre.com/
Crossman & Company: https://www.crossmanco.com/
Colliers International: https://www2.colliers.com/en