Jax holds retail opportunity despite a troubling 2009

Gary Montour

JACKSONVILLE - Retail businesses as a whole are hurting - like many businesses throughout the country hit by the latest recession. During the last recession in the late ’80s and early ’90s, there was tremendous overbuilding in the retail market. The current down cycle seems to be driven by people overspending, people buying assets that they never should have, and the overall backlash in the financial system from the housing market turned into an investment-oriented nightmare.

Landlords’ and landowners’ attitudes on negotiating high prices are the first major sign that many new deals can be done. In the “good times” of expansion, the attitude was, “I am not coming off my million-dollar plus outparcel prices. Sorry, no room in the high rents. Too bad the CAM charges are escalating.”

Now, in the down economy, we have found some sellers/landlords selling and leasing their properties at prices reflecting today’s market. In one deal we recently completed with O’Reilly Auto Parts, a closed barbeque restaurant was purchased for a very good price in the Regency Square area. In good times, we would never have achieved that price.

Colliers Dickinson’s Retail Team remains bullish on the commercial real estate industry - and especially the retail sector. We are currently working with several retail and restaurant groups that have moderate expansion plans and have been long-time clients. We are representing many tenants in either relocation or renegotiation of their rents with their current landlords.

We feel that although the statistics look dim and the newspapers are negative, we would like to look at the positives that the negatives afford us in this down economy.

2008 was one of my best years in a 26-year commercial real estate career. In December, Jason Ryals and I closed a $12,500,000 sale to Ramco Gershenson, a Detroit-based REIT, to purchase 174 acres to expand their 1,300,000sf River City Market Place development at Airport Road and I-95 in Jacksonville.

In October, Ryals and I closed a 110-acre land deal on Imeson Road in Jacksonville to Liberty Property Trust, which plans on building 120,000sf of warehouse/distribution space.

Last year we also sold three banks, four new hotel deals, and - believe it or not - a bowling alley to a good client who has vastly expanded revenues on this remodeled Dunn Avenue facility.

I have also completed or am working on restaurant deals with IHOP, McAllister’s Deli, What-a-Burger, Sticky Fingers, Arbys, Little Caesar’s, Pizza Hut, Taco Bell and a local Indian restaurant. We just completed a deal with Barry Adeeb to lease a 2,500sf space for a Beaches Diner in Mandarin. These entrepreneurs are very bullish on the many local restaurants they own.

In addition to the restaurant transactions, we have recently completed - or are in the process of completing - deals with drug stores, auto parts stores, dollar stores, tire stores and various other retailers. Just my team alone has leased several retail, office and warehouse facilities for clients, and that activity is picking up.

JD Castle Company is building three new Food Lion stores in Jacksonville, Lake City and St. Augustine. Publix developers have put contracts in on several properties in North Florida. Walgreens and CVS continue their efforts to expand their brand name on prime locations.

On March 17 during the First Coast Real Estate Economic Outlook Conference in Jacksonville’s Prime Osborn Convention Center, I will moderate a retail breakout session titled “Retail X’s and O’s Under Current Market Conditions.” Our panel will include eight to 10 speakers who will each take a few minutes to say how their businesses have been impacted and how we as brokers, bankers and developers can help them expand their current business models.

Some of the retail real estate representatives include:

- Ian Allen - IHOP restaurants.

- Barry and Joe Adeeb - Bono’s and Beach Diner restaurants.

- Mike Tomko - Community First Credit Union.

- Ben Hakimian - Hakimian Holding, a local shopping center developer.

- Randall Whitfield - Ash Properties, a local shopping center developer.

- John Kiddy - Sleiman Enterprises, a local shopping center developer.

- Drew Margol - Equity One, a developer and tenant representative broker for big box tenants like TJMaxx and Staples.

- Richard Rosenblum - Rosemblum’s, a local upper-end men’s and women’s clothing store.

We are hopeful that the exchange of ideas will provide an impetus for the attendees to follow the speakers’ leads on helping expand businesses and continuing to maintain a steady flow of transactions in this down market.

Yes, 2009 will be a challenging year, but I tell my team that a down economy means great deals for our tenant representation customers. Motivated sellers mean you can do now what you couldn’t before in good times.

Okay, fellow brokers - stop complaining about the economy and do some deals!

Gary M. Montour, Ed.D., is a senior vice president for Colliers Dickinson in Jacksonville and leader of the Team Montour retail team.