News

By Jane Smith

The coastal South County retail market is stabilizing, say brokers who are breathing more easily after the past few years of real estate upheaval.
    Its brightest spots are Atlantic Avenue in Delray Beach, which has only a few empty stores, and Mizner Park in Boca Raton, which is nearly fully leased.
    Lord & Taylor, a department store that left the nearby Town Center mall nearly a decade ago, is expected to open this fall in the former Robb & Stucky furniture store. That store opening should energize the southern end of Mizner Park, brokers agree.
    Other relatively new tenants include the Yard House restaurant, iPic Theater and Tanzy bar and restaurant.
    Brokers expect the slowly improving economy to continue, allowing shoppers and diners to spend more freely.
    Food does really well in east Boca, said Roxanne Register, vice president of retail brokerage services for CBRE’s Boca Raton office. Other successful retailers sell fashion, jewelry and clothes.
    Mizner Park, with 236,000 square feet of retail space, is 98 percent leased, she said. Built on city-owned land with leasable retail, residential and office buildings, it requires visitors to pay for street parking.
    At Royal Palm Place, just to the south, parking is free. Restaurants dominate here, too. The plaza’s occupancy rate is between 94 and 95 percent for retail and restaurants, Register said.
    Parking is also free on East Palmetto Park Road, between the Intracoastal Waterway and the ocean. Retailers here cater to tourists and beach-goers. A new 7-Eleven convenience store sits on the north side.
    Asking rents along this street range between $25 and $40 a square foot, according to Spencer Grossman, senior commercial associate in Merin Hunter Codman’s Boca Raton office.
    “No one pays the asking rent,” Grossman said. “That would be like going into a car dealership and paying the sticker price.”
    He explained that national credit-worthy tenants, such as P.F. Chang’s, get the best deals. Next would be the regional chains, followed by local chains and then individual stores. Landlords feel more comfortable renting to chains because there is a company to go after if the one location fails, he said.
    The location in a center and the foot traffic also influence what a landlord can charge. As an example, he said, on Atlantic Avenue most tenants pay in the $50 range, but on the side streets that rent drops to the low $20s. Then, of course, the negotiating ability of the tenant’s broker plays a role. Tougher negotiators will get better deals, Grossman said.
    In Boynton Beach, the downtown area is hard to find.
    Some think the true center of the city lies on Congress Avenue, between Gateway Boulevard and Woolbright Road, because that is home to national chain stores and the Boynton Beach Mall.
    Still others think it should be east of the interstate. The Las Ventanas complex at the northwest corner of Woolbright Road and Federal Highway, with 40,000 square feet of retail on the first floor, is 45 percent occupied, according to Nicole Fontaine, retail associate at the Stiles Corp. in Fort Lauderdale.
    Parking is free there, but it is behind the stores, not out front. Despite that problematic parking situation, Fontaine thinks the area is finally coming into its own. “Las Ventanas is four miles north of Atlantic Avenue. A lot of people are getting tired of Atlantic. So we are starting to see more interest in Las Ventanas,” she said.
    Asking rents are $18 a square foot and are negotiable, she added. Tenants include Tsunami Subs & Wraps and Sweetwater Bar & Grill. She is seeking an Italian restaurant, a tanning salon, clothing store and a boutique fashion store.
    Sunshine Square, on the south side of Woolbright,  enjoys a 98-percent-leased rate. Only three spaces remain in the 140,000-square-foot center. A recently-expanded Publix grocery store is its anchor tenant, and two banks have drive-thru ATMs. The complex also has a free-standing building that contains a recently opened Panera Bread restaurant and a GNC vitamin and supplements store.
    Its secret? The center is 50 years old, but everyone from the nearby community goes there to shop at Publix, said Jami Passer, managing director over Florida properties for Edens, a retail developer and owner of community shopping centers along the East Coast.          About one mile north in Boynton Beach and to the east on Ocean Avenue sits an older center called Ocean Plaza, which is part of the Boynton Beach Marina District. It has only one vacant space; tenants include Café Frankies, Nail-Know-How salon and a Sushi Jo’s restaurant.
    Across Ocean Avenue sits Marina Village, a three-tower condo complex adjacent to the Intracoastal Waterway. Two Georges and the Banana Boat restaurants are nearby.
    The retail space is nearly sold out, said James Kwon, broker/owner at Prime Realty and Management in Boca Raton. He has 2,700 square feet of retail space left. The retail owner/tenants include Marina Bites convenience store and a hair salon, he said.
    Kwan is not picky about the new tenant — “whatever fits the bill,” — but it can’t be a restaurant because grease traps are not allowed and there isn’t enough parking. He is asking $16 a square foot for that space, plus $7 in common area expenses.
    At the Plaza del Mar shopping center in Manalapan, with 102,751 square feet, the occupancy level is about 67 percent. Crossman & Co., based in Orlando, got the center’s leasing contract last September, according to Ashley Thornburg, who recently started her own brokerage in Miami.
    The center sits in a town with a seasonal population base, affecting the type of store willing to locate in Plaza del Mar.
    “For real estate, the two biggest things that affect price are location and traffic,” she said. “We try to tell prospective tenants that the bridge closing is only temporary and once it opens next fall, it will be good again.”
    The bridge she refers to is the one that crosses the Intracoastal Waterway between Manalapan and Lantana. It closed in March 2012 while a new one is being built.
    Plaza del Mar is home to John G’s restaurant, Plaza Theatre, Evelyn & Arthur’s women’s apparel and the Ice Cream Club. But it still has a sizable empty place, about 10,000 square feet, which once housed an upscale grocer.
    “We are marketing to small markets/convenience stores or it can be subdivided for restaurants,” she said. Its asking rent is $25 a square foot.
    On the other side of the bridge, destination restaurants have survived the bridge closing. They are Old Key Lime House, Kona Bay Café, Tapas and Pizzeria Oceano.
    On the north side of Ocean Avenue, in the 200 block, the retail scene is bleak.
    “It was completely rented before the bridge closed,” said Marsha Stocker of Love Realty, run by Burt Handelsman, who owns that Ocean Avenue block.            “The bridge closing scared [almost] everyone away everyone. Now everyone is coming back.”
    She declined to reveal the asking rents, saying it varies depending on the space available from 400 to 2,500 square feet.
    When the new bridge opens in November, both Ocean Avenue and Plaza del Mar landlords should be smiling again.
    In Delray Beach, brokers, such as Register of CBRE, say that if Atlantic Crossing can start construction this year that will really make Atlantic Avenue sizzle in a few years.          The $200 million project, which will be built in two phases, still has to have its site plan approved in May. They hope to start construction in the third quarter, and then another 18 to 20 months until the first phase is done, Bill Morris, project consultant, said recently.
    “It will be a marvelous asset for the eastern half of Atlantic Avenue,” he said, “Plus the Class A office space in downtown Delray will bring high-end jobs to the downtown and increase customers for the restaurants that are already on Atlantic.”
    But it faces a lawsuit filed in early January by a group called Save Delray Beach. The group claims the city’s 3-2 approval was inconsistent with its comprehensive land use plan that calls the central business and surrounding neighborhoods to be preserved as the core of a charming village. Its attorney, Ralf Brookes, said final settlement negotiations are under way, hoping the result is a “truly exemplary traditional neighborhood design that furthers the city’s vision as a true village by the sea.”
The first phase is planned with 320 high-end apartments, 42,000 square feet of Class A office space and 45,000 square feet of upscale retail space.    Morris estimates that asking retail rates will range from $35 to $45 per square foot. He hopes tenants will be of high-quality, one level lower than those found on Worth Avenue.
    To overcome the parking challenges that come with shopping or dining on Atlantic Avenue, the Crossings will have valet parking and self-parking spaces, he said.
    After Atlantic Crossings is built, then that would “allow property owners to raise the rents,” Register predicted.