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Market Overview C ENTRA L FL O R I D A

RETAIL

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FIRST QUARTER

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2010

www.colliersarnold.com


COLLIERS ARNOLD

|

CENTRAL FLORIDA

Insights on the Market RETAIL

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FIRST QUARTER

|

2010

Stable Vacancy and Expanding Retailers, Finally

MARKET INDICATORS CENTRAL FLORIDA INVENTORY 73,485,549 s.f. Q1 Q2* OVERALL VACANCY 10.3% ABSORPTION (44,584) s.f. CONSTRUCTION 117,449 s.f. NEW SUPPLY 0 s.f. AVG. DIRECT ASKING LEASE RATE, st 1 GENERATION SPACE $19.51 AVG. DIRECT ASKING LEASE RATE, nd 2 GENERATION SPACE $16.94

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The 2009 year was arguably one of the most challenging years for the retail industry. The economy was put to the test, banks were failing like never before and consumers pulled back the reins on spending causing well-known retailers to disappear. However, as the first quarter of 2010 began, retailers and landlords began to adapt and realign their focus to meet evolving consumer needs and challenges. Some have changed their business models while others are expanding current product lines to compete for increased market share. Regardless, the shift is bringing new hope that the new normal may present fresh opportunities. Retail vacancy, currently at 10.3 percent in Central Florida, has stabilized over the past three quarters; construction activity is minimal, 117,449 square feet, allowing current supply to be absorbed; and rental rates currently averaging $17.79 per square foot triple net, are leveling in some submarkets such as East Orange and Oviedo/Winter Springs. Retailers continue to expand, landlords grateful. With many landlords facing record vacancy levels within their centers, the announcement of an expanding retailer is music to their ears. Well known 7-Eleven, with over 160 stores across Central Florida, plans to open or convert approximately 45 stores by 2012. Dollar General, Dollar Tree and Family Dollar continue to focus on the economic recessionary opportunity to cater to budget-conscious consumers. The dollar store segment plans to open approximately 1,500 stores nationwide over the course of 2010. Discount retailers now have the ability to occupy space within sought after areas due to discounted rental rates. Walgreens and Target recently announced plans to adapt their business models and significantly expand into the grocery segment throughout 2010 and into the coming years. Other retailers are experimenting with “pop-up” stores that occupy small spaces for short term periods to capture a niche within a submarket. The end-result of these new concepts is a new retail market traveling in uncharted waters. Regardless of the success or failure of these concepts, the activity will garner consistent positive absorption and activity over the coming year.

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*Projected, relative to prior period Note: Directional arrows compare current quarter to previous quarter historically adjusted figures.

Central Florida businesses doing what they can to lower the local unemployment. During the month of February, all Central Florida counties, Orange, Osceola, Seminole and Lake Counties, experienced either stable or declining unemployment rates as compared to the previous month. After shedding off the seasonal jobs, the retail industry in Florida added approximately 3,000 jobs in the month of February. Over the past year, education and health services were the only industry segments to experience positive growth of 1,700 jobs with the construction industry eliminating 3,300 jobs during the same time period. The state of Florida felt a slight increase of 0.2 percent while the national jobs market saw a decline of 0.2 percent to 10.4 percent. As unemployment stabilizes and begins to retreat, consumer confidence will slowly return generating higher revenues for retailers and ultimately paving the way for future expansion. CENTRAL FLORIDA RETAIL SERVICE GROUP Scott Corbin

Bill Fraser

Kimberly Lamb, CPM

Alan Lane, MAI

scorbin@colliersarnold.com

bfraser@colliersarnold.com

klamb@colliersarnold.com

alane@colliersarnold.com

Kane Morris-Webster, CCIM

Susan Morris

Lisa Schummer

kmw@colliersarnold.com

smorris@colliersarnold.com

lschummer@colliersarnold.com

Cynthia C. Shelton, CCIM, CRE

Ron Sparks, MAI, MBA, RICS

Michael Sweeney

cshelton@colliersarnold.com

rsparks@colliersarnold.com

msweeney@colliersarnold.com

www.colliersarnold.com

COLLIERS ARNOLD | 1


2010

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FIRST QUARTER

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RETAIL

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CENTRAL FLORIDA AVERAGE ASKING LEASE RATES (NNN)

OVERALL RETAIL MARKET STATISTICS

Completions

Net Absorption

Overall Vacancy

1st Generation Space

2nd Generation Space

$24.00

12%

600 10.3% 400

8.4%

200

Vacancy

8%

0

6%

(200) (400)

4%

(600) 2%

(800)

$22.00 $20.00 Asking Rates

10.2%

Square Feet (In Thousands)

10.1% 9.0%

10%

Q1 '09

Q2 '09

Q3 '09

Q4 '09

$16.00

$14.00 $12.00

(1,000)

0%

$18.00

$10.00

Q1 '10

Q1 '09

Q3 '09

Q4 '09

Q1 '10

NATIONAL GDP

FLORIDA CONSUMER CONFIDENCE INDEX

Consumer Confidence Index

Q2 '09

National GDP

Benchmark Level

8.0

110

5.4

5.6

100 90 80 70

72

71

71

69

72

74

72

69

67

65

73

69

70

3.2

3.0

4.0 Percent Change

Consumer Confidence Index

6.0 2.1

1.4 2.0

3.6 1.5

1.2

0.1

2.2 (0.7)

0.0

(0.7)

(2.0)

(2.7)

(4.0)

60

(5.4)

(6.0) (6.4) (8.0)

50

Q1

Mar. Apr. May. Jun. July. Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 2009

Q2

Q3

2006

2010

Q4

Q1

Q2

Q3

Q4

Q1

Q2

2007

Q3

Q4

2008

Q1

Q2

Q3

Q4

2009

Quarter & Year

Month and Year Source: Bureau of Economic and Business Research

Source: Bureau of Economic Analysis – U.S. Department of Commerce

UNEMPLOYMENT SNAPSHOT Unemployment Rate Florida

M etro Orlando

USA

12 10 8 6 4

Source: Florida Research and Economic Database

2 | COLLIERS ARNOLD

Feb-10

Aug-09

Feb-09

Aug-08

Feb-08

Aug-07

Feb-07

Aug-06

Feb-06

Aug-05

2 Feb-05

Unemployment Rate (%)

14

The unemployment rate for the Orlando-Kissimmee MSA was 12.5% for February 2010. This compares to the year ago rate of 9.2% for February 2009. The State of Florida rate was 12.2% for February 2010 which compares to 9.3% for February 2009. Both the local and state rates are higher than the national rate which now stands at 10.4%, down 0.2% from the previous month. The national rate in February 2009 was 8.9%. The detailed snapshot for the Central Florida area registered a net loss of 36,223 jobs from February 2009 to February 2010.


CENTRAL FLORIDA

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RETAIL

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FIRST QUARTER

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2010

SUBMARKET TRENDS

10%

60

8%

40

6%

20

4%

0

2%

(20)

60

10%

40

8%

20

6%

0

4%

(20)

2%

(40)

0%

(40)

6% (100) 4% (200) (300) Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10

10%

100 50 0

6% (50) (100) (150)

0%

(200) Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10

Completions

60 40 20

8.0%

0 (20)

6.0%

(40)

4.0%

(60) 2.0%

(80)

0.0%

(100) Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10

Net Absorption

Overall Vacancy

12.0%

450 400

10.0%

350 300

8.0% Vacancy

0

0%

150

2%

Overall Vacancy

10.0%

Vacancy

Vacancy

8%

Square Feet (In Thousands)

100

2%

12%

CLERMONT / LAKE COUNTY

12.0%

200

10%

Net Absorption

Overall Vacancy

4%

(60)

Completions

Net Absorption

8%

EAST ORLANDO

Overall Vacancy

12%

Completions

Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10

SAND LAKE / TOURIST Net Absorption

Overall Vacancy

12%

Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10

Completions

Net Absorption

Square Feet (In Thousands)

0%

Completions

250 200

6.0%

150 100

4.0%

50 0

2.0%

(50) 0.0%

(100) Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10

SUBMARKET OVERVIEW During the first quarter, net absorption for the overall market turned slightly negative after a positive recording in the fourth quarter. Five submarkets experienced positive absorption, while seven continued to experience declining demand. The Downtown Orlando submarket experienced the largest amount of positive absorption at 73,139 square feet. The Altamonte / Longwood submarket followed registering a positive 43,224 square feet. Construction activity remains unchanged from the fourth quarter with a total square footage of 117,449. The Publix anchored neighborhood center in Oviedo is the largest project being constructed. Gardenia Plaza, a proposed center in the West Orange submarket plans to begin construction during asss

the second quarter of 2010, resulting in an additional 100,000 square feet of space to the market. Much of the activity occurring is renovations of outdated centers or conversions of vacated spaces. Expanding retailers new to the area, such as Carlos 'N Charlie's and various Mexican oriented concepts are finding many opportunities to back-fill existing vacant restaurant buildings. Another trend being observed in the retail industry is medical/healthcare users back-filling empty retail spaces or occupying inline space. The draw for landlords is a higher paying, sustainable tenant and steady traffic flow. Tenant improvement allowances are heavily relied upon to convert a former big box into a fully functional medical user space, but in a market where few big box retailers are expanding, the benefits normally outweigh the cost. COLLIERS ARNOLD | 3

Square Feet (In Thousands)

80

Square Feet (In Thousands)

12%

SANFORD / LAKE MARY

Vacancy

Overall Vacancy

Vacancy

Net Absorption

Square Feet (In Thousands)

Vacancy

Completions

ALTAMONTE / LONGWOOD

Square Feet (In Thousands)

DOWNTOWN


2010

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FIRST QUARTER

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RETAIL

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CENTRAL FLORIDA

CENTRAL FLORIDA MARKET STATISTICS

Sbmrkt

Bldgs.

Total Inventory S.F.

Direct Vac. %

Total Vac. %

Net Absorp. Current Qtr. S.F.

Net Absorp. YTD S.F.

New Completions S.F.

Under Construc. S.F.

Avg. Direct Asking Rate NNN

HIGHLIGHTED CENTRAL FLORIDA SUBMARKETS Downtown Q1 '10

55

4,337,374

8.48%

8.63%

73,139

73,139

0

0

$21.38

10.48%

10.66%

(8,123)

(8,123)

0

14,400

$17.82

6.49%

6.49%

43,224

43,224

0

0

$17.11

4,338,912

13.00%

13.06%

14,978

14,978

0

0

$15.52

6,804,583

9.11%

9.31%

40,932

40,932

0

0

$20.94

8,916,328

15.84%

15.84%

(96,207)

(96,207)

0

0

$14.49

5,682,562

9.49%

9.49%

(35,349)

(35,349)

0

36,218

$15.97

6,249,992

12.80%

12.88%

(68,512)

(68,512)

0

66,831

$18.12

15,806,793

7.47%

8.23%

(7,080)

(7,080)

0

0

$19.56

2,466,392

11.55%

11.55%

(34,134)

(34,134)

0

0

$18.42

6.01%

6.01%

10,840

10,840

0

0

$17.70

6.18%

6.18%

(18,506)

(18,506)

0

0

$21.93

Total Vac. %

Net Absorp. Current Qtr. S.F.

Net Absorp. YTD S.F.

New Completions S.F.

Under Construc. S.F.

Avg. Direct Asking Rate NNN

Kissimmee / St. Cloud Q1 '10

152

8,132,551

Altamonte / Longwood Q1 '10

87

5,630,735

Lake Nona / Southeast Orange Q1 '10

84

East Orlando Q1 '10

117

Northwest Orange Q1 '10

123

Sanford / Lake Mary Q1 '10

90

Oviedo / Winter Springs Q1 '10

105

Sand Lake / Tourist Q1 '10

165

West Orange Q1 '10

46

Clermont / Lake County Q1 '10

37

2,238,649

Winter Park / Maitland Q1 '10

Qtr. & Year

27

1,716,135

Bldgs.

Total Inventory S.F.

Direct Vac. %

CENTRAL FLORIDA OVERALL MARKET 2010 1Q 2009 4Q 2009 3Q 2009 2Q 2009 1Q

1,107 1,105 1,103 1,098 1,096

73,485,549 73,458,974 73,346,497 73,237,651 73,191,497

10.1% 9.9% 9.9% 8.7% 8.2%

10.3% 10.2% 10.1% 9.0% 8.4%

(44,584) 57,118 (759,529) (387,241) (267,596)

(44,584) (1,357,248) (1,414,366) (654,837) (267,596)

0 112,477 108,846 46,154 506,802

117,449 117,449 163,095 271,941 303,695

$17.79 $17.82 $17.86 $18.32 $18.83

2008 4Q

1,088

72,684,695

7.1%

7.4%

576,116

1,086,726

958,370

671,456

$18.85

2008 3Q

1,073

71,709,225

6.8%

6.9%

54,481

510,610

205,000

1,514,644

$19.09

2008 2Q

1,061

71,384,769

6.4%

6.6%

304,929

456,129

684,591

1,513,802

$19.68

2008 1Q

1,045

70,510,179

5.7%

5.8%

151,200

151,200

976,122

2,118,331

$20.33

4 | COLLIERS ARNOLD


CENTRAL FLORIDA

|

RETAIL

|

FIRST QUARTER

|

2010

COLLIERS ARNOLD www.colliersarnold.com

CENTRAL FLORIDA HIGHLIGHTED SUBMARKETS

4 OFFICES THROUGHOUT FLORIDA TAMPA ORLANDO CLEARWATER FT MYERS

(813) 221-2290 (407) 843-1723 (727) 442-7184 (239) 418-0300

OUR SERVICES: BROKERAGE – SALES & LEASING TENANT REPRESENTATION PROPERTY MANAGEMENT VALUATION & ADVISORY CONSTRUCTION MANAGEMENT RECEIVERSHIPS RESEARCH & GIS

COLLIERS INTERNATIONAL www.colliers.com 294 OFFICES IN 61 COUNTRIES ON 6 CONTINENTS USA 94 CANADA 22 LATIN AMERICA 17 ASIA PACIFIC 64 EMEA 97

FIRST QUARTER 2010 TRANSACTION HIGHLIGHTS LEASING ACTIVITY SHOPPING CENTER NAME/ PROPERTY ADDRESS

CONTACTS TENANT NAME

SIZE (SF)

LEASE TYPE

SUBMARKET

Publix

45,600

NEW

EAST ORLANDO

Wal-Mart Neighborhood Market

40,143

NEW

KISSIMMEE / ST. CLOUD

Bealls Outlet

30,456

NEW

SANDLAKE

Colonial Landing 3200 E Colonial Dr

Party City

12,413

NEW

DOWNTOWN

Baldwin Park Village 4824 New Broad St

Metro Gymnastics

10,921

NEW

DOWNTOWN

Lee Vista Retail Center 6125 S Semoran Blvd

Five Guys Burgers

2,508

NEW

SOUTHEAST ORLANDO

University Plaza 4076 N Goldenrod Rd Vine Street Square 3183 W Vine St. Orlando Square 1728-1750 W Sand Lake Rd

FOR OTHER LOCAL REPORTS VISIT – http://www.colliers.com/Markets/Orlando/MarketReports/ FOR NATIONAL REPORTS VISIT – http://www.colliers.com/Corporate/MarketReports/ This Colliers Arnold market report includes retail space 10,000+ s.f. located within shopping centers in Orange, Lake, Osceola and Seminole Counties. Rates quoted are triple net asking rates. First Generation space is defined as space built after 2006. Second Generation space is space built prior to 2006. Directional arrows on page 2 compare current quarter numbers to previous quarter numbers. Arrows show change when there is a 10 cents or more change in lease rate or 0.5% or more change in vacancy rate. Due to continual updates and refinements in the historical database, some of the data in this report may not match data published in previous reports. Sources: CoStar Property and Colliers Arnold. Colliers Arnold is a member firm of Colliers International - a worldwide affiliation of independently owned and operated companies with over 293 offices throughout more than 61 countries. Questions should be directed to Colliers Arnold Research at: drice@colliersarnold.com or by phone at 407.362.6153. Report written by Daniel Rice, GIS/Research Coordinator. Information contained herein has been obtained from sources deemed reliable but not guaranteed. No representation is made as to the accuracy thereof. Data as of 01/07/2010.

BROKERAGE & CONSULTING Lee Arnold, CRE, CCIM larnold@colliersarnold.com Kimberly Lamb, CPM klamb@colliersarnold.com GIS & RESEARCH Matthew Dolan mdolan@colliersarnold.com Daniel Rice drice@colliersarnold.com MARKETING Elizabeth Cross ecross@colliersarnold.com

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Central_FL_Retail_Market_Report-Q1_10  

CENTRAL FLORIDA R E T A I L | F I R S T Q U A R T E R | 2 0 1 0 www.colliersarnold.com

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