Stanbery Development, the Columbus, Ohio-based firm behind the Promenade at Coconut Creek, makes its commercial Florida debut in the worst economic conditions the state has seen in decades.
Its first mixed-use commercial real estate project here opens Saturday, at a time when the market is in shambles, analysts are warning of a sluggish holiday shopping season, and no one knows when the turnaround will begin.
“If I were to say we aren’t concerned about the current climate I’d probably look like a fool,” said James Westfall, an asset manager at Stanbery Development. “But we have strong relationships with retailers and we’re 85 percent occupied on opening day. So we feel good.”
Those strong relationships are with the likes of quality national retailers like Banana Republic, Coldwater Creek, DSW Shoes, Ann Taylor Loft, Talbots and Chicos. The Promenade at Coconut Creek is hosting these retailers in Western Broward County’s newest outdoor shopping center.
The multimillion-dollar, 550,000-square-foot mixed-use development is located at 4451 Lyons Road. The project will be one of the largest LEED-certified, mixed-use developments in the nation. But green status aside, it still has to fill 15 percent of its 250,000 square feet of retail space and 100 percent of its 50,000 square feet of office space.
Kathy Sawin, a leasing executive at Stanbery Development, admits it’s been a challenge. Smaller retailers have struggled to obtain financing and some larger retailers have halted expansion plans and backed out of deals that were all but inked.
“The housing market has definitely impacted our leasing effort,” Sawin said. “If the economy hadn’t faltered, we would have been able to pick and choose our retailer and drive the rents. Instead, we’ve had to make some concessions on the smaller spaces leased to the locals and regionals.”
Sawin declined to disclose specific concessions, but said pro forma rents ran from the high $20s to the high $30s per square foot. Currently, the average rentals are running in the low $30s. Sawin is in the midst of negotiating with restaurateurs and retailers and expects the project to be full by January.
The 50,000 square feet of office space is another story. Stanbery has no commitments on the office side, despite aggressive incentives to close some deals, including free rent. Westfall declined offer specifics on incentive deals, stating they would be agreed to on a case by case basis.
The overall vacancy for Broward County remained at 14.3 percent during the third quarter while the sublease vacancy rate rose from 0.5 percent to 1.1 percent since mid-year, according to Cushman & Wakefield.
“We continue to see softness in the office market as the economy struggles dealing with the current financial meltdown,” said Chris Constant, director of Cushman & Wakefield’s office brokerage in Broward.
“Fortunately,” he continued, “new office development in the county is minimal and several large transactions in Western Broward have significantly stabilized vacancy rates.”
Sawin is optimistic for the yet-to-open office space at the Promenade at Coconut Creek. When professionals see the opportunity first-hand, she believes the active retail component will help attract office tenants.
“When you walk out your office door you’ve got nine restaurants plus a Starbucks,” Sawin said. “In other nearby office complexes there is no such environment. This is a place tenants will want to be.”