Hhgregg, others, taking advantage of wide-open South Florida retail market
The retail market is still recovering from the high-profile departures of mainstays Circuit City and Linens ‘n Things — but would-be big-box player Hhgregg believes it can succeed where others have failed.
The firm (its name comes from founders H.H. and Fansy Gregg), which began a South Florida foray with a 23,423-square-foot lease at Sterling’s Westland Promenade in Hialeah in October, recently announced a plan to expand with five new stores in Broward and Palm Beach counties last month.
“Back at the end of 2009, which was a few months after the Circuit City bankruptcy, [Hhgregg] made the decision to take advantage of some of the Circuit City locations that would be coming available,” said Chris Macke, senior real estate strategist at real estate research firm CoStar. “Of course, they also benefited from the fact that rental rates had been going down during the cycle, and there’s just been a fair amount of space available over all.”
It’s a strategy that probably couldn’t have existed two years ago, as hhgregg looks to take advantage of substantially more affordable rates, said Paco Diaz, senior vice president with CB Richard Ellis in Miami.
“A couple of years ago, rents were higher,” he said. “Now, it’s a good opportunity for retailers to come down and secure locations.”
The climate right now is favorable to those looking to expand, said Bill Reichel, president of Palm Beach Gardens-based Reichel Realty.
“There’s no place for people to go right now,” he said. “And if they have their business structured right to succeed, rental rates are a lot cheaper, and there are much more aggressive landlords. Depending on the structure of [hhgregg]’s company, I would think it would be a great opportunity for someone.”
Diaz said rents in South Florida generally are about 20 percent lower than they were a few years ago. The recent announcement is notable for another reason: all five stores are in either Broward or Palm Beach county.
According to CoStar, rates in Miami-Dade are around $24 per square foot, and they are closer to $18.50 in Palm Beach and just $17.60 in Broward, Macke said.
“There’s a lot more long space available in Broward and Palm Beach than there is in Miami,” Diaz said. “It’s a lot cheaper — I would say another 10 to 15 percent.”
Diaz pointed to several other high-profile expansions that were the result of a similar environment: T.J. Maxx and Home Goods’ leases at the Greenery Mall in Kendall (with the former being one of the largest leases of 2010), Brandsmart’s move to Dadeland and the Nordstrom Rack opening at Miracle Marketplace in Coral Gables.
He also mentioned the leases by Sports Authority and HomeGoods in Midtown Miami.
“That’s what’s going on right now,” Reichel said. “A lot of companies are seeing opportunities with the vacancies, and, with aggressive landlords [out there], are looking to expand.”