In November, Watsonville, Calif.-based boating retailer West Marine will open the largest store in its company’s history — a 50,000-square-foot flagship location in Fort Lauderdale. The project, which is a build-to-suit in partnership with developer Stiles, is a shift in strategy for the company, which has unveiled a series of expansions across Florida in the last year, including in Sarasota, St. Petersburg and North Palm Beach. The company has more than 300 locations in North America. In the first one of a new feature Retail Roundup, a look at the players in South Florida’s retail real estate market, The Real Deal talked to Erik Rimblas, southeast regional vice president of West Marine, about how the search for retail space has changed, the state of the South Florida retail market and the company’s expansion plans.
Please tell us about the new West Marine location in Fort Lauderdale.
It’s about a 50,000-square-foot store, which is about twice the size of the current one that we have [in Fort Lauderdale]. We opened that one in 2002, and at that point it was the largest store we had ever opened by quite a bit. Now this store that we’re opening is the largest store we’ve ever opened. The next largest is 30,000 square feet. The motivation is that it’s a non-seasonal market — which gives us year-round business. It’s a really big market for us, and we outgrew what used to be the biggest store in the company.
How did the downturn affect the company, and how has it changed the search for new locations?
Well, we kind of took it on the chin like everybody else back in 2006, 2007, 2008. We did some downsizing, but not so much in South Florida — in other parts of the country, especially those really seasonal areas where we ended up having multiple stores due to acquisitions. The ability to find relatively large buildings with better occupancies is more than what we used to find before. We’ve been in a position to take advantage of the favorable real estate market now that it’s on the upswing — or that there’s less bad news [in the market]. The new stores are what we’re calling “flagship” stores, that we previously didn’t have in our fleet. We only had about two for the last seven years, and now we’re opening quite a few.
The company is expanding around Florida — what’s motivated that?
Even in relatively large areas like Florida, we’re looking because those less seasonal markets are attractive to us. We have another version of stores, our large-format stores, and opened a few of those — one in Jupiter, and last year, one in Stuart. We also opened two locations in Jensen Beach and Fort Walton up on the Panhandle. Those were all new stores for us.
How much has the changing real estate market impacted your search for space?
Occupancy, obviously, for retailers, is a big deal. It’s a fixed cost, so when you figure out what you want to do, that’s a really big factor. We tend to sign fairly long-term leases, so we’re making a pretty long commitment to pay that occupancy, and we’re fairly conservative in most of the things that we do. We opened two flagship stores in 2002, and didn’t open another one for seven years. That includes a chunk of time when things were pretty good, but along with that boom, came pretty high real estate prices. Now, we’re able to take advantage of what’s going on. The commercial market is going the other way, and it’s getting better, which means rents are going up, so there’ll be some time when we can still take advantage of it.
How was your real estate strategy different with this project compared to when you opened your previous Fort Lauderdale location in 2002?
Well, one primary difference is that when we opened the original, we ended up using three different parcels of land, and kind of patched it together. There wasn’t a single owner, or a single space, we just built on to our sister store. You would never build that way from the start, but it was the only thing we could get. At that point, a lot of the real estate was going to much bigger projects, like the Mercedes dealership, but that was a Huizenga project. Whereas now, the owner of the property is Stiles, which is very well known in Fort Lauderdale, and they were able to acquire a really large tract of land and build from the ground up. We weren’t able to find a solution like that many years ago, and we’ve been searching for a little while.
What do you think about the state of the South Florida retail market?
We’re extremely optimistic. Like I said, this is an unprecedented boon for West Marine in building a store this big, we’ve never considered doing something like this. We signed up to do a build-to-suit, and that’s a different commitment than doing a strip mall or a free-standing building. I think that’s the best testament to the fact that we think it’s viable now and will be viable for a long time. We feel really good about the Fort Lauderdale market and the whole South Florida market right now.