Gymboree to close four SoFla stores, but brokers are optimistic about filling spaces
Closings include at The Galleria in Fort Lauderdale, CityPlace in WPB, in Boynton Beach and Delray Beach
Children’s clothing chain Gymboree filed for bankruptcy protection this week and will close hundreds of stores nationwide, including 14 in Florida and four in South Florida, amid tough times for retailers.
Nationally, the distressed retail chain said it will close about 375 to 450 of its 1,281 stores. The Florida store closings are scattered throughout the state and will affect locations both in regional malls such as The Galleria in Fort Lauderdale and mixed-use centers such as CityPlace in West Palm Beach. Two additional South Florida locations are affected as well: the Boynton Beach and Delray Marketplace stores.
Like other retailers, Gymboree has struggled in a difficult retail environment, suffering from declining mall traffic, fixed rental costs and online competition. Other mall retailers that have filed bankruptcy and closed stores in the last year include Traffic Shoes, Luggage & More, Payless ShoeSource, Rue21 and The Limited.
Jay Sakalo, a business finance and restructuring attorney with Bilzin Sumberg in Miami, said the major issue retailers face is impending debt maturities and an inability to secure relatively cheap refinancing because of retail’s grim short-term outlook. He said many retailers also have an oversupply of stores near each other that are essentially cannibalizing their market and may lead them to close some of their locations.
Florida landlords already have been dealing with the challenge of leasing the spaces of various bankrupt retailers as well as re-purposing locations vacated by big box stores such as Sports Authority. In January, Macy’s said it would close some stores nationwide, including one at CityPlace in West Palm Beach.
Yet, overall, South Florida’s retail sector is healthier than in most parts of the country, said Zach Winkler, senior vice president and market leader for JLL’s South Florida retail brokerage.
“A space like the one occupied by Gymboree is easy to backfill,” he said. “There are a lot of uses that fit into that size requirement.” Gymboree stores average 1,850 square feet, according to the company.
Winkler said retail is undergoing a shift, moving away from concepts like Gymboree toward more “experiential retail” or food concepts. “Apparel retailers expanding throughout Florida are engaged in social media and inviting customers to experience the brand more than looking at clothes on a rack,” he said.
Even with online shopping, Winkler said people are still going to stores, even if those retailers may require a smaller footprint. And the big department stores like Macy’s and JCPenney that are struggling have made few closures in South Florida. “There are some markets where malls are performing strongly and South Florida is a good example,” he said.
South Florida retail rents are relatively steady, said Ana Barcelo, a retail leasing and transaction services advisor with CBRE in Miami. “If they have dropped, it’s only $1 or $2 … definitely single digits … nothing like the double digits in other locations.”
According to JLL’s 2017 Spring Retail Report, retail rents in Florida average $16.52 a square foot, with Miami closer to $25 a square foot.
Barcelo said where vacancies exist, landlords are hiring real estate advisors to find the tenants who represent new trends: entertainment uses like trampoline zones, interactive users like blow dry bars and stores that sell special edition products not available online. “By shifting gears, we are seeing the spaces get filled.”