Demand drives retail, restaurant expansions

Pat Warren, of the Village of Gilchrist, helps her brother, Carl Stone, of Columbus, Ohio, pick out golf shirts at Van Heusen Izod Golf, in Lake Sumter Landing. The Villages now has a 97 percent retail occupancy rate after five years of growth.

THE VILLAGES — So much retail growth sprouted during the past five years in The Villages.

The result today is more than 3.5 million square feet of retail shops, including 130 restaurants.

What’s more startling about this growth is the community’s consistent 97 percent retail occupancy rate.

That rate far exceeds the state and national average occupancy rates, at slightly less than 93 percent, according to a 2017 market forecast published by the global commercial real estate services firm of Jones Lang LaSalle.

Give credit to the residents in The Villages for the healthy nature of The Villages retail market, said Lee Arnold, founding president and CEO of Clearwater-based Colliers Arnold and now chairman of Florida operations for Colliers International, one of the leading global real estate services firm.

“In The Villages, you’ve got a lot of buying power,” he said.

One Vibrant Market

What makes The Villages growth even more compelling is the optimism contained not only in the JLL forecast, but also similar outlooks produced by commercial real estate services firms like Colliers, Orlando’s Crossman & Co. and CBRE, another global leader.

That optimism only bolsters the local growth outlook for Scott Renick, The Villages director of commercial development.

No mystery exists about why The Villages is, and most assuredly will remain, a vibrant market, either, he said.

“It’s the consistent growth of the community,” Renick said. “We’re blessed to be in a market where we’re experiencing the growth that we have and will have. It’s because of the active nature of our community. It’s a vibrant place not only for residents but businesses, too.”

While he couldn’t provide specific retail figures, he said, The Villages commercial market in total, including medical, office and industrial, grew roughly by about 20 percent over the five-year period ended Dec. 31.

“If someone looked back at The Villages retail market five years ago, we didn’t have Brownwood, Pinellas Plaza or Grand Traverse Plaza,” Renick said.

Although some vacancies still exist at Brownwood, The Villages third town center still produced solid growth, he said.

“In three years, we’ve added 24 new businesses and 77,500 square feet of new retail, restaurant and service space,” Renick said.

Solid Demographics

Considering The Villages standing as a market leader in retail occupancy, the optimistic state and national commercial forecasts bodes well for the community.

The reason centers on the community’s growing demographics, from Renick and Arnold’s viewpoint.

In Lake, Marion and Sumter counties, more than 113,000 residents live in The Villages, according data provided by The Villages Developer.

More than 118,000 people resided in The Villages metropolitan statistical area, which includes all of Sumter but not villages in Lake or Marion, according to the latest Census Bureau population survey. That’s a 20 percent increase over five years.

Because of that population growth, The Villages MSA has ranked over the past several years as the fastest-growing MSA in the country.

In support of what Arnold said, the mean household income in The Villages MSA grew by more than 19 percent to $48,039 over the most recent five-year survey completed by the Census Bureau.

That data also explains the growth of the MSA’s gross domestic product, a key measure of the market value of goods and services produced by labor and property, including sales from stores and restaurants in The Villages.

GDP in The Villages MSA grew by 3 percent to $2.3 billion in 2015, a 30 percent increase over the latest five-year survey completed by the federal Bureau of Labor statistics.

When viewed in its totality, that data only reinforces Renick’s confidence about The Villages retail forecast.

“Absolutely,” he said. “Between the businesses we talk to, our peers in the industry and industry elsewhere around the state and the country, for that matter, everyone seems to share in the same optimism.”

Small-Market Growth

Two important market watchers also acknowledged their market optimism in analyses they recently released.

In its 2017 analysis, the Urban Land Institute expressed a very bullish outlook. That’s significant, too, since the ULI is the leading provider of commercial market research to U.S. institutional investors and wealth managers.

“The U.S. property market landscape in 2017 will be characterized by continued strong fundamentals, increased investment flows and high transaction volume,” according to the report published by David Lynn, editor, and Peter C. Burley, co-author, of ULI’s “The Investor’s Guide to Commercial Real Estate.” “The broader U.S. economy should continue to grow moderately and add jobs. U.S. employment gains continue to be strong, with unemployment dropping below 5 percent in 2016, adding to demand for commercial real estate in a variety of sectors. Many are surprised that the economy has not reached the end of the current growth cycle, but the fact that the recovery was so protracted and growth relatively anemic over the past seven years leads us to believe that the economy may have another two years left in the current growth cycle.”

At the National Association of Realtors, chief economist Lawrence Yun specifically cited optimism for growth in smaller markets, similar to The Villages MSA, as one of the reasons why the U.S. commercial real estate sector should experience stable growth this year.

“Last year was the 11th year in a row of subpar (U.S.) GDP growth, but renewed corporate optimism leading to a focus on investment and a desperately needed boost in residential construction (as occurring in The Villages) should pave the way for modest expansion this year of around 2.4 percent,” he said. “Steady hiring and low local unemployment levels are finally supporting higher wages and increased spending, which in turn bodes well for sustained demand for all commercial property types.”

Desire for Quality

The retail market activity over the past three years also explains Arnold’s optimism this year in Florida and The Villages market.

He is very familiar with The Villages, too, since his commercial agents negotiated the deal that opened the HomeGoods and Marshalls retail stores in Buffalo Ridge Plaza.

“We’re very, very busy,” he said. “Every one of our experienced tenant representatives and landlords are extremely busy. We’re out adding more people right now. Our agents are saying they need more support staff to handle all of the new business.”

The success occurring in each of The Villages neighborhood retail centers, regional shopping plazas and the three town centers only adds to Renick’s confidence about a bunch of new deals already pending for this year.

Proof of that exists in business demand in the Pinellas, Grand Traverse, Lake Deaton and Sarasota neighborhood centers.

“Five years ago, for instance, Colony Plaza was fully leased and thriving,” he said. “We’ve added four more retail projects not far from Colony, and Colony is still full and thriving, and we’ve even added a Bob Evans and PDQ restaurants.”

Lake Sumter Landing remains a vibrant retail market with only few vacancies available, Renick said, while a revival is occurring in Spanish Springs with stores like the Talbots women’s fashion retailer demanding space in that town center.

The retail market activity of late, and what’s anticipated, is sort of like dominos falling, he acknowledged.

“It’s a pretty good mix this year of filling in vacant spots throughout the community,” Renick said. “We’ve got new development up north at Mulberry Grove Plaza with a new Cody’s Original Steakhouse. We’ve got PetSmart coming to Buffalo Ridge Plaza. And there will be more development coming along with that. And we’ve got a number of projects in the works south of County Road 466A.”

And all of this activity is aimed at meeting the growing consumer demand from Villagers, who desire a diversity in quality goods and services, and just a golf cart ride away, Renick said.

“I would absolutely say it is a good time to be a consumer in The Villages,” he said.

David R. Corder is a senior writer with The Villages Daily Sun. He can be reached at 352-753-1119, ext. 9066, or david.corder@thevillagesmedia.com.