For Palm Beach County’s retail real estate, the strange disconnect continues. Sports Authority is long gone. Office Depot is downsizing. Sam’s Club is closing its warehouse store at Interstate 95 and Hypoluxo Road. Even former stars like The Gap are closing mall locations in Wellington and Palm Beach Gardens.
And yet: Palm Beach County’s retail vacancy rate hit a rock-bottom 4.3 percent at the end of 2017, down from 5.8 percent two years earlier, commercial real estate brokerage Colliers International reports.
“South Florida’s retail real estate sector continues to strengthen as the nation grapples with a shifting retail landscape,” Colliers International says in a report about the region’s shopping centers.
Of course, the news isn’t all good. Sears, Macy’s, Kmart and J.C. Penney are among the merchants closing stores. And some, such as Office Depot, are reducing new stores to half the size of yesteryear’s big boxes.
Landlords are responding by turning big boxes into small ones.
“Strategically rightsizing retail space has been crucial for landlords, as there are a lot more tenants looking for 10,000 square feet or less than there are looking for 30,000 square feet or more,” Colliers International says. “One option for landlords with a large vacant space is to subdivide the big box buildings into smaller spaces to accommodate two or three new tenants. Landlords are eager to find new tenants at today’s market rate to replace the retailer-friendly leases signed by the failed big-box users many years ago.”