Big-boxes, Wal-Mart continue to eye 'underserved' downtown Miami
By Risa Polansky and Yudislaidy Fernandez
With more residents gravitating toward city centers to live closer to work, big-box retailers have begun eyeing urban areas in hopes they'll find new customers in these downtown dwellers, experts say.
The dragging economy has led some to scale down expansion plans as shoppers pull back on spending, but Wal-Mart is in growth mode and gunning for a downtown Miami location.
The national big-box chain is considering the planned City Square retail project at 431-1451 N Bayshore Drive and 425 NE 13th St., according to Wal-Mart spokeswoman Michelle Azel Belaire and Miami Commissioner Marc Sarnoff.
But the store is keeping its options open, Ms. Azel Belaire said.
Wal-Mart has also looked into the Omni mall complex on Biscayne Boulevard, now under renovation and set to open in 2010 with 270,000 square feet of retail.
"Wal-Mart has contacted us, but we really don't see it as a fit for our project," said Aaron J. Butler, a leasing broker with Comras Co., which represents the retail portion of the Omni. He declined to say why.
Still, Wal-Mart's efforts to secure space downtown are ongoing.
Miami's urban core represents an "underserved area," Ms. Azel Belaire said. There's "a significant amount of growth happening, but not a lot of low-cost options."
The Shops at Midtown Miami opened in nearby Wynwood in 2006, offering downtowners and Miami Beach residents for the first time options such as Target and Linens 'N Things.
Wal-Mart hoped for a space there during the project's planning stage in 2005, but image-conscious city commissioners put the kibosh on the deal.
There may be another chance.
JCPenney, which Midtown representatives said was slated to open at the complex in March 2009, has no plans to set up shop in Miami this or next year, spokesman Tim Lyons said last week, citing the economy and a national plan to slow expansion.
Ms. Azel Belaire did not say whether Wal-Mart was interested in the space specifically but reiterated the company's interest in the whole downtown corridor.
More and more, big boxes are looking for downtown space, said Mr. Butler, the leasing broker.
"Generally, their typical stores are more in suburban locations," he said. But "as land becomes more and more expensive and people are living now in more urban environments, the vertical projects are going to become more and more typical."
Wal-Mart has downtown locations in Chicago, Honolulu, Atlanta, Cleveland and other cities. All have proven successful, Ms. Azel Belaire said.
Downtown Miami is an attractive possibility for new locations, Comras's Mr. Butler said.
"You have the two strongest retail markets in Miami being Dadeland and Aventura, and the downtown area has kind of become the hole in the doughnut," he said.
But guinea pig Midtown "proved the demand for the big box retailers" in the area and is "doing extremely well."
Most important, he said, downtown is set to one day teem with residents as new condo projects fill up.
"The big-box retailers recognize that."
He acknowledged that attracting retailers during hard economic times could be a challenge.
"The overall retail market, clearly their expansion plans have been changed due to the economic circumstances of America," he said, speculating companies may be pulling back 30% to 40%.
JCPenney has "scaled back on our store-opening plans for this year and next year at least just given the downturn in the economy," Mr. Lyons said.
The retailer planned to open 50 stores a year, but this year cut the total to 36. Only about 20 are planned for 2009.
But downtown Miami's dynamics should continue to attract new stores, Mr. Butler said.
"As the area begins to populate, the retailers will recognize and are recognizing the opportunity to be in the heart of downtown. We're very confident the Omni will be filled."
Wal-Mart isn't experiencing the strain of some other retailers, Ms. Azel Belaire said.
"At this point in time in this particular economy, we find our stores have seen higher traffic."
She said Wal-Mart means big business for Florida's economy, as the retailer paid $5.5 billion this year for merchandise and services purchased from 2,688 local suppliers and paid $87.6 million in state and local taxes.
Those looking to save tend to head to Wal-Mart to take advantage of low prices, she said, and the company is exploring expansion opportunities year round.
Should Wal-Mart secure space downtown, the nearby Target shouldn't pose a problem, said Cynthia Cohen, president of Miami-based Strategic Mindshare, a retail strategy consulting firm.
"There are lots of locations where Wal-Mart is one parking lot away from a Target," she said. "They have some overlap in customer base, but they also have very different customer bases."
Some may shop at Wal-Mart for grocery products but buy apparel at Target, she said, or vice versa.
With a downtown location, "the question is going to be parking, because Wal-Mart especially is a store that both encourages and relies on consumers buying lots of… products and really walking out the door with a big basket of goods, which means they're driving the big family car to a Wal-Mart and stocking up."
Parking would have to be part of the allocation in any development, Ms. Azel Belaire said.
Though some of the contending sites sit near Biscayne Bay and the Adrienne Arsht Center for the Performing Arts, making for pricey real estate, it shouldn't pose a problem for Wal-Mart, Ms. Cohen predicted.
Developers could offer a subsidy to their anchor tenant, she said, "because wherever they (Wal-Mart) go, other retailers would follow. It's not uncommon for an anchor tenant to get a better deal than the smaller tenants."
And though some have expressed concern with the retailer's image clashing with downtown Miami's ambiance, a downtown Wal-Mart would look and feel as if it belonged there, Ms. Azel Belaire said.
"In order for us to go in any community, we will ensure our store and merchandise, from design and layout of the store to the merchandise mix, is what the costumer is looking for."