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West Oaks Mall

New Uses For Shopping Centers

Shopping centers brace for new uses as internet erodes retailers

The financial woes of national retailers are leaving holes at shopping centers across Central Florida, and landlords are looking for new businesses that aren’t susceptible to internet competition.

Amazon and other online retailers are eroding the profitability of brick-and-mortar retailers, and anchor retailers such as J.C. Penney, Sears, Macy’s, Sports Authority and Office Depot are closing stores nationwide.

Increasingly in Central Florida, nonretailers are taking the spaces, including fitness centers, medical projects, call centers and vocational schools that can take advantage of cheap rent in high-profile areas.

“People are asking ‘How Amazon-proof is your project?’” said David Gabbai, a retail real estate broker with Colliers International in Orlando. “Maybe you can put a dentist’s office into a smaller space, but what else out there is really immune to the internet?”

24 Hour Fitness has used some of those openings to gain a foothold in Central Florida. After having a single gym here for eight years, the San Ramon, Calif.-based chain opened two facilities in the past two months. One of those is in a former Publix building at The Grove at Winter Park shopping center on Aloma Avenue. Publix opened a new store down the street in 2013.

Another 24 Hour Fitness is coming to Piedmont Plaza in Apopka, taking the place of a former Albertsons store.

“We are building swimming pools, locker rooms, saunas and steams rooms, so it’s an extensive build-out,” said Tom Lapcevic, executive vice president and chief of marketing for 24 Hour Fitness.

24 Hour Fitness is willing to build new facilities, such as the one in Kissimmee, but old big-box stores provide an opportunity, he said.

“I would like to see more businesses go in here, because this isn’t that old of a shopping center,” said Judy Hurley, a 24 Hour Fitness customer, while walking a treadmill at the Winter Park gym.

Locally and nationally, landlords are turning to nonshopping tenants as they try to predict the cloudy future for retail and restaurants, Gabbai said.

Online sales grew 11 percent year-over-year during the November and December holiday months, according to tracking firm Adobe Digital Insights. Some of the biggest national retailers such as Target and Macy’s reported weak in-store results during the holidays. They have online sales also, but those operations haven’t made up for brick-and-mortar slack.

“And we haven’t even started figuring out how drone delivery and driverless cars are going to change the way we shop,” Gabbai said.

The trend is affecting some of Central Florida’s biggest shopping destinations.

Oviedo Mall filled a former Bed Bath & Beyond with a Zoo Health Club and a children’s education and day-care facility called O2BKids.

Ocoee’s West Oaks Mall took a former Sears location and turned it into a call center for Xerox, which is in the midst of hiring 500 workers to provide support for SunPass. Owners of West Oaks said apartments and vocational schools help fill vacant space there and bring customers closer to support retailers.

The new look of power shopping districts isn’t always exciting, but there are very few new retailers out there to take vacant properties as large as 100,000 square feet, said Steve Kirn, a lecturer at the University of Florida who teaches retail management courses.

“Sometimes you just tear the whole thing down, or you can convert it into something else,” Kirn said. “But often what you have to do with a shopping center is repurpose it, make it a community gathering space.”

Kirn said some communities have had success converting struggling malls and shopping centers into community colleges, drivers licensing offices and hospitals.

The new uses are keeping demand up for commercial property.

A report from Colliers for the fourth quarter showed retail vacancy rates in Central Florida were down to 6.9 percent for the period, compared with 7.2 percent in the third quarter. Rent prices are essentially flat over the past year for the region.

“When a Sports Authority closes, we have a whole list of people waiting to see if they can put something else there,” said Bobby Palta, a retail real estate broker for CBRE Orlando.

But some areas do have an excess of retail space, he said.

“Stores don’t always have a use for these buildings, and it’s not necessarily a bad thing,” Palta said. “So maybe it becomes a call center or a government office or a library. Every neighborhood has a need.”