S.R. 540 Retail Corridor Heating Up 
FOR IMMEDIATE RELEASE For more information contact:
Mike Byrum
Mainsail Development Group
301 E. Pine Street, Suite 750
Orlando, FL 32801
407.513.6340 Ext. 101
S.R. 540 Retail Corridor Heating Up
February 8, 2007
Mainsail Development Group recently completed an update of its comprehensive study of the retail corridor along SR 540 (Cypress Gardens Boulevard) from downtown Winter Haven to US Highway 27 and flowing down to the Eagle Ridge Mall. The study provided a number of useful updates and generally reflected record levels of new activity. The study was completed under the direction of Mike Byrum, Mainsail’s director of marketing activities in Winter Haven.
Byrum recently released his findings, which include the following analysis.
The retail trade area along the Cypress Gardens Boulevard corridor has made significant strides towards placing itself on the list of central Florida’s hottest retail markets. The trade area (generally defined as the area from The Shoppes on the Ridge near Eagle Ridge Mall on U.S. 27, along SR 540 to Highway 17, and Downtown Winter Haven) has begun to gain interest among Florida developers and national and regional retailers alike.
Evidence of the trade area’s commerce potential can first be found in the miniscule vacancy rate among the existing retail spaces in the trade area. Of the 952,000 square feet of existing retail space surveyed in the trade area, only 42,000 square feet is vacant. This results in a historically low vacancy rate of 4.4% and clearly illustrates that the demand of retailers and restaurateurs is outpacing the supply of available space.
Developers have continued to show their confidence in the trade area by committing capital and resources to have a presence in the marketplace. In 2006 there was a total of 87,000 square feet of new retail space delivered (69,000 square feet of which was leased by year end). That represented a 10% increase in the supply of space in the market. There is currently 125,000 square feet of retail / office buildings under construction in the corridor which will be completed in 2007. This new construction will enlarge the market by 13% over 2006. These newer buildings are fetching historically high net lease rates, ranging from $25.00 to $28.00 per square foot. These rates are equal to other elite retail trade areas in central Florida, and some of the highest in Winter Haven’s history. Additionally, Victory Investments will begin renovation of Southeast Plaza this year, modernizing and re-tenanting the 130,000 square foot project on Cypress Gardens Boulevard.
Developer, as well as lender confidence in the trade area is further demonstrated by their “build it and they will come” approach to development in the market. Developers continue to borrow funds, and banks continue to loan them, to finance development and construction costs of the projects currently under construction in the trade area despite the lack of pre-leasing of these projects. Of the 125,000 square feet of projects currently being constructed, only about 14,000 square feet has been leased, which equates to only 11% pre-leased. This supply of vacant space will be crucial to continued growth of the trade area.
There was net absorption of 75,000 square feet of space in the trade area in 2006. Assuming a repeat performance by the market in 2007, paired with the expected market size increase from 952,000 square feet to 1,078,000 square feet (due to the new construction), the vacancy rate at year’s end is projected to be 8.7%, which still qualifies it as a very healthy market. In other words, for the market to absorb 75,000 square feet in 2007 (as it did in 2006), the new unleased vacant space supplies the opportunity for the absorption.
National and regional users are starting to make a sustained effort to have a presence in the trade area. Target, Best Buy, Panera Bread, Starbucks, Tijuana Flats and several of the Outback restaurant concepts are circling the waters and showing serious interest in locating a store in the marketplace.
Last year CSX formally announced their plans to locate an Integrated Logistics Center in Winter Haven, a facility that would be the first of its kind in the southeastern United States. When complete the center is estimated to create 8,500 new jobs. The estimated annual payroll resulting from these new jobs is $282.2 million. These new jobs are likely to further enhance the intensity of demand for consumer goods, further increasing the need for restaurant, retail, and office locations in the area.
Despite announcing its filing for Chapter 11 bankruptcy last year, Cypress Gardens is experiencing continued success. The early word on 2007 attendance is that the January numbers are double what they were last year and in line with January of 2005, the year the park went on to draw 1.5 million visitors.
Overall, the retail trade area flowing in both directions from Cypress Gardens along S.R. 540 is transitioning from a tertiary submarket into a trade area that will inevitably grow into prominence among central Florida’s retail corridors. With nationally recognized businesses continuing to bring more jobs and capital to the market, the future is bright.
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Mike Byrum and Tim Lyons are Senior Associates with Mainsail Development Group, LLC, and are based in the firm’s Orlando office. They can be reached at 407.513.6340.
