The upside of downtown: Shopping center execs target key demographics

Downtown can be a good location for retail, especially in West Palm Beach, Lake Worth, Delray Beach and Boca Raton, where the food and entertainment draw locals and tourists.

That was the message Thursday night as members of the International Council of Shopping Centers gathered to "get the lowdown on the downtowns."

The real estate crash during the recession stymied a development push in the area’s downtowns.

Thousands of residential and commercial condo units have been built in these redevelopment areas in recent years, but vacancies and dark storefronts have been rampant.

Some life has emerged in downtowns and throughout the real estate market, said George Kleier, vice president of American Commercial Realty, as the slow recovery has shown minuscule improvements in retail sales for many months.

Because of those signs of life, local members of the international group are "breathing easier these days" and group activities have started again, Kleier said.

ICSC conferences are seeing more attendance, Florida Conference Chairman Dale Scott told the gathering Thursday, which was the first such Palm Beach County event in three years.

ICSC lobbies nationally for retail issues, and locally it brings together developers, owners, retailers, leasing agents and others to network.

Kleier moderated the discussion this week and was key in organizing the event. He said future programs will explore other geographic segments of the retail market in Palm Beach County.

Downtowns provide key metrics that tenants want: the demographics of who lives and works there, busy traffic patterns including foot traffic, and the synergy created by daytime work crowds and the nightlife that follows.

"When we bring retailers into the market, we have no choice but to show them downtowns," Kleier said.

That wasn’t always the case, said Tom Prakas, who heads restaurant brokerage Prakas & Co.

Development in the 1970s and ’80s pushed Palm Beach County’s population areas west. Businesses in those suburbs still have an easier time of parking and seldom face space limitations.

Prakas has helped move restaurants into Delray Beach’s Atlantic Avenue, where the busy restaurant row is now pushing new business into the side streets.

That’s a successful downtown, a place where people park their cars and stroll to restaurants and window shop, he said.

"You can see that is the trend," Prakas said. "The money is gravitating toward the city centers."

That provides some of what retailers need to bring their businesses to these downtowns, said Bryan Cook, regional director of real estate for CVS Pharmacy. He emphasized the need for daytime activity and enough residents to make services such as a pharmacy viable.

For example, CVS stores depend on the pharmacy to make a profit, despite the amount of space dedicated to the rest of the inventory.

If people don’t live downtown, the pharmacy won’t get the necessary business.

"There’s nothing convenient about going downtown," Cook said.

The area has to draw people, and downtown development authorities can help tip the scale by offering incentives, Cook said.

Kim Briesemeister, executive director of West Palm Beach’s Community Redevelopment Agency, said cities have been trying to rebuild the city’s core business districts since the move to the suburbs. Most cities have a Community Redevelopment Agency that uses special tax districts to improve buildings and businesses in core areas.

West Palm Beach and other cities have "turned a corner" and are seeing retailers, landlords and leasing agents eager to look at downtowns.

The redevelopment agencies often add money for construction of the buildings and put money into facade and infrastructure improvements. They do not pay operating costs or put out money that walks away if the business fails, Briesemeister said.

"Downtowns in Florida are this incredible opportunity just waiting to happen," Briesemeister said.

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