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Residential towers in Downtown pipeline entice pharmacy, grocery chains

Publix in the Paramount condo tower on Lake Eola opened in 2008, the first big chain grocery store in the heart of downtown in more than 25 years. It has been a catalyst for the live/work/play atmosphere downtown.
Publix in the Paramount condo tower on Lake Eola opened in 2008, the first big chain grocery store in the heart of downtown in more than 25 years. It has been a catalyst for the live/work/play atmosphere downtown. (Jennifer Perez / Orlando Sentinel)

Downtown Orlando's residential growth is on pace to reach 20,000 by 2020, and those drawn to the mixed-use urban environment will demand more grocery, pharmacy and other retail that provide the staples of daily life.

Orlando's urban core doesn't have many large ground-floor spaces available now that bigger retailers are demanding, despite growing interest by grocery and pharmacy chains, local commercial realty brokers tell GrowthSpotter. That should change with a wave of new high-rise developments on tap for the next five years, but other challenges may continue to limit how downtown Orlando's retail segment is fleshed out.

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"I think Orlando's downtown (grocery) is pretty well-matched currently for its demographics, but positioned to grow as new residential projects come with first-floor retail space," said John Crossman, president of Crossman & Co. "There could be more opportunity than anywhere in the northern end of downtown, in the Health Village area growing around Florida Hospital."

The technical boundaries of downtown, as established in statutes for redevelopment of the area, are primarily Gore Street to the south, Ivanhoe Boulevard and Brookhaven Drive to the north, Summerlin Avenue to the east and Westmoreland Drive to the west; with total area encompassing roughly 1,660 acres.

The last definitive residency figure for downtown was the 2010 census, which reported just over 13,500. Orlando's Downtown Development Board (DDB) now estimates there are roughly 15,000 residents in the area, based on its count of the number of new units added each year since 2010, and multiplying those by an average of 1.6 occupants.

With another 1,276 residential units currently proposed for downtown and in varied stages of development, DDB projects another 2,000 residents to enter the downtown market in the next two to three years as more advanced projects are finished, with another 2,700 people to move into the area in four to five years.

It puts downtown Orlando on pace for the 20,000-resident mark by 2020. That's nowhere near the residency figures of mature mixed-use downtowns like Chicago, New York and Washington, D.C.

But it's ahead of the curve when measured against other mid-level cities aiming for the 20,000-mark downtown by 2020, including Cleveland (estimated at 13,000 residents in 2014) and Pittsburgh (12,000 this year).

At 15,000 residents and growing, downtown Orlando is on the cusp of attracting more retailers that offer daily staples, like grocery, pharmacy, beauty salons, dry cleaners and more. A challenge up until now has been that downtown has had limited vacant space for large retailers, said David Barilla, assistant director of Orlando's DDB and Community Redevelopment Agency.

"Smaller spaces have always been available to suit your salon, restaurant or dry cleaners, but the space a major pharmacy calls for hasn't been available," he said. "The majority of these new projects coming soon all have extensive retail space planned for the ground floor and will create opportunities to attract your bigger retailers."

The proposed City Centre building on the northeast corner of E. Central Boulevard and N. Rosalind Avenue, which would have 215 units and 42,000 square feet of commercial/retail space, has been presented to city officials with a potential pharmacy or grocery by its development group, Barilla said.

"Our Downtown Development Board now talks regularly with multiple grocery and pharmacy chains to keep them abreast of downtown's residential numbers and market opportunity," he added. "There are (retailers) interested now that weren't three to five years ago."

Population metrics that retailers use to evaluate whether to open a new unit downtown often vary by industry segment. A grocer typically eyes 10,000 to 15,000 residents within a two-mile radius, while pharmacies use population and algorithms to forecast how many prescriptions would be filled at a location.

Downtown's day-time workforce population is roughly 75,000, which along with a developed bar and entertainment scene draws new dining retailers consistently.

Craig Ustler, who has led downtown redevelopment in recent years with Ustler Development, says interest is strong from major pharmacy chains in downtown Orlando, and that residential numbers support a unit within the CRA. The closest now is a CVS Pharmacy on the corner of E. Colonial Drive and N. Mills Avenue, just outside the CRA boundary.

But retailers are giving equal weight to downtown's proximity to established locations like SODO, College Park, Mills 50 and East Colonial/Fashion Square, Ustler said.

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Residents in the new North Quarter neighborhood, for example, are now a walkable or bike-able 1.2 miles from The Fresh Market on N. Mills Avenue, and 1.4 miles from both the Publix near Lake Eola and Publix at Colonialtown on Shine Avenue.

Bobby Palta, first vice president of brokerage services-retail for CBRE, agrees that downtown Orlando has the residency now to draw a pharmacy, and says Publix is actively looking for another space downtown.

But Palta thinks the city can do more to make downtown more attractive to weekend visitors that don't reside there, like increasing garage parking accessibility, making street parking easier to re-up via smartphone app, improving events promotion and more.

"The types of spaces we have available downtown are still not good size fits for what the market needs, and a lot have rents that are too high," he said.

Robin Webb, managing director/principal at NAI Realvest, is excited by downtown's residential growth over the past decade but believes it needs to reach 30,000 or more to attract major retailer attention.

"I've been told that until downtown (Orlando) becomes a 24-hour city, retailers won't be drawn to the market," he said. "We have a ways to go in order to attract retail downtown that relies on high volume."

bmoser@growthspotter.com or (407) 420-5685

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