More than a dozen of the most profitable restaurants in Orlando would be forced to move if the Florida Department of Transportation proceeds with its recommendation to build drainage ponds at the site of the Crossroads of Lake Buena Vista.
Located directly across from a Walt Disney World main entrance, the entire shopping center is targeted for right-of-way (ROW) acquisition as part of the I-4 Beyond the Ultimate widening project, in what could be the most expensive taking in Central Florida history.
"We're 100-percent leased, and most of our tenants are top performers in the chain for the Orlando area, if not the nation," said JLL Vice President Justin Greider, listing agent on the center for owner TIAA-CREF, which bought it in 2005 for $54 million from Disney Development Co.
"This is a true dining destination, and has been serving tourists for a long time."
Based at the northeast quadrant of the I-4 - SR 535 interchange, the 29-acre shopping center is a dining hub with more than 155,000 square feet of retail space occupied by a Gooding's supermarket, a miniature golf attraction and national chain restaurants. Among those are McDonald's, T.G.I. Fridays, Red Lobster, Pizzeria Uno, Perkins, Tom & Chee and Noodles & Company.
This would be the most highly valued property taken for ROW in the I-4 Ultimate process thus far. The financial impact of that decision isn't being taken lightly by FDOT, spokeswoman Jennifer Horton told GrowthSpotter on Thursday.
"The analysis for Crossroads will be a standalone analysis," she said. "It is unlike anything we’ve ever done in District 5, and for context we take in nine counties and are roughly the size of Massachusetts."
The estimated $3 billion I-4 Beyond the Ultimate project, which is currently in design but not funded for construction, continues the I-4 Ultimate express lanes into Polk, Osceola, Seminole and Volusia counties.
FDOT estimates ROW acquisition cost for Segment 1, which includes the SR 535 interchange and Crossroads shopping center, will be more than $428 million as of October, a figure that has increased $134 million since May.
That number dwarfs the ROW cost estimates for segments 2-5 combined.
But commercial real estate experts tell GrowthSpotter that estimate doesn't come close to the actual value of the property, where average restaurant sales exceed $460 per square foot.
"I don’t know if they know how much these businesses are making out here," said David Gabbai, managing director for retail services at Colliers International Central Florida. "These are among the highest producing restaurants in the country."
Gabbai said several of his clients that are Crossroads tenants have been notified by third parties that the ROW funding could be accelerated. "There's not a panic, but there are concerns," he said.
Greider said he's confident the FDOT will reject the current plan in favor of one that leaves the Crossroads property intact. "While we’ve seen a number of different plans and time lines, currently there’s no solid time line and no solid plans," he said. "Ultimately we don’t believe we will be affected."
But FDOT staff indicated last month they favor taking the property.
During an Oct. 25 public hearing, FDOT presented its design recommendations for Segments 1 and 2, from SR 532 to the Beachline Expressway. Staff favored the option that builds ponds on the entirety of the Crossroads site.
Two of three design options for that interchange involved taking all or part of the shopping center. The agency evaluated the one design that wouldn't impact the Crossroads, but gave it a low rating for "constructability."
Horton said the agency is accepting written comments until Nov. 8 regarding the Project Development & Environmental Study.
Agency consultant HTNB recently completed a draft Conceptual Stage Relocation Plan that identified the nine Crossroads parcels at being 100-percent affected.
FDOT's Horton said all of the affected businesses could be eligible for federal relocation assistance -- which would be included in the ROW funding -- but they could not seek damages.
She said the agency can't seek appraisals for property until it has funding for ROW acquisition. So far, the only ROW funding is scheduled for fiscal year 2022 for Segment 3 in Seminole County, and for Segment 2 from Kirkman Road to the Beachline Expressway.
Greider said he and his client have been proactive in dealing with FDOT regarding Crossroads, and he has tried to reassure the tenants about the long-term viability of the plaza.
JLL just signed on Tex-Mex favorite On The Border to its only vacant space, and the firm is currently marketing three available restaurant outparcels on the site. Greider said Orange County has approved the entitlements and concurrency for the additional restaurants.
The HTNB report evaluated potential relocation sites for the Crossroads businesses along Palm Parkway, International Drive, and S. Apopka Vineland Road (SR 535), as well as available sites in the nearby Vista Centre Shoppes.
But Gabbai said the Crossroads plaza and its proximity to Disney World make the site unique. He said FDOT would get "a rude awakening" when it does start the appraisal process.
"How do you compensate for this loss of business?" he asked. "I know it's not funded, and I know it could take years. But how can FDOT justify these costs? It’s going to be interesting to see how it all shakes out."