Covid-19 pandemic could change the face of Sembler’s shopping centers

Retail shopping centers are transforming in the wake of Covid-19.

Medical storefronts are likely to become more prominent and new leases for restaurants will include dedicated parking spots for customers picking up their food for takeout, said Nichole Popovics, vice president of leasing for The Sembler Co., a St. Petersburg-based development firm.

Popovics was among the commercial real estate professionals sharing insights on how the pandemic is reshaping retail properties in the Tampa-St. Petersburg area, during a program presented by the Urban Land Institute-Tampa Bay.

Covid-19 has been devastating for retailers deemed “nonessential” and forced to shut down or limit operations in efforts to slow the spread of the disease. Nearly 30 national retailers have filed for bankruptcy.

Stephanie Lieb

Stephanie Lieb, a shareholder at Trenam Law in Tampa who primarily represents creditors and landlords in commercial bankruptcy cases, said during the panel discussion that she hasn’t been this busy since the economic crash of 2008. She has been working on cases involving GNC, Pier One Imports, Stein Mart and Tuesday Morning, among others.

However, grocery stores, which are considered essential, are thriving, including Publix Super Markets, which reported a nearly 60 percent increase in net earnings in the third quarter of 2020.

Publix and other grocers are the anchors at most of Sembler’s shopping centers, with other tenants occupying the rest of the space.

“We did deal with a lot of rent relief, but in the second and third quarters, while everything was shut down, we had our best leasing quarters,” Popovics said. “From a collections perspective, April and May were the lowest, but we’re back. People are paying their deferments.”

Both The Shops at Wiregrass in Wesley Chapel and Westshore Plaza in Tampa closed early on in the pandemic, and have since reopened.

Washington Prime Group, which owns Westshore Plaza, worked with its tenants to ensure they were left standing after the pandemic is over, said Larry Scollo, general manager of Westshore Plaza.

The company is focusing on events to drive traffic to the mall, and also is stressing safety, such as additional cleaning. The play area for children remains closed, as do play areas at other local shopping centers.

“That definitely impacts our traffic. The stay-at-home parent is not coming to the mall because the play area is not open,” he said.

Future trends

Going forward, Popovics expects to see more lease accommodations for restaurant tenants, especially for quick service restaurants.

“We’re seeing quite a bit of QSR and a lot of formats that have been traditionally go in the store, order and they’ll bring it to your table — those concepts have been adding the drive-thru component as well as pickup spots or wait for your order spots. In deals going forward, we’re having to make sure there is dedicated parking for those types of things. In the past, we’ve tried to get away from dedicated spots, but now they are requiring them if they don’t have a full drive-thru or even if they do, they need those takeout spots so customers have more convenience.”

The pandemic amplified the demand for convenience, Popovics said.

Greg Lenners

Greg Lenners, senior general manager at The Shops at Wiregrass and CBRE Retail Property Management, agreed.

“We’re  an outdoor shopping center, so none of our QSR establishments have drive-throughs. However, with an outdoor shopping center, you can pull up in front of each store. So we allowed two parking spaces for each business so they could come up as a convenience to pick something up,” Lenners said.

Washington Prime has a program called “retail to go,” and both local and national companies at Westshore Plaza participate, Scollo said. Customers can order from a store’s website, then get a number for a designated parking space at the plaza. When the customer arrives,  an employee of that store will bring the merchandise out to the customer.

Lenners also is seeing a lot of hybrid situations, where brick and mortar blends with ecommerce, as well as a growth in Amazon lockers, allowing customers to pick up online purchases from Amazon at other retail stores.

“I think there will be broader mix of fulfillment center, grocery store, mal type retail and maybe medical office, all in one,” Lieb said.

Popovics expects to see more medical storefronts going forward.

“Medical is huge, from 1,000 square feet up to 30,000 or 50,000 square feet. We’re seeing all of the hospital groups preparing for that. A lot of the hospital groups are taking all of the specialties – general practitioner, physical therapy and other specialties– into one box. It’s a convenience factor again,” she said.

One-stop shopping at a single center is another key trend, Popovics said.

“Can the mom go to the grocery store, and then do Pilates and also run by the bank?” Popovics said. “Where that has been done in the past, now it’s more intricate because she doesn’t want to leave the center at all.”

At Westshore Plaza, the parcel that formerly housed a Sears store is being redeveloped into a live-work-play environment, starting early next year. “We’ll have apartments, a hotel, medical office space, more retail and more restaurant space so people who live in one of the apartments can do just about anything they need to,” Scollo said.

Winners and losers

Panelists answered a series of rapid-fire questions from moderator Camille Renshaw, co-founder and CEO of B+E, a real estate brokerage firm. Here are some of those questions.

Which real estate asset class will be the biggest winner coming out of Covid?

Popovics: Industrial

Lenners: Grocery

Lieb: Home improvement

Scollo: Home office supplies

Which will be the biggest loser?

Popovics: The office sector

Lenners: Office

Lieb: Small retail

Scollo: I’ll pass on that one.

Which retail segment will be the biggest winner?

All four panelists said sporting goods

Which retail segment will be the biggest loser?

Popovics: Any with no online presence

Lenners: Small businesses and nationals that were already struggling

Scollo: Moms and pops that were not positioned to get through this

If you could sign a lease with any new tenant in 2021, who would it be?

Popovics: Probably a hospital group. Here in the Tampa Bay area, I would go with Advent Health.

Lenners: Maybe an Apple or a Microsoft store. I’d also like to look at a shared office concept or fitness apparel, such as Lululemon.

Scollo: Medical office

Will there be a recession in 2021?

Popovics: Not to the extent of what it was in the past. I think there will be a blip but not a complete recession.

Lenners: I don’t think so. I think there will be some struggles. It will be a tough year, but I don’t see a recession.

Lieb: It will be industry based. There will be problems for a number of industries, but I don’t think it will bleed into the general economy.

Scollo: I don’t think there will be a recession, because of the pent-up demand and with the vaccines coming out soon, I think consumers will feel more confident about the way things are going to go, and the economy will respond to that.