Commercial Real Estate, Capital, Insurance, Leasing & Management

Potential Office Depot/Staples closings couldn’t come at a better time for Tampa Bay retailers

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If federal regulators approve Staples' $6.3 billion deal to buy Office Depot, it will likely mean a number of those stores will go dark — and that could be a good thing for Tampa Bay retailers.

If federal regulators approve Staples’ $6.3 billion deal to buy Office Depot, it will likely mean a number of those stores will go dark — and that could be a good thing for Tampa Bay retailers.

The retail real estate market in Tampa Bay is extremely tight, with less than 6 percent vacancy in any part of the region. That makes it extremely difficult for the new concepts looking at the market to find space in desirable areas, and rents aren’t quite high enough to justify the construction costs of redevelopment.

Both Office Depot and Staples stores range from 25,000 to 30,000 square feet, nearly all in prime locations, making the ones that may go dark a prime opportunity. If approved by regulators, the deal is expected to close by the end of 2015.

Office Depot has 26 stores in Hillsborough, Pinellas, Pasco, Polk and Manatee counties; Staples has 19.

“There are at least two dozen active mid-size users in Tampa Bay that will take those spaces and take them quickly,” said Patrick Berman, senior director of retail brokerage at Cushman & Wakefield of Florida Inc. “It won’t be a problem at all.”

Retailers that could potentially fill those stores include specialty grocers Earth Fare and Sprouts Farmers Market — both of which recently started scouting the market for sites. Retailers already in the region that are in expansion mode — any of TJX Inc.’s brands, including Home Goods, Marshall’s and TJMaxx, for example — could also be a good fit.

The potential closures could even benefit landlords in some cases, said Brian Bern, senior director with Franklin Street in Tampa.

“Depending on when those deals were made, the landlords might have to take a hit,” Bern said. “But with how tight the real estate market’s been getting, and if the market keeps improving, in most areas they could get better rent.”

Berman said he predicts six to 10 of the stores in the entire Bay region could close, based on their proximity to each other. Many Office Depot and Staples stores are less than two miles apart.

“It’s almost guaranteed some will close, if you look at the map,” he said.

That’s a small chunk of the retail real estate market — even if 10 stores closed and represented more than 250,000 square feet that suddenly was dark, it represents a fraction of the 100 million square foot market.

“I’m not worried one bit,” Berman said. “I predict within six months, or at least no more than a year, all those boxes will be filled.”

 
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