Upgraded Parking Unlocks This Retail Plaza’s Profit Potential

Most of the time, you buy a building because it has everything you’re looking for. But in some cases, you purchase one that’s not up to snuff for the opportunity to add your own value.

Some might overlook a poorly developed property, but if you can see past its drawbacks and project your vision onto its pitfalls, then you can position your asset for an even greater return.

In the instance of the Lakeside Plaza of Windermere in Orlando, Florida, that’s exactly what Chicago-based developer Alliance Consolidated did.

“We decided before we even bought this property that we would have to redo the parking lot — we knew that going in,” Alliance CEO Ben Reinberg told LoopNet.

The December 2018 purchase also included an adjacent piece of vacant land, which the company wasn’t sure how to tie into its overall plan. “Part of the land is owned by the county and we didn’t know what they would want to do with it. Long story short, we spent over a year working with Orange County, and getting entitlements and approvals, in order to get all our upgrades built,” he added.

With an investment of $1.5 million, Alliance installed new sidewalks, planted palm trees, built a detention pond with a retaining wall, and most importantly, redesigned the parking lot to support better traffic flow and almost triple the parking, increasing available spaces from 49 to 125.

The 20,000-square-foot property’s most glaring problem was its lack of parking.

Reinberg, a 27-year veteran of the commercial real estate industry, recalls being “seriously concerned,” the first few times he visited the property, which includes two structures. “There were people parking on curbs or in the grass,” he said. “The retail center has a popular dance studio, and is near a school, so that kind of traffic flow was particularly unsafe with so many children around.”

And frankly, it just wasn’t functional or easy for patrons to get around while visiting the retail plaza. The center is primarily home to medical tenants, beauty services, and a dance studio, for example. But with all the traffic concentrated in the center of the lot and sparse available spaces, the congestion was deterring visitors.

“We talked to the tenants, and while their businesses were doing well, the parking was an issue and there were often backups. Say, for example, that a number of people come for a 4 p.m. drop-off at the dance studio. Well, now there’s a line of cars that are blocking someone who is coming and going from the nail salon,” said Reinberg. “The new parking lot solved the complaints of everyone, created better synergy between the tenants and now allows everybody to thrive.”

At the request of Orange County, Alliance also built out 25 additional parallel parking spaces along Reams Road, where the new entrance is now situated.

Wrapping the parking around the “L-shaped” buildings, instead of having it concentrated in the center as it was previously, also made for a more conducive traffic flow and added additional spots. “We had a drive that went around the spa and dental building, so we created parking spots behind it for employees, which left more available space for people coming to the center.”

The original layout also had a detention pond taking up valuable space in the lot, so the team moved it to the adjacent vacant land, “which allowed us to add numerous spots when you pull into the center,” while still incorporating landscaping for curb appeal, said Reinberg. “A huge key was moving that detention pond. At the suggestion of the county we built a retaining wall with it, and so now there is a gorgeous landscaped space at the back of the property, and it really allowed us to expand the footprint of the land by taking that out — and in turn, that allowed us to put in more driveway and increase parking spots.”

The retention wall also acts as a buffer between the retail center and its residential development next door. Removing original curbs and islands in the lot also opened up room for more parking spaces.

In the three years since Alliance purchased the property, the surrounding area of Horizon West, Florida, has developed rapidly.

“When we bought the property, Reams Road was two lanes. Right after that, it expanded into four lanes,” said Reinberg.

But with several new residential and luxury townhouse communities going up around the site, other shopping centers in close proximity, and a newly built grade school down the road, an absence of sidewalks made what could be a walkable location inaccessible without a car. Through working with the county, the infrastructure upgrade campaign included building out new sidewalks that made the businesses at Lakeside Plaza accessible for residents by foot.

“At the end of the day, it was a really challenging project and a significant capital investment. I don’t think the previous owner who sold us the property wanted to go through the challenges we had to face. But over time it will pay dividends for leasing and marketability,” said Reinberg.

Alliance has seen the evidence of its improvements so far through lease renewals, with tenants already extending their leases this year with five-year terms. Upon its completion, the new parking lot also immediately helped lease a vacant space to a new tenant, he added.

While the company has owned the property for too short a time to directly recoup the monetary investment, Reinberg does naturally expect higher rent prices in the future.

“With how hot this market is in Florida, there is a lot of demand, and this kind of value-add proposition adds a lot of attractiveness compared to the competition. It’s a place that tenants want to be,” he explained. “Tenants will be willing to pay up to be here, and what that demand does is create longer-term leases, escalating rents and rent bumps, etc. It gives us more leverage as the owner, and it will really pay for itself over time — the value is in the long-term.”

Reinberg recognizes that the ability to hold the property is part of the return-on-investment strategy, and feels confident that Lakeside Plaza is positioned for long-term growth due to its stability and attractiveness.

“There isn’t really any more vacant land to be developed by the competition, and the rents in the area will continue to increase due to demand, so by improving the parking lot, it improved our position to always be a strong property with good tenant synergy and lease-up,” he said.

“The parking lot improvements have helped with the safety of the property, its marketability, and whether we hold or we sell down the road, whoever owns this property in the future will never have an issue with leasing,” he continued. “You might have different tenants here and there, but the parking and infrastructure upgrades we made are important to the patrons that frequent this center and spend money at these businesses.”