Case
Teaching Notes
Supplementary Resources
Abstract
In January 2019, Benedict Clarke needed to address the vacancies at retail shopping center Tulaberry Plaza in Southeast Orlando. The rise in online shopping forced Tulaberry’s anchor tenant into bankruptcy and weakened the outlook for retail more generally. Clarke must devise a plan that presents the most logical and profitable way forward for the shopping center. The case asks students to make leasing decisions from the perspective of the property owner, Clarke, giving them an appreciation for both the quantitative and qualitative factors that influence optimal leasing decisions.
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved
Resources
Exhibit 1: Southeast Submarket of Orlando, Florida
Area covered by the submarket is outlined and highlighted in a different color in the map. Submarket extends over the following places:
- Azalea Park
- Conway
- Pine Castle
- Sky Lake
- Taft
- Flamingo
- Kissimmee
- St Cloud
- Narcoossee
- Runnymede
- New Eden
- Yalaka
- Wewahotee
- Tala Apopka
- Central Florida Greeneway
- Beach Line
- Two lakes: Lake Buena Vista and Lake Hart are also within the submarket.
Source: REIS.
Exhibit 2: Aerial View of Tulaberry Plaza
Source: CoStar.
Note: Property outlined in yellow.
Exhibit 3: Site Plan
Left side of the site plan shows two buildings near the Tulaberry Plaza not included in the site plan labeled as follows:
- Wachovia (Not Included)
- BB&T (Not Included)
Miniature image of several trees in between the buildings and cars parked on the roads are given in the site map. A rectangular strip on the top left corner of the map shows six buildings labeled from “B–6” to “B–1” (in descending order from top). A set of 22 rectangular buildings arranged in a reversed L-shaped layout is given on the bottom right corner. They are labeled continuously from “A–27” to “A–17” (top to bottom, along the vertical strip) and “A–16” to “A–6” (right to left, along the horizontal strip). A square building (next to building labeled “A–6”) with an Outback steakhouse logo is on bottom left corner of the site map.
Source: Tulaberry Plaza LLC.
Exhibit 4: Current Rent Roll, Tulaberry Plaza
Unit | Tenant | Industry | Size (SF) | Lease End Date | Current Rent per SF ($) | Current Annual Rent ($) | Annual Rent Adj. (%) |
B-1 | Quizno’s | Submarine sandwich/salad restaurant | 1,400 | 12/31/25 | 32.00 | 44,800 | 2 |
B-2 | Vacant | 1,400 | |||||
B-3 | Papa John’s | Pizza take-out/delivery | 1,400 | 12/31/21 | 30.00 | 42,000 | 2 |
B-4 | Jamba Juice | Drink-oriented restaurant | 1,400 | 12/31/20 | 30.00 | 42,000 | 2 |
B-5 | Great Clips | Unisex hair salon | 1,260 | 12/31/19 | 30.00 | 37,800 | 2 |
B-6 | Nature’s Table Café | Café-style restaurant | 1,790 | 12/31/25 | 30.00 | 53,700 | 2 |
A-1-5 | Outback Steakhouse | Restaurant | 6,401 | 12/31/32 | 10.15 | 65,000 | 2 |
A-6 | Pike & Co. | Title and mortgage company | 1,400 | 12/31/22 | 28.00 | 39,200 | 2 |
A-7 | Polo Cleaners | Dry cleaners | 1,400 | 12/31/20 | 32.00 | 44,800 | 2 |
A-8 | Pak Mail | Shipping and packaging | 1,400 | 12/31/21 | 28.00 | 39,200 | 2 |
A-9 | Deep Nine Salon & Spa | Hair salon and day spa | 1,400 | 12/31/23 | 28.00 | 39,200 | 2 |
A-10 | Vacant | 1,386 | |||||
A-11 | Total Family Care | Family medical practice | 1,337 | 12/31/26 | 28.00 | 37,436 | 2 |
A-12 | Family Chiropractic | Chiropractic office | 1,400 | 12/31/19 | 28.00 | 39,200 | 2 |
A-13 | Lakeside Pediatrics | Pediatric medical practice | 1,387 | 12/31/27 | 28.00 | 38,836 | 2 |
A-14 | Vacant | 1,387 | |||||
A-15 | Vacant | 1,388 | |||||
A-16-19 | Vacant | 14,228 | |||||
A-20 | Chinese/Thai | Chinese and Thai restaurant | 1,984 | 12/31/26 | 28.00 | 55,552 | 2 |
A-21 | Florida Fever | Clothing and home furnishings | 1,984 | 12/31/21 | 28.00 | 55,552 | 2 |
A-22 | Animal Hospital | Veterinary medical facility | 1,984 | 12/31/25 | 28.00 | 55,552 | 2 |
A-23 | Home Meal Replacements | Catering | 1,984 | 12/31/27 | 28.00 | 55,552 | 2 |
A-24 | Insurance Office | Insurance office | 2,000 | 12/31/26 | 28.00 | 56,000 | 2 |
A-25 | Vision Center | Optometry, optical devices | 2,000 | 12/31/19 | 26.00 | 52,000 | 2 |
A-26 | Dentistry Office | General dentistry office | 2,000 | 12/31/27 | 28.00 | 56,000 | 2 |
A-27 | Sushi Style | Asian sushi restaurant | 2,000 | 12/31/29 | 28.00 | 56,000 | 2 |
Source: Created by the author for discussion purposes only. All leases are NNN.
Exhibit 5: Anchor Tenant Possibilities
Tenant | Walgreens | Harbor Freight | PetSmart | Planet Fitness |
Tenant type | Anchor | Anchor | Anchor | Anchor |
Industry | Pharmacy | Hardware store | Pet store | Fitness |
Creditworthiness | S&P: BBB | S&P: BB- | S&P: CCC | Franchisee |
Projected sales (per SF) | $572 | $308 | $289 | $78 |
Tenant improvements requirement (per SF) | $35.00 | $27.00 | $28.00 | $44.00 |
Lease type | NNN | NNN | NNN | NNN |
Term | 25 years, with 5 additional 5-year options to extend at $25.00 | 15 years | 10 years | 20 years |
Base rent amount range (per SF) | $15.00 | $18.75 | $18.50 | $21.00 |
Rent escalations | 0% | 2% annual increase | 2% annual increase | 10% increase after every 5 years |
Target demographics | Male and female, all ages, all incomes | Male, ages 25–55, wide income range | Female, ages mid-20s and 50s | Male and female, ages 18–45, low- to middle-income |
Location preference | Near intersection/drive-through | Visible, inline, or self-standing | Anchor | Anchor |
Parking requirement | Medium | Medium | Low | High (100 spaces) |
Size requirement | 10,800–15,000 | 12,000–15,000 | 18,000–27,500 | 12,000–20,000 |
Exhibit 6: Non-Anchor Tenant Possibilities
Tenant | Starbucks | The Vitamin Shoppe | Ben’s Tux Rental | Family Dollar |
Tenant type | Restaurant | Inline | Inline | Inline |
Industry | Coffee/food | Health and wellbeing | Formalwear rental | Value retail |
Creditworthiness | S&P: BBB+ | N/A | N/A | S&P: BBB- |
Projected sales | N/A | N/A | N/A | N/A |
Tenant improvements requirement (per SF) | $39.00 | $25.00 | $20.00 | $22.00 |
Lease type | NNN | NNN | NNN | NNN |
Term | 10 years | 10 years | 5 years | 10 years |
Base rent amount range (per SF) | $33.75 | $25.50 | $24.00 | $24.50 |
Rent escalations | 10% every 5 years | 10% every 5 years | 3% | 10% increase every 5 years |
Target demographics | Male and female, ages 25–40, mid-income ($75k or more) | Male and female, educated, health enthusiasts | Male, ages 18–30 | Male and female, low- and middle-income, wide age range |
Location preference | Urban or suburban, on commuting side of traffic patterns | Highly visible | Cheap | Food store anchored, neighborhood shopping center |
Parking requirement | Medium | Low | Low | Medium (25+ spaces) |
Size requirement | 1,700–2,700 | 3,000 | 1,200–1,500 | 7,000–10,000 |
… … …
Tenant | Salons | Payless Shoes | Local Furniture Boutique | Five Guys |
Tenant type | Inline | Inline | Inline | Restaurant |
Industry | Hair salon and day spa | Footwear | Home furnishings | Food |
Creditworthiness | 3-month security deposit | N/A | 3-month security deposit | Franchisee |
Projected sales | N/A | N/A | N/A | N/A |
Tenant improvements requirement (per SF) | $22.00 | $19.00 | $20.00 | $48.00 |
Lease type | NNN | NNN | NNN | NNN |
Term | 5 years | 15 years | 5 years | 5 years |
Base rent amount range (per SF) | $25.50 | $23.50 | $25.50 | $33.75 |
Rent escalations | 3% | 10% increase every 5 years | 3% | 3% |
Target demographics | Female, middle-income | Female, ages 18–44, household income less than 75k | Male and female, ages 18–45, low- to middle-income | Young adults |
Location preference | None | None | None | Corner or end cap ideal, but will consider inline |
Parking requirement | Low | Low | Low | Medium (35 spaces) |
Size requirement | 1,200–1,500 | 6,000–15,000 | 1,200–1,400 | 2,000–3,000 |
… … … .
Tenant | GameStop | Ricardo’s Bon Voyage | Plato’s Closet | Verizon |
Tenant type | Inline | Inline | Inline | Inline |
Industry | Gaming | Travel agency | Clothing retail | Wireless service |
Creditworthiness | S&P: BB+ | 3-month security deposit | 3-month security deposit | S&P: BBB+ |
Projected sales | N/A | N/A | N/A | N/A |
Tenant improvements requirement (per SF) | $35.00 | $25.00 | $24.00 | $37.50 |
Lease type | NNN | NNN | NNN | NNN |
Term | 5 years | 5 years | 10 years | 10 years |
Base rent amount range (per SF) | $30.00 | $25.50 | $25.50 | $40.00 |
Rent escalations | 3% | 3% per year | 3% per year | 0% |
Target demographics | Male, ages 15–30 | Male and female, ages 35–55 | Male and female, ages 12–24 | Male and female, ages 25 and older |
Location preference | None | None | None | Outlier/inline/endcap |
Parking requirement | Medium | Low | Medium | Low |
Size requirement | 1,200–1,400 | 1,200–1,400 | 2,800–3,600 | 2,600–4,600 |
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved