Tulaberry Plaza: Leasing Decisions in Commercial Real Estate

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

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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.

A map of Florida shows the extension of southeast submarket of Orlando.

Source: REIS.

Exhibit 2: Aerial View of Tulaberry Plaza

An image shows the aerial view of Tulaberry Plaza (outline marked in a different color). Logos of Publix, McDonalds, Wachovia, BB&T and Outback steak house are given above appropriate buildings. Many cars and trees are seen in between the buildings.

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.

An image shows the site plan of Tulaberry Plaza.

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

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