Is Walgreens' upcoming closure in downtown Orlando a canary in the coal mine? - Orlando Business Journal (2024)

For Rob Nunziata, the imminent closing of the downtown Orlando Walgreens at 190 S. Orange Ave. is more than just the loss of a convenient retail option on the ground floor of a building for which he and his brother, Joe Nunziata, are majority owners.

After all, it was the Nunziatas — who are also co-CEOs of Orlando-based FBC Mortgage LLC — along with veteran broker Brian Grandstaff, of Millenia Partners, who were the driving forces behind the national retail tenant coming to downtown Orlando in the first place.

The leasing was heralded at the time as a big deal for downtown, with downtown leaders saying it checked one of the vital boxes for the central business district's progression.

It's through that lens, then, that Rob Nunziata told Orlando Business Journal that his larger concern with the store's upcoming closure, scheduled for March 30, is that it's a canary in the coal mine for the downtown district — warning that more challenges may lie ahead.

"The biggest thing is really that Walgreens going out of business is a symptom of a much bigger problem downtown," Nunziata said. "It re-emphasizes that downtown has some struggles that need to get fixed."

He's not alone in this assessment, either.

Longtime Orlando attorney Rich Newsome is a partner at Newsome | Melton Law, which has downtown offices at 201 S. Orange Ave. and has had offices in the central business district for more than two decades.

Newsome told OBJ that his firm is reevaluating whether it will remain downtown when its lease comes up in a year. "What should be the heart of our urban area is blighted," he said. "It just makes me sad."

Such concerns matter for the immediate health of downtown Orlando and its ability to attract new businesses and economic activity. This was noted during a March 20 Orlando City Council meeting by District 1 Commissioner Jim Gray, who is also a managing director for CBRE.

"Right now, we're in the news for all the wrong reasons — an unruly nighttime atmosphere and too many homeless on the streets," Gray said during a discussion on two controversial measure recently passed regarding downtown's nightclubs and bars. "Companies looking to relocate to Florida currently do not have a favorable outlook on our downtown, and many of our current downtown employees aren't walking endorsem*nts to their friends and co-workers in other parts of the country."

Of course, not everyone is down on downtown, either. Nor does everyone think the Walgreens closing should be a barometer for the district's health.

OBJ spoke to several stakeholders about the outlook for downtown in light of this week's planned closure, and several noted the store's lack of a pharmacy as one possible reason the location did not work out in the long run.

For instance, Jeré Matheny, a senior associate for Orlando-based First Capital Property Group who regularly works both lease and building sale deals in downtown, noted the average size of a Walgreens is 13,500 square feet — or about twice the size of the 6,780-square-foot store at the corner of Church Street and Orange Avenue.

Those larger stores include not just pharmacies, he noted, but also increasingly are home to its Village Medical urgent care clinics. Both of these components are an important part of Walgreens' business model at this point, Matheny said.

"A 6,500-square-foot store, regardless of how prime the location, simply isn't ideal for where Walgreens is in their own evolution."

As for Walgreens executives, the company offered only a general statement through a spokesperson that noted focusing on the "right network of stores in the right locations" and "changes in the buying habits of our patients and customers."

David Barilla, acting executive director of the city’s Downtown Development Board/Community Redevelopment Agency, also noted the lack of a pharmacy but added the board takes any closing of a downtown business seriously — be it a national tenant or not.

Despite that, he said the store's closure does create an opportunity for a new concept to move into one of downtown's "key corners" — one that "could bring in a lot of activity and energy to the space."

Making the case for positivity in the district, Barilla also noted that March 4 of this year was the first time since the pandemic that all of Orlando's downtown venues — including the Dr. Phillips Center for the Performing Arts, Amway Center, Exploria Stadium and Camping World Stadium — were in use at the same time.

After fits and starts for downtown Orlando's events economy coming out of the pandemic, the success of that night was a big deal, said Dominique Greco, the former nighttime economy manager for the city of Orlando who launched and now leads the Orlando Hospitality Alliance.

"We’ve gotten far away from that event culture that we were really strong on before Covid-19, for obvious reasons, but it needs to come back in a big way."

Another reason for some persisting positivity from downtown stakeholders is growth in the district's residential sector.

For instance, OBJ previously reported that more than 2,700 apartment units have delivered downtown in the past five years — almost all of which are high-end, luxury apartments — and that at least 1,100 more are in some stage of planning or construction.

It's one of the reasons Tim Garito, whose investment in downtown Orlando has several components, remains bullish.

Garito owns Garito & Co., a commercial real estate firm that has offices at 14 E. Washington St. downtown and frequently does deals in and around the district. He also owns Garito Hospitality, whose entertainment and nightlife concepts include Sly Fox Pub; The Game Room, which recently opened; and the under-construction relocation of Parliament House.

"I'm investing — I'm one of those people that believes wholeheartedly that Orlando's downtown has got great potential for the future," Garito said. "I think we're just getting started, and one of the big things that is positive for downtown is the increase of residential development."

Garito did, however, note that he has observed an exodus from his bars at a certain time of night on weekdays, with regulars acknowledging it is in part because of safety concerns.

Safety concerns, and concerns related to a rising homeless population downtown, were noted by several of those with whom OBJ spoke for this story.

Cheyenne Matos is director of operations for Garito & Co., a role that includes hiring new talent for the firm, and she and Garito said some prospective employees are not enthusiastic about working downtown because of such issues.

"It's a huge issue, and I'd like to see our City Council members come up with an action plan to take care of that and replicate things that other cities have done to help," Matos said. "A lot of these people need mental health services, so how do we implement those things to help these individuals find those things and make a better path for themselves?"

One other challenge for downtown that affects its outlook, both in a retail sense and more broadly, is the success in recent years of neighboring downtown neighborhoods and their Main Street districts.

Prominent downtown developer Craig Ustler, whose work includes downtown's $1.5 billion Creative Village district, said it is important not to think of downtown in a vacuum, and to consider the ways in which those nearby neighborhoods and their vibrant commercial districts are part of the ecosystem of the city's core.

"Where the market has taken over is really in Mills 50, North Ivanhoe, Thornton Park and Hourglass," Ustler said. "Because those neighborhoods are strong, and because they have single-story and more affordable real estate, we haven't gotten as many of those uses in our downtown corridor."

Despite that, Ustler still sees plenty of upside for the downtown district, saying "there's some unbelievably good pieces of the puzzle" already in place.

It's for that reason that Ustler, Barilla, Greco and others remain positive about downtown's outlook — even as one of its few national tenants prepares to close its doors.

"Our thriving Main Streets are such a success story and something to celebrate," Greco said. "Has that impacted downtown? Yes, of course — but I also think there is enough business to share the wealth. There's still 30,000 people coming downtown on many weekend nights."

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