ALEX: Welcome to The Local Business Playbook, I'm Alex, and today we are diving into something that honestly sounds like it could be a dry economics lecture — but trust me, it is anything but. We are talking about vacancy chains, and if you own or are thinking about opening a small business in Florida, this episode could genuinely save you from a really bad decision.
JAMIE: And I'm Jamie! And Alex, I love that you said it sounds dry because when you first brought this topic to me I was like, okay, vacancy chains, sure — and then I started actually digging into it and I could not stop. This stuff is wild.
ALEX: Right? Because it's one of those things where once you see it, you can't unsee it. Have you driven through Brandon lately, or Altamonte Springs, or even parts of Sarasota?
JAMIE: Oh, absolutely. You see these massive empty storefronts — a Big Lots, a Bed Bath and Beyond — sign faded, parking lot growing weeds. It looks sad, but most people just drive past and think, oh, that's too bad.
ALEX: Exactly. But what most people don't see is what's happening to the smaller shops right next door over the following six to twelve months. Those shops aren't just losing a neighbor. They are being pulled into a cascading failure that can hollow out an entire commercial center in less than three years.
JAMIE: And that's the vacancy chain. So let's start at the beginning — the anchor. Because to understand how this whole thing collapses, you have to understand what an anchor actually does for a strip mall.
ALEX: Yes. So in commercial real estate — CRE if you want to sound fancy at a party — the anchor is the gravitational center. Think of your classic Florida strip mall. You've got a Publix or a Target, and then you've got twenty smaller stores around it. The nail salon, the sandwich shop, the boutique gym.
JAMIE: And those big anchor stores, they are not just taking up space. Data shows they generate forty to sixty percent of a mall's total foot traffic. They spend millions on advertising and loyalty programs just to get people physically into that parking lot.
ALEX: Which is why when Sears shuttered its last 23 locations in 2023, the whole industry felt a tremor. And then in 2024 you had over 1,400 Big Lots closures and the massive Bed Bath and Beyond liquidation. These big-box stores occupy anywhere from 60,000 to 200,000 square feet. That is a lot of gravitational pull just... gone.
JAMIE: And when that anchor goes dark, the foot traffic doesn't just dip — it evaporates. Think about it from a small business owner's perspective. Say you're a local coffee shop owner in Tampa. You signed your lease specifically because you knew 5,000 people a day were walking past your door on their way to the big-box store next door.
ALEX: Right, and when that store closes, your customer acquisition cost doesn't just go up — your primary source of discovery vanishes overnight. That's Stage 1 of the vacancy chain. The Anchor Exit. And it's especially brutal in Florida because we have an abundance of retail square footage, but consumer habits are shifting hard toward e-commerce and experiential spending.
JAMIE: So the market is already under pressure, and then you yank out the anchor. Okay, but here's where I think a lot of people — including landlords, honestly — get caught off guard. Because you'd think, alright, the big store left, but the landlord will just find a replacement, right?
ALEX: That is exactly what most people assume. And that assumption leads us straight into what I think is the most dangerous part of this whole story — co-tenancy clauses.
JAMIE: Oh, co-tenancy clauses. Okay, so for anyone who hasn't heard this term before — and I hadn't before we started researching this episode — these are essentially a protection built into retail leases.
ALEX: Most retail leases for spaces over 2,000 square feet — the kind of space a local hardware store or a large restaurant might take — include these clauses. They basically say, if the main anchor store leaves and isn't replaced within a certain timeframe, I, the tenant, don't have to pay full rent.
JAMIE: Wait, so when Bed Bath and Beyond or Rite Aid exited their Florida locations, thousands of smaller neighboring tenants suddenly had the legal right to reduce their rent? Like, immediately?
ALEX: Immediately. Often by 25 to 50 percent. And now think about that from the landlord's perspective. You just lost your biggest rent check from the anchor. And now your remaining tenants are legally cutting their checks in half. That is a massive cash flow crisis hitting from two directions at once.
JAMIE: And it gets worse! Because if the anchor space stays vacant for 12 to 18 months, many of those co-tenancy clauses allow the smaller tenants to terminate their leases entirely. No penalty. Just — bye.
ALEX: And landlords in legacy portfolios — centers built or leased out between 2005 and 2015 — are often completely blindsided by how many of these clauses are active. They thought they had a stable 90 percent occupancy rate. But on paper, they are one anchor exit away from a 40 percent revenue drop.
JAMIE: Which is why you see some Florida plazas just... stay in a state of decay. The landlord literally doesn't have the cash flow to renovate or attract a new big tenant because the co-tenancy clauses are draining the reserves. They're stuck.
ALEX: Stuck is the perfect word. And that leads us into Stage 3, which is really the heart of the vacancy chain — the Secondary Tenant Exit. This is where the hollowing out actually happens, and it usually takes 18 to 36 months.
JAMIE: And it follows a pretty predictable pattern, right? The first businesses to go are the impulse-buy ones. Your specialty gift shop, your high-end dessert spot. They relied on the 'while I'm here' crowd. Without the anchor driving foot traffic, they simply can't survive on destination traffic alone.
ALEX: And as those shops close, the plaza starts to look broken. There's more trash in the parking lot because the common area maintenance fees — the CAM charges — are being split among fewer and fewer tenants. The lighting isn't as bright. Security gets scaled back.
JAMIE: And that creates a perception of safety issues, which further drives customers away. So even if you're a business owner who is still there with a great product, the environment itself is working against you at that point.
ALEX: And then the vulture tenants arrive. Temporary Halloween stores, low-quality liquidators, short-term storage. They fill the space, sure, but they don't bring the foot traffic back. And honestly, they signal to the community that this plaza is on its way out.
JAMIE: Which is such a crucial thing for anyone scouting a new location to understand. You need to look past the current occupancy. Ask to see the anchor's lease term. If that anchor has two years left and no options to renew, you could be looking at a vacancy chain kicking off before your own first lease term is even up.
ALEX: That is such important advice. Okay, but let's talk about the silver lining here, because there genuinely is one — especially in Florida specifically.
JAMIE: Yes! Okay, this is the part I was actually excited to get to. Because Florida's population is growing so fast, especially in the I-4 corridor and the Suncoast, those empty big boxes aren't staying empty forever. They're just changing.
ALEX: We are seeing a massive trend in adaptive reuse. The big one right now is what's being called 'Med-tail' — medical retail. Massive dialysis centers, specialty surgery centers, giant health clubs taking over old Sears locations.
JAMIE: And these bring in high-income, consistent foot traffic. That's actually really good for the neighboring small businesses. But my personal favorite trend — and I feel like this is so Florida — is the Pickleball Pivot.
ALEX: The Pickleball Pivot! Old department stores being converted into indoor sports complexes. And here's why this is actually better for a local cafe than a Sears ever was — a pickleball complex brings people who stay for two hours and then want a smoothie or a beer afterward.
JAMIE: Right, it's experiential, it's sticky, people linger. Compare that to someone who runs into a big-box store for a quick errand and goes straight back to their car. The new anchors are actually generating better downstream spending for small businesses.
ALEX: So if you are currently in a plaza facing an anchor exit, the advice is: get ahead of the chain. Talk to your landlord now. Don't wait for the co-tenancy clause to kick in. Ask them directly — what is the plan for the anchor space? Are they talking to medical groups? Are they looking at residential conversion?
JAMIE: And if the answer is 'we're just waiting for another big-box retailer' — that is a red flag. Because the old model of the 1990s power center is genuinely dying, and the vacancy chain is the mechanism of that death. The retail landscape in Florida is moving hard toward lifestyle centers and mixed-use.
ALEX: But here's the flip side of that — for the savvy entrepreneur, a dying center can actually be an opportunity. You can negotiate a killer lease rate in a location that is about to be reborn as something much more modern. The chaos creates leverage if you know how to read it.
JAMIE: Which is exactly why understanding these market forces is what separates a business that survives from one that gets caught in the collapse. And that's really the whole point of today's episode.
ALEX: Perfectly said. Okay, so to recap — vacancy chain, Stage 1 is the anchor exit and the foot traffic evaporation. Stage 2 is the co-tenancy clause domino, which hits the landlord's cash flow hard. Stage 3 is the secondary tenant hollowing, the broken plaza effect, and the vulture tenants moving in. And the way out is adaptive reuse — med-tail, pickleball, mixed-use, and the savvy business owner who reads the room early.
JAMIE: Love that recap. Alright, if you want to go deeper on any of this — and I really hope you do — head over to support-local-businesses.com. They have specific guides on the cost to start businesses in various Florida cities, from plumbers in Orlando to boutiques in Miami. You can check out their directory for your specific ZIP code to see who is actually thriving in your backyard. And please, subscribe to The Local Business Playbook on your favorite podcast app, and leave us a review if this episode helped you look at your lease — or your next lease — a little differently. I'm Jamie, he's Alex, and this has been The Local Business Playbook. Support local, stay informed, and we will see you in the next one. This podcast is a production of support-local-businesses.com — visit us at support-local-businesses.com/podcast for show notes and links to everything we talked about today.