Thursday, February 5, 2015

Nine hot trends that the retail real estate industry can expect in 2015

We really enjoyed Joel Groover's article in the most recent Shopping Centers Today covering nine "hot topics" he identified after surveying experts in the industry.  Commercial district managers take note! Could some of these trends make their way to your district?
  1. More Mobile Tech and E-Commerce - The continued rise of Internet users worldwide coincides with the ability to capture and use data in ways that improve overall performance. The article goes as far as to note the ability to track customer movement inside malls and stores to gather information - is this move overstepping privacy though?
  2. More Redevelopments of Well-Located Properties - A lot of capital investment is being leveraged against redevelopment of strategically located properties that have the investors cool as cucumbers because the demand for good real estate is so high.
  3. Continued Growth of Fast-Casual Dining - Sales among fast-casual dining establishments increased 11% from 2012 to 2013 and are expected to continue.  Baja Fresh, Chipotle, Panera Bread, and Qdoba are all lumped into the lot of fast-casual as well as Shake Shack who's recent IPO sold 5 million shares. Fast-casual, as I see it is a step above fast-food, which Americans are slowly recanting from. But don't take our word for it, just take a look at what's been happening to McDonald's lately..."As sales dip, McDonald's is replacing Don Johnson as chief", NYTimes, 1/28/15. So here is our question for you...what is your mix of food offerings and is fast-casual dining part of your retail mix? If probably should be. 
  4. More Subleasing of Retail Space - Basically a store or brand within a store or brand. This is expected to increase in 2015. Large-format retailers are turning to creative sublease solutions amid the trend toward downsizing.
  5. More Solar Arrays on Shopping Center Rooftops - Companies, mostly big box stores, are seeing solar as a way to turn underused land and rooftops into productive assets while also impressing environmentally friendly consumers.
  6. Healthier Employment and Consumer Spending - The article relates lowered energy, i.e. oil prices, to savings for employers and consumers who will spend the money saved on gas.  This equates to, among other things, more hiring by employers.
  7. More Same-Day Delivery - As Amazon has notably taken the charge toward same-day delivery, other retailers such as Macy's and Target have also rolled out same-day delivery for select markets of time-stricken consumers. But only 9% of consumers surveyed "cited same-day delivery as a top factor that would improve their online shopping." This means that while delivery remains important, people still want to go to stores to purchase. That's good news for downtown. 
  8. New Initiatives to Recapture Coveted Spaces - Like putting a peg in a hole, retailers are adjusting their size to fit into more appropriate and more coveted spaces as they "right-size" their portfolios. Some of the retailers taking space include Nordstrom Rack, Sprouts, Trader Joe's, and Whole Foods. Looks like luxury bargains and specialty food are taking advantage of these opportunities.
  9. More Retailer Spin off Concepts - Spin off concepts ideally allow established retailers to capture interest of new demographic groups and enter normally inaccessible markets. For example Space Ninety8, an Urban Outfitters concept store, opened in normally chain unfriendly Williamsburg, Brooklyn. COS by H&M spins off higher luxury while F21 Red is lower priced than it's spin off parent, Forever 21. Could some of these spin offs find their way to your district?
Credit: This post was developed in part an article in SCT (“Nine Hot Topics For 2015,” Jan. 2015). 

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