Retail Forecast – Spring 2010

Customers Still Looking for Value
Although some say that the market is rebounding, customers are still looking for value in their purchases.

So, Who is Expanding?
Research conducted by RBC Capital Markets and Retail Lease Trac on retailers planning store openings in 2010 finds that of the top ten retailers planning to expand in 2010, three are dollar store concepts (Dollar General, Dollar Tree, and Family Dollar) and four are value-oriented food concepts (Quiznos, Five Guys Burgers and Fries, A&W Restaurants, and Burger King), with the number one retail spot going to Quiznos. [Retail Traffic, “Quiznos Leads List of Retailers Looking to Expand”]

For commercial district manager, the nice thing is that a majority of these retailers can be found along both pedestrian and automobile oriented commercial corridors.

Discount Apparel and Merchandise Remains in Vogue
Retailers that peddle discount apparel and merchandise are still finding opportunities to expand, and fortunately for us they are not shying away from urban areas. Kohl’s, a Minnesotta-based national discount retailer recently opened a new LEED-certified store in Rego Park, Queens, and they are looking for other opportunities in the New York market. They have developed a multi-story urban prototype store – Rego Park is three stories – and are flexible in store layout to meet local market demand.

Experts agree that expansion is still not that easy for many retailers – banks are still a bit queasy these days about lending money - but retailers that are well capitalized can take advantage of vacancies in the market. Many are signing leases or purchasing real estate at a fraction of the price they would have paid in the past. As long as property owners in your commercial district are comfortable with some form of market self-correction, they can position themselves to be competitive with retailers looking for well-priced space. But the bottom line is, landlords need to be flexible. If they speculate, their spaces may remain vacant for longer than is good for your district.

It’s Not Just the Chains
Smaller retailers are also looking to expand. In the New York market, Energy Kitchen, a mini-chain offering affordable healthy food ‘fast-food’ options, is looking to expand from 15 stores in the New York tri-state area to 100 stores in the northeast by 2014. They are looking for smaller spaces, from 1,000 – 2,000 sf that are already vented for cooking in and around gyms. Now may in fact be the time to approach regional mini-chains like Energy Kitchen looking to expand in your market.