SHOPPING CENTER INSIGHTS BY JEFF DERVECHBlog

Pizza Delivery companies are busier than ever! As people are forced to stay at home, many are turning to decades old pizza and chicken wing chains for food delivery. Many of these chains are hiring employees as fast as they can. Papa John’s, Domino’s and Little Caesars are all adding help to assist with the growing demand. With the delivery infrastructure in place, these retailers are setup and prepared to execute during a time like...

The retail environment and the world economy remain in a state of flux. As local communities across the country “shelter in place” and all businesses deemed “non-essential” close their doors, the shopping center sector has been thrown for a major curveball. Essential retail is thriving as “daily need” uses remain to be open and busier than ever. Grocery stores are noticing a 50-100% uptick in business, drugstores are not able to keep products on shelves...

The restaurant sector will continue to see growth in 2020. Over 90% of American adults report that they enjoy going to brick and mortar restaurants, according to Hudson Riegel of National Restaurant Association. Restaurant concepts such as craft breweries, entertainment, chef driven restaurants and fast casual giants continue to be active and seek to lease space. Growth within the sector remains to be moderate but steady, as top chains are being very methodical and strategic...

Healthy fast causal concepts continue to be on the rise and pair as a great use in a shopping center with other health-oriented retailers. As consumers seek out food retailers that offer healthy food options, concepts styled around the “Chiptole” bowl blueprint continue to be in high demand. Retailers have followed suit and are beginning to see success of their own. Panera for instance, implemented both a Baja and Mediterranean bowl last fall and have...

Target is leading the charge and continues to benefit for its investment in both digital and brick and mortar assets. As Target continues to slowly grow its new store count, renovate existing units and make investments into its digital footprint, the company is setting itself up to be a fierce force in this new age of retail. This retailer is the poster child to other retailers and is a model that others should follow to...

According to a National Restaurant Association survey, nearly 60% of restaurant interactions now are for off-premises dining. 90% percent of consumers buy takeout at least once monthly. “Digital platforms have made it very easy to order online in a seamless way from these various restaurants, so it has increased traffic quite a bit,” said James Cook. 79% order delivery directly from restaurants and 53% order through 3rd party apps such as DoorDash or Grub Hub....

The banking industry has changed tremendously over the last 10 years. From large rollout programs by different banks to capitalize on markets in establishing brand with a brick and mortar presence to purely technology driven initiatives with a turn towards focusing on efficiencies. As of late, here are the 5 bank branch trends occurring in the retail sector. Branch bank consolidation continues; 3,164 branches closed last year. The biggest institutions are closing the most branches;...

“Tenant Mixes in 2020 differ from Anything Consumers have seen since The Dawn of the American Downtown.” Landlords are discovering and reaping the benefits of backfilling former vacant retail spaces by way of some recent closures, leading to higher returns and a more powerful overall diversified tenant roster. By way of examples include, RPAI filling a former Pier 1 store with a Trader Joes at Shoppes at Union Hill as well as the replacement of...

Simon Property Group has negotiated to purchase an 80% stake in the Taubman Realty Group for $3.6 million in cash, expecting to close in mid-2020. Simon will be acquiring Taubman’s common stock for $52.50 per share and one-third of its ownership interest, with Taubman still remaining a 20% partner. Taubman’s property portfolio will continue to be managed by its existing executive team being led by the CEO Robert S. Taubman. Simon Properties claims to enhance...

Mark Zandi, chief economist at Moody’s Analytics, gives some insight on what he predicts will occur in 2020 in the real estate economy. Views on job growth, trade wars, presidential election and its impact on the economy. Interest rates are projected to remain relevantly stable with neither an increase nor decrease expected in 2020 and the next anticipated move by the Fed is probably to raise rates in approx. 12 months (2021) in order to...

The Vitamin Shoppe opened 300-square-foot shops inside 9 LA Fitness health clubs. These in-gym shops serve up sports-nutrition products and on-the-go healthy snacks and beverages, as well as vitamins, minerals and supplements. The Vitamin Shoppe pays rent on the shops and employs its own salespeople. The companies are monitoring the format through March to determine whether to open more. One location is in Union, N.J., and two are on Long Island, in Farmingville and Huntington...

Retailers continue to shrink their footprint to right size their stores as they position themselves for the future. Omnichannel is a must and retailers must look for ways to condense and maximize their brick and mortar footprint all the while creating and growing an online base. Customers want both the ability to purchase in store as well as the ability to buy online. This move by Abercrombie is one that you are seeing by majority...

Former Toys R Us real estate update! New York based firm, Raider Hill, was tasked back in mid-2018 as the exclusive real estate advisor to the Toys R Us bankruptcy estate. The company was assigned the leasing, redevelopment and disposition of approx. 320 vacant big boxes across 46 states. In less than 2 years, Raider Hill’s portfolio of former Toy R Us stores available for sale or lease had dwindled from 320 stores (15.5 million...

From issues which include fixing the Qualified Improvement Property (QIP) glitch, opposing legislation that would tax carried interest as ordinary income, restoring Section 118 income tax exemptions, changes to beneficial ownership reporting requirements and ADA lawsuit reform. ICSC members from around the country travel to visit with Members of Congress in their home states to create interactions outside of DC, build long term relationships in a more personal setting and highlight the breadth and scope...

Coffee chains continue to grow and work to obtain market share from the already well-known mammoths! The coffee industry overall has evolved over the last 50 years. For decades, Americans obtain their daily dose of coffee from a local diner or café then to have evolved over the years to more corporate known options such as Starbucks, Dunkin and Tim Hortons. Now, more and more regional players are creating a craft product and a custom...

Shrinkage, the term used mainly to describe the theft of stolen goods, is now being addressed more efficiently by the use of technology. According to the National Retail Federation, retail shrinkage accounted for approx. $50.6 billion in 2018. This encompassed shoplifting, returns fraud, employee theft and similar losses with theft by employees accounting for the bulk of this amount. Retailers are now adopting video analytics and technology to count shoppers and track their behaviors. The...

The only constant is change! The grocery industry continues to evolve and has embarked on a new trend. Supermarket retailers are beginning to open “dark stores”. A dark store resembles a traditional store but is closed to customers and used only to process online orders. Brick and mortar locations essentially work to serve as micro fulfillment centers. As consumers move more towards online ordering, expect retailers to evolve to meet changing demands on how people...

As opportunities for former big box and department store anchor spaces become available, developers and retail landlords are getting creative on how to reutilize the real estate. Commonly retail landlords are splitting the former big box unit, where viable, demising the space to accommodate multiple retail uses with smaller floor plan layouts. One developer in Neptune Beach, FL is creating a mixed-use complex out of a former Kmart location which will include ground floor retail...

Chiptole is growing! The brand will open between 150 to 165 new units in 2020. The company has announced that more than half will incorporate drive through lanes as they’ve changed their real estate strategy and look to add this convenience option for customers. Generally speaking, restaurants that add a drive through lane increase overall sales on average 20-30%. Chiptole has a large cult like customer following, offers a great product and is a strong...

Did you know that Domino’s carryout service is 45% of their total US orders? Dominos is incentivizing its customers to use carryout service as it is more profitable then delivery mainly due to high costs and competition from third party delivery apps. Domino’s is expanding its store footprint to get closer to customers, which is designed to shrink delivery times and save costs. The belief is that as 3rd party delivery apps continue to shrink...

It’s a symbiotic relationship! Fitness concepts are healthy for shopping centers and shopping centers benefit from fitness users as tenants. The old stigma that fitness tenants absorb too much parking and the fact that many major anchors excluded their use in reciprocal easement agreements has changed over time and is not longer the norm. In many instances, shopping centers benefit by way of having a fitness concept at their centers as these uses drive traffic...

The holidays and retail go hand in hand! The retail industry is very much alive and well and as we enter this holiday season expect consumers to continue to spend discretionary income at very strong levels. The average consumer is expected to spend approx. $683 on holiday related items, an increase of 4.9% over last year according to ICSC. Brick and Mortar remains crucial to the success of the holiday shopping season, with approx. 90%...

Optical Stores are great shopping center tenants! The expansion of vision offerings is growing in demand for both functional and fashionable eyewear. Eyewear is essential across all demographics and is available at all price points from value based to high end. The sector continues to benefit from America’s growing older population which continues to fuel demand for health care services across the board. Optical Stores offer different options and sell a variety of products ranging...

Target and Walmart are racing to make a push in an effort to implement solar panels into their store portfolios. Target has roughly 1,855 stores and is aiming to have approx. 25% of their units powered by renewable energy by the end of 2020. Walmart has committed to using 100% renewable energy and plans to have 50% of the stores within their portfolio completed by 2025. This an admirable commitment and one of which will...

Dollar General is a great retail tenant for shopping center owners! This retail brand continues to innovate and stay ahead of the curve. With over 15,800 stores across the US, DG is implementing further plans to dive deeper into the grocery business with its DG Fresh initiative. The scope of this initiative is to add additional grocery products in order to close the gap between dry goods and fresh product offerings in store. The company...

Walmart to move into health care! The Bentonville, Ark based retailer has made an announcement that it will open its 1st Walmart Health clinic this month within a store in Dallas, GA. This clinic facility will provide customers with low priced health services to include dental, audiology, x-ray examinations and mental health counseling. If successful, this pilot program will be expanded further and will be implemented to other units across its chain. The clinic is...