SHOPPING CENTER INSIGHTS BY JEFF DERVECHBlog

Technology continues to increase efficiencies and create competitive advantages for investors in the retail industry. Sophisticated investors are using satellites to count cars in parking lots to gain a real-time understanding of traffic attributed to same-store sales growth, an important metric for physical retailers. This technology provides investors with data support of store foot traffic before retailers disclose their quarterly financial results. It can be a basis of indication coupled with other metrics indicating if...

Private owners and shopping center investment groups who continue to seek out value are adding retail opportunities, whether that be a grocery-anchored center that needs cosmetic upgrades in order to boost rents and to re-tenant the small shop space or unanchored strip centers with a vacancy that needs to be completely repositioned. Opportunities such as the examples outlined above are being highly sought out after and there is no shortage of banks willing to funds...

Retail brands such as Circuit City, Toy R Us, Bon Ton, and Wet Seal are a few retailers that have gone through the bankruptcy process and are now re-emerging in an effort to find themselves and their new identity. Many of these concepts will look to online platforms to re-engage with customers, but in the world of brick and mortar, they must create some sort of a physical strategy for an experience that cannot be...

Click and collect is an investment in both physical and digital, with retailers implementing this technology and consumers increasingly using it. According to a recent ICSC survey, 50% of adults use click and collect with as many as 61% using it as frequently as once per month. The retailers that offer this option are seeing an increase in sales and overall happier customers. Technology that makes retail purchasing frictionless is now mandatory as consumers expect...

The mall landscape has undergone two significant transactions, which finalized in 2018. Brookfield Properties acquired GGP for $15 billion, and Unibail-Rodamco purchased Westfield for $22 billion.The 80% of U.S. malls that are owned by publicly traded REITs with the top 4 malls owners in the US, measured by the total value of their owned or controlled portfolios, are Simon (110 malls, $49 billion), Brookfield (152 malls, $42 billion), Macerich (46 malls, $15.7 billion) and URW...

Renting rather than buying is the last trend in the world of retail, and I do not see this changing. The customer in today’s world is interested in having access to the newest selections, and retailers are stepping up to provide customers with this emerging demand. For instance, Rent the Runway is a women’s online apparel service that provides customers with an option to pay for a monthly subscription to rent, use, and return apparel...

Abercrombie and Fitch, a long-standing brand very familiar with millennials mainly through their middle school and high school days, is undergoing change with efforts to evolve to the standards of retail today. How many of you remember going to an A&F store with dark lighting in a large store footprint? The brand has announced plans to open more stores, shutter the non-performing locations, and correctly size their store footprint to maximize efficiency and sales per...

Brick and Mortar is strong, and retail has transformed and will continue to transform for the foreseeable future. The retailers that incorporate omnichannel into their business model will survive, and the ones that don’t will become extinct. 90% of total retail sales are still completed in stores. Over the last 10 years, overall online retail sales have grown gradually from about 3% in 2007 to about 10% in 2018. People still prefer to buy online,...

Shopping centers and health care users are a natural fit; both the health care and shopping center industries continues to evolve, and common ground is being found between the two industries more than ever before. Past obstacles such as parking concerns and exclusivity agreements for health care tenants are being approached by landlords with a different mindset than in the past. Landlords value health care tenants for several reasons, including the diversity they can bring...

With spas continuing to grow at a roaring pace, consumers value health and wellness now more than ever before. This growth has been mainly fueled by a strong economy with individuals having more disposable income. In addition, consumers are placing more value on health and wellness and taking more responsibility for their body and mind. As many would say, people want to live their best life, looking for longevity, striving to be as active as...

Retail is constantly evolving and changing. In order to compete in today’s environment, retailers must be incorporating omnichannel into their strategy. The dinosaurs that are reluctant to invest the time and resources to morph their retail practice into the standards of today for future growth and sustainability will be left in the dust. Many retailers such as Kroger and Macy’s are aggressively adopting omnichannel platforms in order to meet today’s consumer expectations. At the ICSC...

Tenants defined as “small shop” tenants are performing well, and landlords are participating in their success. Small shop tenants are defined as retail tenants leasing less than 10,000 square feet. The growth of small shop tenants has universally increased across the portfolio of many of the major shopping center owners. Vestar, a Phoenix-based owner with over 70 properties, acknowledges that most of the deals that they are doing have been with small format retailers and...

The demand for triple net lease retail investments remains high throughout the country. This investment product is in most demand for tenants that are restaurant-based uses. An investors preference is to acquire assets which include restaurant based, service styled uses because they have less to worry about given the Amazon effect. Assets encompassed by restaurants are a larger driver of traffic and tend to create a synergy that bodes well for surrounding retail. This is...

Restaurants are continuing to right-fit their footprint to accommodate new consumer demands. To meet consumer demands for delivery, restaurants are experimenting with testing kitchens only or shared kitchen outlets with no dine-in options. This comes at a time where delivery costs are high and restaurants are solving this problem by reducing square footage and paying less in effective rent. There are companies setting up 3rd party kitchen sites, like a food court, where you might...

The economy in the United States has delivered its 103rd straight month of employment gains by adding approx. 263,000 jobs in April. This marks yet again another strong and record-breaking metric that proves the current strength and growth of the US economy. Unemployment dropped to 3.6% and is at its lowest level since December 1969. This economic momentum continues to remain evident and a strong economy will continue to lead to consumer confidence and spending...

Kohl’s is a retailer getting creative and thinking outside of the box! Kohl’s has announced a partnership with Amazon to accept Amazon product returns at their brick and mortar locations. With Kohl’s extensive brick and mortar presence, approx. 1,100 stores across 49 states, this move will allow both companies to provide excellent customer service, convenience for their customers and allow for a strong omnichannel approach providing a seamless shopping experience. Right fitting their stores to...

The banking industry continues to change, with the majority of financial institutions focusing resources on technology initiatives rather than aggressive brick and mortar growth strategies as in the past. Over the last 24 months, more than 5,700 bank branches closed throughout the country with a forecasted 1,700 units to close in 2019. Don’t take these stats the wrong way! Banks remain to be in a healthy position, this move is simply a result of a...

The food and restaurant industry is expected to grow by approx. 13% over the next five years. What does this mean? This means that this sector is very strong and will continue to be very competitive which will drive innovation. Majority of the food service spending, approx. 75%, results at dine-in restaurants but online ordering is on the rise globally. The traditional burger or sandwich is no longer acceptable. Consumers value experience much more in...

Renovate and Freshen Up your Strip Center! Why? Because in many instances you can add tremendous value by renovating or redeveloping your plaza to attract better quality higher paying retail tenants. Creating new energy by way of renovation directly affects the property’s bottom line and positions retail assets to be setup for long-term success by attracting tenants and keeping up the occupancy rate. Deighton Babis with BDG Architects coined a term “In Cap” and created...