SHOPPING CENTER INSIGHTS BY JEFF DERVECHBlog

Target is one of the darlings of retail brands in today’s day in age. In 2017, Target initiated a $7B reinvestment program to renovate existing stores and to open smaller format stores. The company has opened its 100th small-format store and has remodeled its 500th existing store unit since 2017. The goal is for Target to update approx. 1,000 of 1,800 existing store base by the end of 2020. Target’s strategy is paying off well...

Walgreens announced that they will close approx. 200 stores within the drugstore chain. This is a minimal amount, approx. 2%, given that this retailer has over 9,500 US locations. The move comes as expected when they cautioned in June that they would be looking to close unprofitable stores as they evaluate the approx. 500 leases that come due each year. Drugstore real estate is typically really good dirt, traditionally located at highly trafficked signalized intersections...

Orlando is not only an interesting city but also a very strong market for retail. This region is one of the top markets in the country for both population and job growth. With Downtown Orlando emerging as an 18-hour city, more and more retailers are being drawn to the urban core. The residential population of Orlando is approx. 18,000 with approx. 80,000 daytime workers. This growth in residential population has postured downtown to be a...

U.S. Department of Justice (DOJ) announced, this week that it would review and expand government scrutiny of certain dominant tech companies. By this review, opens a broad antitrust investigation into whether market-leading online platforms have engaged in behavior that has reduced competition, stifled innovation or otherwise harmed consumers. Amazon.com Inc., Facebook Inc., Apple Inc., and Google are reportedly the targets of this latest review. The main initiative by the DOJ and FTC (Federal Trade Commission)...

UPS, the American multinational package delivery and supply chain management company, aims to provide services within 5 miles of roughly 90% of its US consumer base. To work in accomplishing this goal, UPS will add thousands of package pickup and drop off facilities to CVS and Michaels stores across the US. The collaboration with CVS alone will add more than 6,000 UPS access point locations. The goal of this move by UPS is to make...

Mall landlord Simon has entered an agreement to team up with Allied Esports, an e-sports operator, to open venues in shopping centers around the country. Allied Esports is a sister company of the World Poker Tour. This move will allow connecting video-game players, streamers and fans through integrated arenas and mobile e-sports trucks worldwide. As part of this move, Simon and Allied Esports will create dedicated e-sports venues and experience sites at select domestic Simon...

Dollar General is a retailer that continues to grow! This year D.G. is planned to open nearly 1,000 stores, remodel approx. 1,000 mature stores and relocate approx. 100 existing units. Dollar General has over 750+ stores within the State of Florida. They recently announced that they will expand offerings to include home furnishing, kitchenware, and party supplies to attract wealthier customers. Also, they will look to open produce sections with healthier snacks and private label...

“New is the new, new”, as commonly quoted by Spencer Levy. Retail is very much alive and is here to stay. Retailers continue to make investments into their operations and strategize for the future in this ever-changing landscape. The main component in all these retailers’ growth plans is finding ways to adapt and evolve their omnichannel presence. Strong market leaders in the retail space, which have done just that, have been Target, Costco, The Home...

Lululemon, the athletic apparel retailer, is now offering its consumers the option of trying on clothing and borrowing items to work out in before purchasing. Talk about experimental retail! Lulu has opened a new store in Chicago that includes a traditional retail unit coupled with fitness component of which includes 2 exercise rooms, a meditation area and a café serving smoothies, salads, kombucha, and beer. Lulu is one of many retailers of which are offering...

Last week, Jerome Powell, indicated the potential for a future cut to interest rates. If this were to happen, this would be the first time in over 10 years that interest rates were reduced. Many economists believe that a move such as this by the Federal Reserve would have no significant impact on the commercial real estate industry’s growth trajectory. The United States continues to remain in a strong position but does have some concerns,...

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,...