SHOPPING CENTER INSIGHTS BY JEFF DERVECHBlog

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...

What are opportunity zones and why is everyone crazing about them? Opportunity Zones is a new tax incentive program casted by the government that is forecasted to activate billions of dollars in development and investment in 8,700 federally designated low-income census tracts across the US. The basic concept behind this initiative is to incentive private investors to place capital in these low-income areas in return for deferred and reduced taxes on capital gains. The government...

Whole Foods Market which operates 479 locations throughout its chain was purchased by Amazon in June 2017 for $13.7 billion. Since the acquisition, the chain has been somewhat muted on aggressive store expansion and store pipeline as Amazon worked to fine tune the engine and gear up for the grocery track meet. Whole Foods was known to be behind the curve on technology and the development of a loyalty program as well as declining same...

Chipotle Mexican Grill which operates 2,250 locations across the United States is a strong tenant for many strip center and shopping center owners and continues to innovate and stay ahead of the curve. This fast-causal restaurant has implemented a new category to meet customer demands designed to follow trendy eating plans. This new “Lifestyle Bowl” includes a Paleo Salad Bowl, a Keto Salad Bowl, a Whole30 Salad Bowl and a Double Protein Bowl which contains...

As shopping centers evolve, so are parking requirements! The traditional parking ratio of 5 spaces per 1,000 sf is in many cases outdated and not does apply to every situation or commercial development. Municipalities are changing or considering changing the way that they view this requirement by understanding that traditional consumer transportation now includes multiple alternatives such as car sharing services and in the future autonomous vehicles. The existing code for parking requirements, at times,...

The economy continues its longest streak ever by adding 312,000 jobs in December. This is a record 99 months of monthly job growth beginning in October 2010. Year over Year wage growth grew 3.2% with unemployment at 3.9%. December numbers show that are economy continues to be in a very healthy state and is not in line with the perception of the recent equity markets. This is a great thing for our economy kicking off...

2019 is finally here! As we embark on this new year, investors will look to a world that consists of a strengthen economy with consist job growth in a tail ended real estate cycle. From technology, rising interest rates, economic conditions, potential political risks, omnichannel retailing, change of how brick and mortar space is used by retailers, chase for yield, debt market’s competition and global capital market flow, this year is sure to be an...

As shopping centers continue to evolve, landlord’s will look to lease space at their centers to strong local and regional operating tenants. In order to meet the demands of consumers, landlords will look to input tenants that offer an “experiential, social and engaging experience”. Local and Regional Mom and Pop tenants have been increasing in appeal to shopping center landlord’s as they continue to prove by their successes that they know their customer, understand the...