RECon Attendees Talk Creating Vibes, Activation of Mind
May 25, 2016 | By Natalie Dolce
Original article published on GlobeSt
LAS VEGAS—GlobeSt.com chatted with event attendees on trends in different regions and what retailers are doing to stand out in this EXCLUSIVE article on the subject.
LAS VEGAS—From the capital market context, a sector-wide belt is tightening as investors take a pause and step back from retail real estate. That is according to ICSC RECon attendee D. John Miller, founder and CEO of DJM Capital Partners.
Miller tells GlobeSt.com that “Institutional investment is down, with a drop-off in acquisitions by many of the big players.” He also points out that around the US, there is a lot of dead retail as opposed to the interesting/boutique-style projects happening in places like California.
“Look at the recent bankruptcies of Sports Authority and Sports Chalet, Staples and Office Depot, and other big box anchor tenants, who are suffering from the effects of the internet and e-commerce in a commoditized space,” he says. “You have to create a vibe, an experience and an activation in the consumers’ mind to succeed now.”
Alexander Mehran Jr., president and COO of Sunset Development, tells GlobeSt.com that the retail market demand is extremely high but supply is very tight, at least in the Bay Area. San Ramon, CA, where Mehran’s firm operates, is no exception with vacancy rates in the very low single digits, he says.
“Tenants today are largely focused on existing projects with solid performance records,” he explains. “For new projects, there needs to be a compelling combination of retail demand, strong anchors, food, place and experience.”
Paul Travis, co-developer of City Point, tells GlobeSt.com that he actually doesn’t see significant growth in the retail market. “Growth is very urban and there has been a shift from suburban to urban sites especially in areas that have not seen significant presence by national retailers.”
As for other key trends? Travis points out that retailers are now also more diverse than they once were. He says that internet firms are making their way into retail and food is playing a larger part in retail centers. “There has been a transition from food courts to quality restaurants and food halls as well as more groceries as a part of retail centers, and more focus on entertainment.”
Ami Ziff, national director of retail with Time Equities Inc., agrees that food and entertainment are the new anchors and will continue to be major assets for retail tenants. “With declining department store traffic and continued growth of online shopping, consumers will be looking for unique experiences paired with conventional shopping activity,” says Ziff.
For instance, Lululemon will offer added “amenities” such as wi-fi, yoga classes and pop-up coffee shops, Ziff says, while brands such as ABC Carpet, Restoration Hardware and Macy’s are also introducing food concepts to create elevated shopping experiences.
Attendee Rod N. Santomassimo, president and founder of the Massimo Group, tells GlobeSt.com that one trend he is seeing across the country is that NNN lease opportunities continue to be the darling of investors. “Cap rate compression seems to have settled and investors are now turning their attention to secondary and tertiary markets.”
As for Santomassimo’s forecast for the sector? He says that the market will continue to be strong throughout 2016, barring any significant economic setbacks. However, this is the time, he says, for commercial real estate professionals to start to diversify their client bases and offerings going
into 2017.
