Reinventing Real Estate - The Scoop
A stellar panel of retail real estate experts convened last week in New York City for the Urban Land Institute’s Reinventing Retail program to answer this $64,000 question: what’s in store for retail real estate?
Here’s what they had to say:
The Industry is Healthier Than it Seems
According to David Zoba, Chair of JLL’s Global Retail Board, the 37,000 retail real estate professionals that attended RECon this May were not passing out resumes, as they have during past industry downturns, they were negotiating leases, a sure sign of health.
Brick and Mortar Retail Is Here to Stay
Brittany Bragg, Partner and COO of Crown Acquisitions, which owns high street retail in dense urban locations from New York City to Las Vegas to London, cited the global success of the Apple store, in spite of the fact that their products are well suited to online sales, as evidence that people want a physical shopping experience. She also noted that in spite of the very visible retail vacancies in New York City, new leases are being signed and new stores continue to open.
Creating That Unique Experience
Brian Pall, President of Hudson Bay Real Estate, the lone retailer on the panel, drilled down on the challenges that retailers are facing. Brian stressed that the key to brick and mortar retail success is the ability to offer consumers a compelling experience that goes beyond great food, merchandise, service and prices and makes them actually look forward to leaving the confines of the internet. From his perspective, the current barrage of retailer bankruptcies, store closings and shrinking revenues is evidence of just how hard it is to do that during what he characterizes as a period of industry transformation.
The Rules Are Being Re-Written
In keeping with this theme, Mary Rottler, EVP of Seritage Growth Properties, which owns 42M square feet of existing and former Sears and Kmart stores throughout the country, observed that traditional notions what a shopping center is and what drives traffic to a shopping center are up for grabs. Uses that once would have been “laughed at” are now considered desirable, one example of which is that supermarkets, which were traditionally confined to open air centers, are now anchoring enclosed malls.
We Can’t Predict the Future
Brittany noted how hard it is to predict what the future holds, citing the rise of Starbucks. Even 20 years ago, she observed, the “experts” weren’t able to foresee that 25,000 Starbucks coffee shops would span the globe.