Some good news: After nearly two years of non-activity, retailers are returning to the negotiating table and looking for deals. That was the overwhelming consensus that came out of the International Council of Shopping Center’s RECon event in Las Vegas. The annual show is a bellwether for the retail real estate market and the overall retail market in general.
“Improvement, stabilization … and value-priced and mid-box tenants aggressively looking for opportunities—that’s what we’re seeing,” said Scott Schroeder, VP marketing and corporate communications, Developers Diversified Realty, Beachwood, Ohio.
While the picture isn’t rosy by any means, most industry experts agreed that the hemorrhaging is finally over. Store closings have slowed significantly during the past two quarters, credit markets have opened up, and some retailers are bumping up expansion plans. While the conventional wisdom was that expansion, for all intents and purposes, would return in 2012, it now seems poised for a comeback next year.
A rash of recent surveys lends credence to the growing confidence. A survey of U.S. retailers by Los Angles-based Richard Ellis showed that 92% are planning to increase store openings this year. Only 8% plan on reducing the number of locations in 2010.
“Our survey shows that retailers are increasingly more confident about their growth plans for 2010, and even more so for 2011,” said Anthony Buono, executive managing director, CB Richard Ellis Retail Services in the Americas.
But if all signs now point to 2011 as when retail will recover its mojo, some chains aren’t even waiting that long. Instead, they are seizing the moment at hand. And I’m not just talking about the extreme-value players, some of whom went into expansion overdrive during the recession. In fact, new concepts (some brand new, some new to the national arena) are also driving a lot of the activity. This issue contains profiles of a few interesting ones (Check out Flip Flop Shops and Hot Concepts). But they are just the tip of the iceberg.
Among the retailers investing in growth are such well-established brands as Gymboree Corp., which will nearly double the store count of its value brand, Crazy 8, this year. The company will open 75 to 100 stores in 2010, with the same number planned for 2011. And American Eagle Outfitters is entering the children’s arena, with a new concept called 77kids by American Eagle. Teen retailers rue21 and Five Below are growing beyond their regional roots and moving to a national presence.
On another front, Shopko is introducing Shopko Hometown, which will combine features from its full-size stores and smaller Shopko Express stores. TJX Cos. has a new format in the works. J. Crew has opened a bridal boutique, and Urban Outfitters will launch a wedding brand.
All of this is good news for the industry. New concepts remain the lifeblood of retail, and without them, the industry will stagnate.
“There is always a new concept somewhere that is expanding and worth investing in,” said Hessam Nadji, managing director, national retail group, for the real estate brokerage firm Marcus & Millichap, at a presentation in Las Vegas.
To which I can only add: My feelings exactly.