News

Breakout Retailers

BY Marianne Wilson

Innovation in retail means breaking down barriers, navigating a fiercely competitive marketplace and making connections with increasingly demanding customers. In this section, Chain Store Age profiles five retailers that are succeeding in both. They are the winners of CSA’s Breakout Retailers Awards.

In its second year, the award honors emerging retail and restaurant brands (less than 10 years old) that have crossed the “newbie” line and are well positioned for growth in the coming years.

Selected by the editorial board of Chain Store Age, the winning lineup features five forward-thinking brands from five different industry segments, including a women’s apparel retailer that combines bohemian fashion sensibility with a giving-back philosophy, a neighborhood pet store concept with a healthy nutrition focus, an upstart eyewear merchant that seamlessly blends the best of offline and online, a gourmet candy boutique for adults and a fast-casual pioneer with a people-first culture.

For all their differences, the five winning concepts share an ability to engage and delight shoppers — online, in store or both. Whether it’s through an on-target merchandise mix, a dynamic multichannel experience, compelling customer service, a strong social mission or any combination thereof, the Breakout Retailers stand tall in today’s disrupted retail Sponsored by market.

ALTAR’D STATE

It’s all about the customer experience, as well as the company’s mission, at Altar’d State.

Since 2009, the young women’s fashion brand has expanded its footprint from one fledgling store in Knoxville, Tenn., to 73 locations throughout the Midwest, South, mid-Atlantic and Northeast. During that time, its merchandise offerings and store interiors have grown more on trend. But the company’s mission to help change the world for the better has remained constant.

“The give-back mission isn’t just what we do — it’s who we are,” stated Altar’d State’s chairman and CEO Aaron Walters. “From the very beginning, our mission has been to help the less fortunate in and around the communities where we have Altar’d State boutiques.”

From its first day of business, the retailer has sought to connect retail with goodwill, with efforts that range from donations in local communities to funding a program that helps support underserved children in Peru.

“Our commitment is to consistently give at least 1% of sales to local and global philanthropic efforts on an annual basis,” said Mary Beth Fox, chief brand officer at Altar’d State. “Each year, our funds donated to charities through our give-back program have grown faster than our sales — a fact of which we are extremely proud.”

Through its “Mission Monday” initiative, all Altar’d State stores donate a portion of their net proceeds every Monday to global and local nonprofit organizations. In November, the company celebrated the opening of its store at the Mall of America with a series of activities that included a partnership with local coffee shops to provide pay-it-forward hot beverages for paying guests.

The company also actively supports volunteerism. This past November and December, employees received a total of more than 8,000 paid hours to support the nonprofit initiatives of their choice.

Expansion

Altar’d State’s stores are warm and inviting, with an eclectic feel. The feminine-styled interiors are beautifully detailed, with chandeliers and vintage accents.

“Altar’d State is a place of refuge, relaxation and rejuvenation for our customer, where she can find a smiling face, beautiful fashion and a truly unique environment,” Fox said.

The merchandise mix, which includes clothing, accessories and select home décor items, has a bohemian vibe. Home goods and gift items are integrated throughout the store. Price points are moderate. Almost all of the merchandise is sold under the Altar’d State brand.

Altar’d State will open 15 to 20 new stores in 2017, with locations in both new and existing markets. Store sizes vary, but start at 5,000 sq. ft. The real estate strategy includes shopping centers as well as street locations.

“Our brand translates very well whether in a lifestyle, outdoor or shopping mall situation,” Fox added.

How does the company stand out in today’s crowded retail scene? “We believe the presentation of unique fashion assortments in one-of-a-kind beautiful environments and great people who have the mission to stand out for good all differentiate and position Altar’d State well in a very competitive environment,” Fox said.

BENTLEY’S PET STUFF

Why should eating healthy, organic food be limited to humans? Our four-legged friends deserve the best possible nutrition, too, say the founders of Bentley’s Pet Stuff — and they’re building a retail chain on that philosophy.

Bentley’s currently operates 65 stores, with locations in Colorado, Georgia, Ohio, Illinois, Minnesota, Missouri and Wisconsin. The fast-growing company ranks as one of the largest independent natural pet supply retailers.

Lisa Senafe, founder and president, first conceived the concept back in 2007 after losing two cats to illness. After examining the ingredients in her pets’ food, she was horrified to discover the number of chemicals and lack of protein and essential nutrients.

She and her husband, Giovanni Senafe, decided to create a store that would put the emphasis on healthy food, along with high-end toys and treats. They debuted the concept, under the banner of Bentley’s Corner Bakery (named for the family dog), in Arlington Heights, Ill., in 2008.

“I wanted to give my dogs and cats a fighting chance for their immune system and overall health,” Senafe explained on the company’s website. “I wanted other pet parents to be aware of all the great options available so they can make an informed and conscious decision about their pet’s health.”

From the one location, the company slowly expanded in the Chicago area, with the Senafes running everything themselves. When it was time to accelerate growth, they turned to an expert: successful entrepreneur Marcus Lemonis, host of the CNBC television show “The Profit” and CEO of Camping World.

Lemonis helped the Senafes bring in a management team, reinvented and updated the store design and provided financial support. He helped them expand through acquisitions of individual stores and small regional chains and new store openings.

In 2015, Bentley’s merged with Pet Stuff, another suburban Chicago chain, essentially doubling from eight to 15 units, and taking on the name Bentley’s Pet Stuff. Smaller acquisitions followed, including a delivery service for the Chicago area. As part of its acquisition strategy, the company retains key people from the acquired company as partners or part owners.

Bentley’s stores average 2,200 sq. ft., with a bright and inviting interior and a signature green paw print on the outside canopy. They have a strong local bent, hosting numerous events throughout the year, from parties to veterinary clinics.

“We celebrate bringing in your dog by hosting numerous events in our stores to make it a fun place to bring your dog shopping,” Senafe said.

The company has donated more than 50,000 lbs. of food to local pet shelters and rescues, and offers regular adoption events at its locations.

The merchandise mix features a curated assortment of natural pet food brands, along with treats, toys and accessories, with about 60% of the assortment devoted to food. Customer service is a priority. Employees are trained to help shoppers choose the right food for their individual pets.

Expansion

Bentley’s plans to open 90 to 100 stores in 2017. It prefers locations in strip centers next to infant or grocery stores.

In addition, the company does business online. It also has a rapidly growing home delivery service. “Our e-commerce division provides the convenience of online shopping while still supporting your local pet food store,” Senafe said. “This allows us to offer local delivery and help to compete with online.”

With its smaller footprint, Bentley’s stands out from most chain pet supplies stores. But that’s not their only point of distinction, according to Senafe.

“We have a curated assortment and are picky about the brands we carry,” she said. “And customer service is our No. 1 priority. We educate our team members so they are a resource to our customers, and not just a place to buy pet food. Our community involvement is extremely important to us. We are the neighborhood pet store in each town we are in.”

The timing is perfect for Bentley’s growth. Natural pet foods make up the fastest-growing segment of the pet food industry, growing at 10% annually compared to about 3% to 4% for the overall industry. Sales of natural/organic pet foods rose to more than $8 billion last year, according to David Lummis, pet market analyst for market research firm Packaged Facts.

MOD PIZZA

Artisan-style, made-on-demand pizzas are a big part of the story at MOD Pizza, one of the nation’s fastest-growing, privately owned restaurant companies.

Husband and wife duo Scott and Ally Svenson founded the company in Seattle in 2008. Already successful entrepreneurs, the couple previously founded two businesses in the United Kingdom: Seattle Coffee Company, which they eventually sold to Starbucks Corp., and Carluccio’s, which they also sold.

Returning to their hometown of Seattle to raise a family, the Svensons began exploring ideas that combined their love of business, people and purpose with a goal of creating a people-first culture where everyone could thrive. MOD grew out of their search for a better way of doing pizza — and business.

MOD, an acronym for made on demand, is considered a pioneer in the now-competitive fast-casual pizza niche. It serves up fresh-made pizza (and salads) in minutes, with customers choosing any combination of more than 30 toppings, all for one set price.

In just nine years, the chain has grown to more than 200 locations in 20 states — along with five in the United Kingdom. And it won’t be slowing down anytime soon. In 2017, the company is expanding in existing markets while also entering new ones, such as Florida, Alabama, Georgia and Utah.

“We opened 100 stores last year and plan to continue this rate of growth [in 2017],” said Charlotte Wayte, marketing manager at MOD Pizza.

MOD has nine select multi-unit franchise partners across the United States. But unlike many fast-casual chains, the majority (80%) of the chain’s locations are company-owned.

“This is a strategy that helps maintain our strong people-first culture and the customer experience,” Wayte said.

MOD restaurants, which have a casual, cool vibe, are typically located in retail centers. It does well in areas with both business trade and strong neighborhoods.

“But we also have some non-traditional locations including Portland International Airport and the Microsoft Campus in Redmond, Wash.,” Wayte said.

Culture

The secret to MOD’s success is not just a quality product. Conceived from day one as a platform for doing good with a “people-first” mission, the company enjoys considerable goodwill and loyalty in the communities in which it operates. With every store opening, MOD donates 100% of all pizza sales to a nonprofit organization within the local area.

Each charity also benefits from the company’s annual “Spreading MODness” initiative. During Thanksgiving week, $1 from the sale of each pizza goes to a charity selected by the employees at each store.

But nothing exemplifies MOD’s people-centric culture better than the way it treats its employees, who are called the MOD Squad. From above industry-average pay and benefits to hiring people with special needs — including those in need of a second chance — MOD has stayed true to its mission of putting people first even as its growth has skyrocketed.

In addition, the company maintains an emergency fund that provides financial assistance to employees in times of unexpected need.

At the end of the day, MOD delivers on a lot more than a good tasting pizza.

“We have a great value proposition … and our stores are designed with the community in mind, with a focus on creating a fun, friendly atmosphere,” Wayte said. “However, what people will also find is a really authentic customer experience, delivered by our MOD Squad, who are at the core of our business. As we say, ‘We make pizza, but our pizza makes people.’”

SUGARFINA

Rosie O’Neil has a sweet tooth, one that she’s putting to good use in her fast-growing gourmet candy start-up boutique, Sugarfina.

The concept grew out of a movie date. O’Neil and Josh Resnick were on their third outing, a screening of “Willy Wonka and the Chocolate Factory.” Feeling inspired, the two started dreaming up the ultimate candy store — for grown-ups.

Two years later, and after a lot of globe trotting and taste testing, their dream became a reality. In 2012, the twosome (by then an official couple) launched Sugarfina as an online retailer of gourmet sweets made by artisan candy makers from around the globe.

Fueled by savvy marketing and social media buzz (partially fueled by a partnership with Facebook soon after launching), the brand flourished. A jump to the physical space soon followed. In 2013, Sugarfina opened its first boutique in Beverly Hills, Calif. It’s been on an upward trajectory ever since.

“Our newest location, which is store No. 23, recently opened at Dallas North-Park. And we have 15 in-store shops at Nordstrom, with 10 in the United States and five in Canada,” said co-founder and chief creative officer O’Neil, who prior to Sugarfina spent seven years as director of marketing for Barbie at Mattel. (Co-founder and CEO Resnick previously was the co-founder and president of Pandemic Studios, a video game developer.)

Sugarfina carries approximately 120 unique candies from around the world, more than three quarters of which can’t be found anywhere else in the United States. Best-sellers include Champagne Bears, Dark Chocolate Sea Salt Caramels and Parisian Pineapples.

Does O’Neil have a favorite Sugarfina sweet? “My personal favorite is our new Dark Chocolate Covered Champagne Bears,” she said. “The bears are made with Dom Pérignon Champagne and the chocolate is a very high-quality chocolate from Paris. Together, they’re a match made in heaven. Josh’s favorite is our Single Malt Scotch Cordials, a chocolate ball with a shot of real scotch inside.”

As much as the product itself, it’s the overall aesthetic and presentation that defines Sugarfina. Everything about the brand is luxe, including the packaging. Sweets are packaged in transparent cubes that are packed in elegant, Tiffany-blue gift boxes. Online orders come with a customized handwritten note.

Sugarfina stores have an upscale, sophisticated feel and a chic, feminine look, with aqua and white color accents. Candies are artfully displayed. Customers are treated to in-store sampling, and are encouraged to customize luxurious candy gift boxes, styled as a Bento Box. A “candy concierge” provides a range of services, ranging from help with custom and corporate gifts, to arranging private events, dessert bars and candy tastings.

The store footprint ranges in size depending on location. The largest shop is in Beverly Hills, at 1,200 sq. ft. The smallest is at the Time Warner Center in New York City, at 225 sq. ft.

“Our ‘sweet spot’ is around 600 sq. ft.,” O’Neil said.

When it comes to locations, the company focuses exclusively on A-level malls, upscale lifestyle centers and high streets. The strategy is in keeping with Sugarfina’s core customer: fashionable women in their 20s, 30s and 40s.

Expansion

Sugarfina expects to open about 12 stores this year. The company recently launched a website in Canada. Brick-and-mortar expansion is a definite possibility.

“At the moment, we do not have any committed standalone stores in the Canadian market,” O’Neil said. “But we are interested in expanding into that market in the future. Our five in-store shops at Nordstrom in Canada are very popular and perform well.”

Expansion in Europe is also on the table. The brand has already launched in the United Kingdom, with in-store shops at Harvey Nichols and Harrods.

“We hope to open standalone shops in the United Kingdom in the future, and possibly in other European markets as well,” O’Neil said.

WARBY PARKER

Warby Parker is a model of retail disruption in the digital age, both online and off. The hip online-only-turned-brick-and-mortar retailer has upended a market dominated by high profile — and high priced — brands.

It’s done so by selling its own private brand of prescription eyeglasses starting at $95, and offering consumers home try-ons and free returns by mail.

Founded by University of Pennsylvania Wharton School students Dave Gilboa Neil Blumenthal, Jeffrey Raider and An-drew Hunt, Warby Parker debuted online in 2010, opened its first physical store in 2013, in Manhattan’s SoHo neighborhood, and now operates 46 brick-and-mortar units in the United States and Canada.

The company has turned an eyewear retail market dominated by designer brands from Guess to Gucci and industry giant Luxottica — which owns chains Lens-Crafters and Sunglass Hut and brands/ licenses from Ray-Ban to Ralph Lauren — on its head.

Warby Parker’s vertically integrated business model enables the retailer to beat the competition on price. The average unit price of eyeglasses in the U.S. is $140, $45 more than Warby Parker’s opening price point, according to market intelligence firm Euromonitor International.

As Warby Parker controls the “design, manufacture and retail of eyewear, it is able to avoid any licensing fees and retail markup, and offer eyeglasses at much cheaper prices,” according to Euromonitor’s report, “Eyewear in the U.S.”

The retailer, which counts J.Crew’s iconic CEO Mickey Drexler as an investor, operates stores marked by a high-service, low-price model. And no two stores are exactly alike, with the company combing its signature library-inspired design details with unique elements in each location. Its newly opened Philadelphia outpost features a vibrant original mural done by a local artist.

Shoppers can opt to receive their frames by mail or pick them up at the store, and non-prescription frames can be purchased on the spot. An in-house optometrist is on hand for eye exams, and its library-inspired environs feature books for perusing from independent publishers. Stores also include selfie-prompting photo booths designed so consumers can try on frames and share them for feedback.

Store employees can shoot pictures of customers trying on frames and email them if they need to mull their choices before committing to a purchase.

Expansion

While traditional retailers are contracting, Warby Parker is spreading its brick-and-mortar wings. Continuing its rollout strategy of setting up shop in densely populated urban areas, the eyewear retailer plans to open a minimum of 25 stores this year, according to media reports.

The new locations are slated for Miami, Philadelphia, Los Angeles and other cities, and are projected to bring the total store count to about 70 by year-end. The stores will vary in size and include freestanding as well as mall locations, the report said.

Despite industry chatter on the troubled state of brick-and-mortar retailing amid the ever-burgeoning encroachment of online shopping, Warby Parker co-founder Blumenthal offers this qualifier: “I don’t think retail is dead,” he told The Wall Street Journal. Instead, “mediocre retail experiences are dead.”

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Project Profiles

BY CSA STAFF

Main Street Promenade

Location: Naperville, Ill.

Size: About 182,000 sq. ft.

Owner: Retail Properties of America Inc.

Key tenants: Anthropologie, J.Crew, Soft Surroundings, Ann Taylor Loft, Sur La Table, White House Black Market, and Hugo’s Frog Bar & Fish House

Status: Open and operating, but includes a vacant parcel that has approval for future development of up to 62,000 sq. ft. of mixed-use space

Main Street Promenade is a 182,000-sq.-ft. mixed-use project that includes approximately 103,000 sq. ft. of retail and approximately 79,000 sq. ft. of office located in the heart of downtown Naperville. Naperville is located just 30 miles from Chicago and is the destination of choice for shopping, dining and relaxation with over 100 national and boutique stores, 40 national and local restaurants and 300 businesses. It epitomizes the work, shop, play lifestyle. The property is also located within a “Super ZIP,” one of the most affluent and well-educated ZIP codes in the country, and boasts average household income of $130,000 and a population of 215,000 within a five-mile radius.

Geneva Commons

Location: Geneva, Ill.

Size: Approximately 437,546 sq. ft.

Owner: LPS Geneva Commons LLC, LaSalle Investment Management

Property manager: Mid-America Asset Management

Anchors: Barnes & Noble, Dick’s Sporting Goods, Crate & Barrel

Key tenants: Sixty-five upscale merchants including Pottery Barn, Williams-Sonoma, Sephora, Forever 21, H&M, Victoria’s Secret, Pink, Express, Chico’s, Loft, Gap, Banana Republic, and Coach

Status: Open and operating since 2002

Geneva Commons offers a unique collection of stores, restaurants, cafes and services in an inviting open-air setting. Situated along Randall Road in the western Chicago suburb of Geneva, the center is home to Crate & Barrel, Barnes & Noble, Dick’s Sporting Goods, Sephora, Chico’s, Coach, H&M, Forever 21, Loft, Banana Republic, Pottery Barn, Pink, Victoria’s Secret, California Pizza Kitchen and Houlihan’s, among many others. A hub of community activity, Geneva Commons offers seasonal events such as visits with the Easter bunny, summer concerts, and Girls’ Night Out. Holiday events include a tree lighting, visits with Santa, horse-drawn carriage rides, and celebrations for the whole family to enjoy.

Recently, several digital screens have been installed to accommodate a free outdoor movie series set to kick off in summer 2017. Coming soon is a makeover to the central common area that will offer enhanced amenities for visitors including comfortable seating, pergolas, a fireplace, interactive art installations and a life-size chessboard. The goal is to create a central gathering area that will elevate the quality of the shopping experience for customers. It will encourage visitors to take time to sit and relax, and just enjoy the outdoors.

The Court at Deptford

Location: 1500 Almonesson Road, Deptford Township, N.J.

Size: 361,103 sq. ft. of GLA

Owner: DLC Management Corp.

Anchors: Burlington Coat Factory, Hobby Lobby, Ross Dress for Less, Launch Trampoline Park

Key tenants: Shoe Carnival, Party City, Pier 1 Imports, Chuck E. Cheese’s

Status: Open and operating

Since purchasing the center in the summer of 2014, DLC has been hard at work implementing a complete renovation and remerchandising program. A brand new 60,000-sq.-ft. Burlington Coat Factory opened at the center in March 2015. Party City relocated to a new, larger 17,000-sq.-ft. space next to Dress Barn. The past year saw the addition of the center’s newest anchor tenant, Hobby Lobby, along with the signing of the 32,000-sq.-ft. Launch Trampoline Park. Physical improvements at the center include a complete façade modernization, total roof replacement, parking lot repaving and restriping, sidewalk repairs, landscape enhancements and lighting improvements.

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Five Items a Retailer Should Have in its Lease

BY Al Urbanski

With long-time anchors leaving malls, urgent care clinics moving into neighborhood centers, and online sellers applying pressure from all sides, retailers should take a new approach in structuring their lease agreements with property owners, say experts from both sides of the negotiations table.

“In today’s environment, it’s very interesting. Both retailers and landlords are under a lot of pressure, most of it coming from online competitors,” said Rick Burke, president of Lease Administration Solutions, an auditing firm for tenants. “It’s a scary situation for both sides.”

Anchors such as Sears and Macy’s leaving enclosed malls set in motion a range of scenarios that affect owners and tenants. In-line retailers pay high square-footage rates and shoulder all the common area costs in order to be next to those anchors. If one of them leaves, that high-rent traffic is bound to fall off.

But anchor churn could also be good for them. Say an owner replaces an anchor with three mid-box stores paying full rent and contributing to common area maintenance costs. CAM costs would then decrease for all in-line tenants, and perhaps square-footage rate for new tenants, too. And should traffic fall off, new lessees could negotiate percentage-of-sales rents based on the traffic-building merits of the anchor replacements.

Owners are all too aware of these contingencies, and the good ones are having little trouble dealing with them, according to Ami Ziff, director of national retail at Time Equities Inc.

“We bought a mall with a Sports Authority from GGP and GGP had a new anchor store ready to take the space in case Sports Authority didn’t emerge from bankruptcy — which it, of course, didn’t,” he said. “There was just a few months’ downtime. Also, a lot of these anchor leases are very old, and the property often sees a 200% to 400% rent increase with a new tenant.”

Dick Spinell, a partner in Mid-America Asset Management Inc., reports that the worst is over in the Midwestern region, and that rents are trending upward. “The stuff hit the fan back in 2007. We had 300 mid-box vacancies. But rental rates in 2016 are close to where we were at the peak,” he said.

That said, brick-and-mortar retailers find themselves rethinking their retail footprints. Here are five areas of concern that wise retail leasing managers will be paying extra special attention to in lease negotiations.

1. Co-tenancy clauses

When the anchor you’ve paid dearly to be in the path of leaves, you need to have a clause in your lease that ensures you’re paying the right rent for what you are getting with a new anchor or anchors.

When Paul Kinney was the leasing manager for Friendly’s Restaurants some years ago, the chain had a store in a mall that lost a department store and replaced it with a Dick’s Sporting Goods. Friendly’s depended on a steady stream of female shoppers with longer dwell times than men, but Dick’s customers skewed male. To make matters worse, the mall closed an entrance in the reconfiguration and the restaurant’s sales dropped by 15%.

“There’s more to think about in co-tenancy clauses than replacement time for the lost anchor. In our case, the question ended up being, ‘Will the new anchor bring in the right people?’” said Kinney, now the executive director of the National Retail Tenants Association. “If I’m going into a lease like that today, I’m going to use stronger language. I’d ask for a consideration if my sales dropped 30% or more. It was normal to give owners a year to replace an anchor. Nowadays, I would not give them a year.”

Tenants can also ask for a percentage rent clause, in which their rent reverts to a percentage of sales should a change in the mall mix adversely affect traffic. Kick-out clauses that allow retailers to back out of their leases under such conditions should also be explored.

“This keeps the landlord incented to keep the center as viable as possible. We’re seeing a lot of new co-tenancy clauses,” Burke said.

2. Shorter-term leases

This is a trend gaining favor among property owners as well as tenants. Look no further than the local neighborhood center, where new restaurant concepts and boutique fitness centers have replaced traditional retailers in an effort to build traffic. New formats trend quickly in these segments, and owners are starting to move to shorter lease terms to give them the ability to react to new needs in local marketplaces.

Retailers, too, need to allow themselves the nimbleness to react to changing customer mixes and many are re-considering the wisdom of signing 10- or 20-year leases. “Ten years is probably the average now, but we’re seeing more five-year terms and additions of a right of first refusal,” Burke said.

3. Permitted-use clauses

Retailers can pursue this route to make leasing arrangements more flexible and adapt their businesses to the changing nature of malls and shopping centers.

Most retail leases are explicit in the nature of the business and selection of merchandise lessees can sell within their four walls.

But retailers can seek to insert clauses allowing them to sell categories that once were the sole domain of a department store or big-box category killer. A gift shop at a mall with a Sears store, for instance, might fashion a lease that would allow it to sell small appliances should Sears depart.

4. Assignment clauses

Often the fail-safe for modern retail times, assignment clauses give tenants another escape route with the awarding of the right to sublet its space or re-assign its lease.

5. Occupancy costs and caps

The rise of mixed-use developments that blend office and residential space with retail raises plenty of questions about which tenants should be paying for what attendant costs.

“I deal with many mixed-use properties, and there’s always the question of how we’re going to work this out for the retailers,” said Nancy Erickson, executive managing director of retail services for Colliers International. “If they’re in ground-floor spaces in an office or residential tower, they don’t use the elevators, so why should they pay for them?”

This is a complicated issue to resolve, because office tenants commonly pay rent, which includes taxes, plus electric while retail tenants are on triple-net leases that break out taxes, insurance and CAM costs. Erickson said that, in the case of one New Jersey mixed-use complex she represented, elevator costs were eliminated from retailers’ leases, though they continued to be responsible for CAM costs.

“What a lot of retailers are attempting in mixed-use situations is to put a cap on their insurance, real estate tax and CAM costs,” Burke said.

More new configurations and new kinds of tenants are surely in retail’s near future. Online sellers are beginning to migrate into centers. Urgent care facilities and even hospital clinics are squeezing in between PetSmarts and Sam’s Clubs. It’s imperative that lease arrangements evolve with the landscape.

“Who knows what’s ultimately going to happen with Sears and Macy’s? There’s a lot of repositioning to be done,” Spinell said. “The strong are getting stronger, and the weak are getting weaker.”

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