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JLL: Retail driving construction growth

BY Marianne Wilson

First, the good news: A strong retail sector is helping to drive 2016 U.S. construction activity, with retail construction projects up 24.4% year-over-year, from 57.2 million sq. ft. in first quarter 2015 to 70.2 sq. fr. in first quarter 2016.

That’s according to JLL’s latest report on non-residential U.S. construction activity. On the less positive side, the report noted there is a cloud of economic uncertainty, which has companies laser-focused on lean budgeting and smart spending decisions.

“Developers and occupiers are proceeding with caution, but they continue to build and renovate,” said Todd Burns, president, project and development services, JLL Americas.

He added that project sponsors are thinking more strategically about development versus renovation. “The best managed companies have learned to keep their capital spend within about 2% of the plan,” Burns said, “by starting with a realistic budget, leveraging data and analytical platforms, and putting the right skills together in a centralized project team.”

For now, however, the market for commercial construction remains strong, with a strong first quarter and steady growth projected for the second.

RETAIL: Retail vacancies continue to decline, and retail has surged ahead of other property types in construction activity. Much of the growth in the first quarter has come from renovations as retailers continue to evolve to meet consumers’ demands for a unified shopping experience across channels.

“Retailers must innovate quickly to capture the untapped needs and expectations of consumers, who expect the same brand experience whether shopping online or in the brick-and-mortar store,” said Aaron Spiess, co-founder of Big Red Rooster, JLL’s brand experience company.

Another incentive to renovate is the federal tax break providing “safe harbor” for some remodeling expenses, Speiss said. Retail stores and restaurants that are eligible can reduce 75% of qualifying expenses with the remaining 25% capitalized and depreciated over time.

In terms of key markets, JLL noted that Dallas was the most active retail market in the first quarter, with activity up nearly 80% year-over-year.

In addition, Nashville has seen rapid construction growth in the last year. And the San Francisco area is catching up to New York metro area in construction costs and is actually on track to exceed New York as the “most expensive” construction market in 2016.

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D.Major Malls says:
Jun-15-2016 04:11 pm

It's great that even though there is uncertainty in the market that developers continue to build and renovate. In areas such as San Francisco, Dallas, Nashville, and even Houston are untapped areas, showing rapid growth and expansion. Anyways, if you are in the construction or signage business I think you should check out the Directory of Major Malls at https://shoppingcenters.com. They have detailed information on 8,100+ major shopping centers and malls in the U.S. and Canada, which are approx. 200,000 sq. ft. and above in size, as well as centers we've classified as Lifestyle/Specialty/Mixed-use of any size. Check them out for a free trial.

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Un-Boxing Retail

BY Bob Gibson

Image Courtesy: Christopher Michel, CC by 2.0

If asked to imagine a typical retail store, most of us would think of a rectangular box with parallel rows or aisles of shelves stocked neatly and uniformly with merchandise. This is still the most common store format, since it presents consumers with a wide, sometimes staggering array of products in a fairly easy-to-navigate layout.

While this layout still works well for commoditized goods like office supplies and typical grocery packaged goods, consumers are longing for more. An engaging layout is crucial to apparel and luxury good stores, and shoppers continue to seek a sense of play and discovery in the physical space. They want to feel like they have learned something useful. The ability to interact with the environment in fun and innovative ways can make a huge difference in how consumers view a retailer.

Curated Landscapes
Some retailers are going all out to create an environment that allows consumers to wander around as they discover different product selections. By making the layout less linear, consumers can spend more time in store, looking at different merchandise. To facilitate this, some retailers are focusing much more on serious curation: getting to know their target customers and choosing enticing merchandise that will reflect consumers’ tastes and lifestyle, as well as allowing customers to personalize their selections. These retailers have designed their stores to feel more like a work of art than simply a transactional space, which helps strengthen brand images and connections.

The bottom line is that the traditional store layout is fine for categories where price is a priority, or immediacy is vital. However, most retailers who don’t differentiate their store experience in some way are at a disadvantage. Consequently, retailers should invest in retooling their layout, décor and merchandising to make a real impression on consumers and to make shopping in-store a more engaging experience.

Un-boxed Retailers in Action
Here are a few examples of retailers who are taking the un-boxed approach:

• Flowerboy Project in Venice, California is a florist, café and boutique is also a working studio where visitors can purchase one-of-a-kind items.

• Samovar Tea operates three lounges and one tea bar in San Francisco. Called “the Apple Store for tea” the store uses simple modern design to showcase the craft of modern tea making.

• Story in New York treats retail curation like a magazine editor, completely reinventing itself every 4-8 weeks. Shoppers can find a new store every time they go.

• Flying Tiger, the Danish home goods retailer, now has two locations in New York. Visitors discover inexpensive home goods as they walk through a maze that winds its way through a predetermined path in the 5,000-sq.-ft. store.

• At Aesop on San Francisco’s Fillmore Street, one finds a cosmetics store with a design that invites exploration. A wall of shelving tapestry made of reclaimed wood that divides and subdivides to create irregular nooks waiting to be discovered.


Bob Gibson is retail vice chairman of JLL.

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Veteran supermarket retailer dies

BY CSA STAFF

The 95-year old co-founder of the North Carolina-based supermarket chain that became Food Lion has died at the age of 95.

Ralph Ketner and two others in 1957 founded Food Town, which changed its name to Food Lion in 1982.

Ketner retired from the business in the early 1990s but remained active until the end, according to the Charlotte Observer, dropping in at company headquarters as recently as last December to talk business with president Meg Ham.

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