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REAL ESTATE

JLL lays down benchmarks for retail experience

BY Al Urbanski

Indoor skydiving and punch-fueled karaoke are surely worthy retail center experiences, but for most retailers the nature of “experientiality” is more elemental.

That was the conclusion of a press conference in a booth of the ICSC RECon Show in Las Vegas yesterday, where JLL released a study identifying six “dimensions of retail experience.” They are:

  • Intuitive: Shoppers find quality products, new items, and find them easily.
  • Human: They have favorable interactions with knowledgeable associates
  • Meaningful: Retailers make a difference in shoppers’ lives, who feel a sense of pride when shopping their stores.
  • Immersive: The exterior and interior of the store are captivating and shoppers enjoy spending time there.
  • Accessible: Shoppers can shop where they want — in stores or on websites — and the retailer knows their preferences
  • Personalized: The experience is how shoppers want it, with associates who understand their unique needs and can satisfy them and offer rewards based on past behavior.

JLL’s Big Red Rooster unit asked 2,000 shoppers to rate 20 national retail chains on these traits based on recent experiences. Receiving the five highest aggregate scores were Apple, Victoria’s Secret, Ulta Beauty, Bath & Body Works, and Ikea.

“Our goal was to create new benchmarks to better understand how well retailers are meeting shoppers’ expectations,” said Big Red Rooster managing director Stephen Jay. “This is just a starting point in measuring how people rate their retail experiences.”

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REAL ESTATE

Report: Retail investment will pick back up in second half

BY Al Urbanski

Investment in retail assets plummeted by 46% in the first half of 2018, but JLL predicts a second-half comeback that should end up surpassing last year’s investment increases.

“We’re pragmatically optimistic of today’s market, and are seeing investors begin to rebuild their confidence in the sector as fundamentals strengthen,” said Naveen Jaggi, president of JLL Retail Advisory Services. “Vacancy is stabilized at under 5% nationwide and rents have reached pre-recession levels.”

In a report released at ICSC’s RECon show in Las Vegas, JLL said it based its forecast on the following factors:

  • Major markets are still showing stronger fundamentals when compared to the United States as a whole, but even those top tier properties are seeing impacts of retailer fallout. Rents continue to rise but remain inconsistent across major markets.
  • Retail construction remains limited with only 14.2 million sq. ft. delivered so far this year. Less with less than one-third of new construction came in the shopping center and mall space, with most concentrated in general retail.
  • Leasing remains steady and absorption rates remain in line with 13.4 million sq. ft. absorbed through April.

JLL pointed out that investors were slow to close deals at the beginning of the year, even though such fundamental measures were already showing improvement.

“Sellers are under more pressure to sell than buyers are to buy,” Jaggi said. “There is tremendous opportunity unfolding to buy quality retail at a discount to historical values.”

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Enduring allure of brick-and-mortar: The mall that started it all: Simon’s Southdale Center in Edina, Minn.
REAL ESTATE

The enduring allure of brick-and-mortar

BY Al Urbanski

A study of 90 regional and super regional shopping malls conducted last year by JLL found that 19% of them had renamed themselves and dropped what the retail industry has come to call the “M-word.” There is a general perception among the populace and in the media that the enclosed mall is a relic of the late 20th century, as outdated and irrelevant as The Sharper Image and Hoffritz cutlery shops are that one spies in the background of the 1991 film “Scenes From a Mall.” Even CEO Sandeep Mathrani of GGP, the second largest retail real estate owner in the United States, is on record as saying the company tries to avoid using the word “mall” nowadays.

The facts behind the overbuilding of indoor shopping meccas that took place in the ’80s and ’90s (resulting in twice as much retail space per person in the United States than in the United Kingdom or Japan) are well known by members of the retail real estate industry. That’s why mall owners the likes of PREIT, CBL, and Starwood are recapturing empty department stores and filling them with the dining, fitness, and entertainment tenants that their customer bases are crying out for.

A study done last year by the International Council of Shopping Centers found that the typical dwell time for fine dining establishments in shopping centers was two to three hours, and that people who engaged in social drinking in bars stayed an average of 60 to 90 minutes. For shopping center owners and operators charged with building traffic for retail tenants, numbers like these don’t go unnoticed. In fact, plenty of malls — among them Easton Town Center in Columbus, Ohio — realized the lure of upscale hospitality years ago.

“Easton never closes,” said Jennifer Peterson, chief executive of the Steiner + Associates property. “People are still leaving the bars at 3 a.m. And by 5 a.m., a hundred-plus mall walkers arrive.”


Ancient times

But all the traffic statistics, digital transformation, and demographic modulation don’t negate the fact that people have been coming together in central locations to eat, be entertained, and shop since the beginnings of recorded history — even before the first enclosed shopping bazaar was built in the 15th century. In fact, Simon Malls’ property brochure pays tribute to the influence of the ancient marketplace, calling shopping a “contemporary interpretation of vibrant Middle Eastern bazaars, colorful North African souks, picturesque Asian markets, and busy European trading squares, where atmosphere and socialization were as important as commerce itself.”

While there’s no question that scores of malls will fall in the coming years and scores of new mixed-use developments will rise, the formula of dining, entertainment, and gathering places prescribed for retail centers of the future is hardly new. Indeed, these consumer traffic builders hark back to the earliest ages of consumer exchange.

The “Oxford History of the Classical World” notes that society in ancient Greece, which consisted of vast tracts of sparsely populated land, grew up around the polis or city-state. The central social gathering spot of the polis was, in turn, the agora.

“There had to be one focal point — religious, political, administrative — around which usually grew up a city, usually fortified, always offering a marketplace, or agora, and a place of assembly, often the agora itself,” according to “Oxford.”

The agora was not merely a place for the trading of goods, but of political theories and ideas put forth by philosophers such as Socrates. Like the new gathering places being created by such developers as Steiner, Trademark, and North American Properties, to name a few, social interaction — not closeout sales — were the traffic draws in ancient Greek marketplaces. Still, the Greek word “agora” does translate to “buy.”

“Retail trade is fundamental to every culture,” said Dave Cheatham, president of X Team Retail Advisors, a consortium of 37 real estate companies that develop, lease, and manage retail properties across the United States and Canada. “For centuries people have gathered at the marketplace. From farmers’ markets, to entertainment centers, food halls, open air public markets, and traditional storefronts, brick-and-mortar retail has always been a part of the fabric of a community.”

Some historians point to Trajan’s Market in Rome as the first shopping mall and one of the emperor Trajan’s great contributions to Roman society. It’s even possible that it was the first mixed-use center.

With dense residential development and a hillside cutting off expansion possibilities for the Forum, architect Apollodorus cut into the hill and went vertical with the terraced, six story-high Trajan’s Forum. Apartments filled the upper floors and shops called “tabernae” crowded the ground floor. In a Roman society in which Caesars built their reputations by waging war, Trajan left a legacy that continues to manifest itself in retail real estate today.

“What if the Romans would have never built the Forum?” asked Ralph Conti, developer of Celebration Pointe in Gainesville, Fla., a 1 million-plus-sq.-ft. development with garden apartments, a hotel, and such tenants as Bass Pro Shops and the first Rascal Flatts Bar & Grill. “How might the absence of what was arguably the most celebrated public center in the history of the world have impacted one of the most storied societies in history?”

Another perhaps more interesting question for current detractors of the enclosed mall is, “How is it that the world’s oldest covered marketplace is still open for business?” More than half a millennium since it opened in 1464, Istanbul’s Grand Bazaar remains one of the most successful shopping destinations in the world, drawing some 92 million visitors a year. It recently renovated its ancient tiled roof to safely welcome hordes of shoppers from around the world. Built as a trade center for merchants from all corners of the Ottoman Empire, the bazaar is essentially a roofed neighborhood with 22 gates, 64 streets, and 3,600 shops.


First U.S. mall

The oldest mall in America still thrives, as well, under the direction of Simon Property Group. Southdale Center in Edina, Minn., like the 260-year-old Great Gostiny Dvor center in St. Petersburg, Russia, had a logical reason to put up a ceiling: It’s too cold to walk from store to store in both places.

Victor Gruen, the designer of Southdale, did not have a network of sterile, cookie-cutter mega-centers in mind when he built the center. It was quite the opposite, actually. Gruen sought to recreate the inviting streets of his native Vienna and give people a community gathering place at which to shop, but also to stroll, linger at cafés, and socialize. This is what sociologists call a “third place,” inviting public gathering places outside of one’s  own home or workplace that, in Gruen’s words, “provide the needed place and opportunity for participation in modern community life that the ancient Greek agora, the medieval marketplace and our own town squares provided in the past.”


More options

New age food and entertainment retailers are doing a good job of putting a panoply of “third place” options at the disposal of shopping center and mall developers, who fight over the hottest concepts. One of them is Punch Bowl Social, which offers arcade games, bowling, Ping-Pong, and karaoke to customers, along with food and drink. Robert Thompson, founder and CEO of the 11-location-and-growing concern, had social history in mind when devising the concept.

“Years ago, people would gather around in parlors, drinking punch together. They gathered together in a communal setting. They had conversations with each other in person,” Thompson said. “Similar to our namesake, we create gathering spaces — and signature punches — for people to connect together in a highly social environment.”

Retail center developers may have only recently become attuned to the role that dining out plays in the lives of millennials and have blown up their food courts, but developers, by and large, have long-standing commitments to the communities they serve. Talk to the family scions who direct the retail real estate empires they or their forebears built, and nearly every one of them continue to do it and pass their businesses on to their offspring because of the emotional connection they have to the communities they serve.


Family

Butler Enterprises president Deborah Butler is one such retail heir. In 1939, her father, Clark Butler, opened a curbside market in Gainesville, Fla., that metamorphosed into a 267-acre mega-retail complex boasting 2 million sq. ft. of retail and lifestyle GLA.

Like all real estate developers, Butler carries an abiding commitment to growing revenues for her company. (Whole Foods Market just opened at Butler Town Center, with luxury retail and residential to come.) But she possesses just as strong and deep a commitment to the people of Gainesville.

“Have you ever turned to a stranger in a store and asked an opinion? We all have,” Butler said. “That, in a nutshell, shows what shopping can add to people’s lives. We gather to look and discuss, exchange thoughts about fashion or food, even family. And in doing so, we build the kinds of moments that life is made of.”

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M.Sapir says:
May-25-2018 07:25 am

We are building a live entertainment stage at our 150 M Snow Heights Promenade in Albuquerque, New Mexico. Consumers today want an outdoor socialized setting with food and Entertainment, fresh air and walkability to get out. Shopping is fun and there is no gratification waiting for boring Amazon box to arrive and finding “if” you return the item because you couldn’t try it on you’ll be banned from future orders. Besides, if you order an outfit from Amazon you’d like to put that on and get out. That’s why we feel the “full experience” will drive millennials back out to enjoy their lives! Michael Sapir, CEO, Sapir Real Estate Development.

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