REAL ESTATE

Three tips for retailers entering nontraditional spaces

BY Richard Broder

As vertical mixed-use developments flourish and towns and cities pursue redevelopment as a way to revitalize their civic centers, retailers find themselves presented with abundant opportunities to seek expansion in “nontraditional” urban spaces. First-floor retail beneath residential or office space can be an ideal fit for urban mixed-use projects.

But the development calculus changes when merging retail with office, residential, or hospitality.

On a macro level, the big questions with respect to retailer location remain the same whether you are dealing with a suburban strip center or a ground-floor office building space: It’s all about geography and demand. Retail positioning depends on whether the retailer (and the developer) believes there is an underserved market for their product nearby.

For the developer, the right retailers can be a strong selling point for the project, giving office and residential tenants convenient shopping, dining, and on-site amenities. The retail mix helps to make the downtown environment more engaging and contributes to that all-important energy and activation that distinguishes successful mixed-use centers.

The benefits for the retailer begin with visibility and foot traffic. Having a “captive” population upstairs or next door is a tremendous built-in advantage. It’s hard to beat the marketing benefit of having a large group of people walking past your windows every day or coming down hungry to your restaurant. The density of an office space is much higher on a per-sq.-ft. basis than multifamily, making ground-floor retail in office buildings a particularly advantageous and coveted position for retailers.

The top three things that retailers and developers need to keep in mind when evaluating retail fit in nontraditional urban space are:

Fit and functionality. From an operations point of view, you need to think carefully about how to accommodate retail logistics. There are almost always workable solutions that can be made for practical considerations, such as a retailer’s delivery requirements or hours of operation. These fundamental factors can make a big difference — not only when it comes to coexisting with an office tenant, but also in achieving that elusive mixed-use synergy. The notion of fit also extends beyond practicalities to more nuanced considerations of brand and “tone.” A high-end law firm might be an awkward pairing with a Disney Store, for example. A similar thought process should apply to a retailer’s fit within the surrounding market dynamics and local retail mix.

Strike a balance. In a general sense, owners and developers will need to be somewhat more flexible, responsive and accommodating to specific retailer requests. For example, locational choices tend to be more specific and impactful for retailers than an office tenant (who isn’t likely to be as concerned about what floor they are on or what side of the building they are facing). Anytime you have two or more different uses coexisting in the same building, you need to be both thoughtful and strategic about balancing the different needs of each component. It’s also important to achieve a balance within the larger project and the overall marketplace. Selecting the right retail tenant is a process that requires not only asking, “Is this what people want?, but also “Is this good for the building?” and “Is this a good fit for the surrounding neighborhood/overall project?” The answers to those questions can be conflicting or contradictory, which means that the best deal on paper might not always necessarily be the best decision for the long-term success of the project.

Respect civic context. The need to make smart decisions can be an especially urgent priority in cities like Detroit, where a comprehensive civic renaissance is underway. In essence, downtown Detroit is being “rebuilt,” virtually from scratch. In circumstances like that, owners, developers and leasing professionals have both an opportunity and an obligation to get it right–and that is a responsibility that should not be taken lightly. In fully evolved urban ecosystems like New York or Chicago, that dense mix of uses has evolved organically over a long period of time. In places like Detroit, there is a need to be really thoughtful and strategic. Being conscious of context and consequences in an urban landscape that is comparatively “young” is critical in order to tackle gaps that need to be (re)filled.

Richard Broder is CEO of Broder & Sachse Real Estate, a Birmingham, Michigan-based real estate development company known for bringing influential commercial and residential projects to life. Broder can be reached [email protected].

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you hiring seasonal employees this year?

View Results

Loading ... Loading ...
REAL ESTATE

Real Estate Roundtable optimistic about 2018

BY Al Urbanski
The commercial real estate market will stay strong through the end of the year and remain stable in 2018, according to the Real Estate Roundtable’s Q4 Economic Sentiment Index.
Continued activity in high-quality urban real estate assets is one of the factors fueling optimism among real estate executives contributing to the index. The Q4 score came in at 53 out of 100 points, a three-point increase over Q3.
What emerges from Washington in the way of tax reform remains a wild card for the business in 2018, however “A final bill that may eventually emerge from a bicameral conference must encourage capital formation and help maintain the strength of our capital markets,” said Roundtable President and CEO Jeffrey DeBoer.
Executives surveyed suggested that many more deals are in the making for new urban projects and that real estate pricing is stable compared to other asset classes.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you hiring seasonal employees this year?

View Results

Loading ... Loading ...
REAL ESTATE

Inland wins Illinois business ethics award

BY Al Urbanski

For the third time in five years, The Inland Real Estate Group received a Torch Award from the Better Business Bureau of Chicago and Northern Illinois. The distinction is reserved for companies displaying exemplary business ethics practices.

“This is a prestigious award to receive once, let alone three times. Inland prides itself on its integrity and doing business the right way,” remarked Steve Bernas, president and CEO of the Chicago BBB.

Dan Goodwin led a company of executives from the Oak Brook-based company that began as a side-line for a group of Chicago school teachers and grew into one of the most active acquirers in the real estate business.

“What a wonderful award to receive as we kick-off our celebration of 50 years in business,” Goodwin said.

Connect with me on LinkedIn | Follow me on Twitter

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you hiring seasonal employees this year?

View Results

Loading ... Loading ...