ICSC 2018 RECon Show
REAL ESTATE

Upbeat mood prevails at 2018 RECon Show

BY Al Urbanski

“The Mall is Dead, Long Live the Mall!” read the cover line on issues of Chain Store Age distributed at last week’s big retail real estate trade show in Las Vegas, and it was an apt description of retailer sentiment at RECon 2018.

Developers across the show floor shared varying assessments of traffic levels at the show, but gave high marks to traffic quality. Meetings were more positive than at last year’s show, they reported, with retailers eager to work with developers to expand their brick-and-mortar networks.

PREIT CEO Joe Coradino said RECon 2018 was the most productive show for the Philadelphia-based mall operator in five years. “I gauge the quality of the show by how many new-to-market retailers visit the booth. Last year we had 75 and this year we had 96,” said Coradino.

The aisles were rife with representatives of entertainment and food-and-beverage chains eager to expand their businesses at mixed-use centers and renovated malls. Coradino reported that some 40% of prospective new tenants visiting the PREIT booth fell into those categories compared to only about 15% five years ago.

Traditional retailers, too, were brainstorming new store concepts with developers adding residences and office space at their properties. The renowned Easton Town center in Columbus, Ohio, is adding residential square footage and is exploring new retail options with Shop Lab, a 600-sq.-ft. space that will rotate startups and clicks-to-bricks retailers.

“A lot of heritage retailers have mall concepts that are not as fresh as they’d like, and they’re looking to the developers for solutions,” said Anne Mastin, executive VP of leasing for Steiner + Associates, which owns and operates Easton.

Several other developers exhibiting at RECon had fresh attitudes on display about what consumer experience means and the lengths they need to go to deliver it. “We’re looking for new concepts,” said Whitney Livingston, senior VP of Madison Marquette, which is developing the 2.7 million-sq. ft. Wharf project in Washington, D.C. “You can’t rely just on big, established national brands. Today you’ve got to have something authentic to succeed.”

At the Poag Shopping Centers booth, CEO Joshua Poag, said that the lifestyle center was meant to keep evolving and that new retail concepts help Poag to do it. He should know. His father and company found Dan Poag conceived the concept of an outdoor center with lush landscaping and trademarked the term “lifestyle center” in the 1990s.

 “We can evolve our concept with tenants and refreshing our mix is a contstant challenge,” Poag said. “We have several that are getting it done for us—West Elm being one that comes to mind as a really great store.”

Evolution, however, is a slow process, and so it will be with the remaking of America’s retail centers. “The problem is public markets,” said Poag. “Public [development] companies always hold the fear that some Wall Street analyst will destroy them if they dare to do something different.”

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Blue Bottle Coffee
REAL ESTATE

Blue Bottle Coffee makes it an even dozen in NYC

BY Al Urbanski

With its artisanal brews and straightforward menu, Blue Bottle Coffee has scored a hit with New York City hipsters and continues to expand.

The company, which was acquired by Nestlé last year for an estimated $500 million, announced it had signed a lease for its 12th location near Gramercy Park in Manhattan. The café will have 23 feet of frontage at 257 Park Avenue South, a building owned and managed by The Feil Organization.

“Grammercy Park is now one of the fastest-growing districts in New York, becoming home to tech companies and the young professionals who work at these companies,” said Brian Feil, VP of leasing for Feil.

Founded in Oakland, Blue Bottle promises to brew coffee beans less than 48 hours out of the roaster. Fueled by the Nestle acquisition, it is expanding rapidly in Los Angeles, the San Francisco Bay Area, Washington D.C., Miami, Boston, Tokyo, and Kyoto.

Other Blue Bottle locations in New York include Rockefeller Center, The Westfield mall at World Trade Center, and University Place in Greenwich Village.

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REAL ESTATE

Five trends in five years will reshape U.S. mall mix

BY Marianne Wilson

Expect the malls of 2023 to include new uses and experiences, as retail real estate responds to five major industry and demographic trends over the next five years.

That’s according to a new report from global think tank Coresight Research, which predicted that mall operators will move away from an apparel focus to create retail-and-services ecosystems that include a variety of uses.

“Over the coming years, many malls will reshape their offerings, moving from a focus on apparel stores clustered around department store anchors to more diverse networks of nonapparel retailers, leisure and entertainment tenants, event and pop-up spaces, and business service providers,” stated Coresight Research CEO and founder Deborah Weinswig in the report, “Deep Dive: The Mall is Not Dead, Part 3-Five Predictions for Five Years Out.” “Those property firms that are proactively dealing with market shifts by broadening their range of tenants now—rather than simply reacting to apparel store closure programs and bankruptcies as they arise—look set to be the most resilient as the apparel market shifts further.”

According to the study, the five trends that will prompt these changes are:

1. Department store consolidation: Coresight Research predicts that 1,100 to 1,200 department stores will close between 2017 and 2023, reducing the total number of stores in the sector by one-fifth. However, with the exception of bankruptcies by chains such as Bon-Ton, these closures will have a bigger effect on lower-traffic, lower-sales regional malls than on higher-traffic premium malls.

2. Shift to services: Between 2000 and 2017, consumer spending on goods as a share of total discretionary spending fell from 50% to just over 45% As a result, U.S. consumers spent $139 billion less on discretionary goods in 2017 than they would have if the goods/services split had remained at 2000 levels.

“Looking ahead to 2023, we expect consumers will be redirecting an additional $78 billion to discretionary services at the expense of discretionary goods,” Weinswig stated.

3. Apparel sales diverted online: Brick-and-mortar apparel sales will remain flat, as e-commerce captures a greater percentage of a growing total market. Shoppers will spend approximately $73 billion more online on apparel in 2023, with e-commerce capturing one-third of total apparel sales (up from 20% today).

4. The maturation of millennials: The oldest millennials will be 43 in 2023, and will wield more than $5 trillion across all spending categories in that year. The next age group, Gen Z (those born after 2000), will also be fully fledged consumers in five years’ time. Together, the two groups will constitute more than half of all U.S. consumers, and will continue to prioritize value for price paid and experiences over goods.

In addition, their familiarity with digital brands is likely to support the continuation of the clicks-to-bricks trend in retail.

5. Growth of nontraditional channels: Retail alternatives such as rental, resale and subscription services could capture $17 billion in spending at the expense of traditional retail channels in 2023.

“Brick-and-mortar retail will face significant challenges in the coming five years,” Weinswig writes. “The mall is not dead but challenges await the most unexceptional, apparel-dominated regional malls.”

 

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M.Sapir says:
May-25-2018 07:15 am

Our 30 year expert experience tells us the consumer wants the “full experience”. The want good deals , social environments like Starbucks and engagement. Open aired single level outdoor Promemades, walkable , fresh air,featuring food and Entertainment and Shopping. We are building a live entertainment stage at our 150 M Snow Heights Promenade in Albuquerque, New Mexico. We are sure this retail trend will continue across the nation. Michael Sapir, CEO, Sapir Real Estate Development.

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