The Stable Economy Favors Growth: The five year-long bull market in the United States gives impetus to the notion that commercial real estate (CRE) offers strong investment advantages – especially in markets where supply is limited and the book value of projects has been growing incrementally.  In December, the Federal Reserve encouraged CRE investors with predictions of long-term stability in the markets and very limited inflation. Employment gains across the country also augur good things for CRE as demand for office (principally creative office) has grown apace.

 Urbanization and The Millennial/Boomer Effect: An explosion of milennials into the workforce and their preference for inner city life has fueled expanded development for office, residential and retail in core markets across the country. Added to this trend, a stream of boomers leaving suburbia behind for “downsized” urban dwellings, has strengthened and made more competitive the growth of city neighborhoods that offer a range of amenities and transportation options.  This demographic shift is predicted to continue into the next decade or more – and will reward investors and developers who can leverage demand with appealing and well-priced supply.

Ecommerce Shaping Retail Development: The growing impact of ecommerce on bricks and mortar stores will be felt even more strongly in 2016 and in the years ahead.  Shifting shopper preferences and space pressures in urban core markets will lead to an expanding palette of mini-shops (City Target) and quick trip store formats that cater to office workers with limited time and micro-unit residences.  At the same time, retailers will be investing ever more heavily in technology solutions that can compete with the convenience of ecommerce and experiential scenarios such as cocktail receptions, in-store fashion shows and pop up stores that make a shopping trip “fun and fierce.”

Increasing Foreign Investment in U.S. Real Estate: Despite some hiccups in the Chinese economy and the economic pressures felt by Europe because of the migrant crisis, foreign investment in U.S. real estate will remain strong. The passage of FIRPTA reform in December, 2015, has been a factor in expanding investment by foreign pension funds – including Canadian and Asian funds.  The Association of Foreign Investors in Real Estate (AFIRE) reported recently that its members expect 2016 to be a growth year.

 Core Market Appeal: Urban gateway markets (New York, Boston, Washington, D.C., Los Angeles, San Francisco and Seattle as examples) will continue to feel strong demand for office and residential space.  This trend rests on demographics (see trend 2 above) and on limited options for development or redevelopment because of geographic boundaries and pre-existing density.  Developers with expertise in adaptive re-use of properties in key urban locations will fare well and are seen to be active in these high in-demand locations.

The post 2016 – The Year Of Emerging Commercial Real Estate Trends appeared first on PLACES.

Over 90% of the time, the average individual researches a service or product online before making a purchase. Amazon, Uber, delivery innovation and smartphones have revolutionized consumer behavior across just about every category. As Pinterest and Instagram provide a platform for swoon worthy wardrobes, home décor and recipes for a year’s worth of family-friendly meal planning options, the physical retail space has taken a secondary role to merchandising goods and services.

In 2014, Deloitte reported that as a result, retailers were likely to downsize stores by 30-40% in the medium to long term, due to emerging mobile platforms and the fact that even consumers in rural zip codes who once had limited access to popular urban brands, now have equal access to retail offerings with the Internet.

Users check their smartphones more than 200 times every day, and it’s changing the way we discover, compare and purchase products and services. According to the Google Shopper Marketing Agency Council, 79% of smartphone users are smartphone shoppers, and the more a consumer uses mobile to research or compare products, the more apt they are to spend more (up to 25% in store). This is indicative across consumer categories from groceries, to appliances and clothing, and is forcing retail brands to rethink merchandising, inventory and virtually every traditional aspect of the brick and mortar business model.

Clarifying how brick and mortar and digital merchandising can meld together successfully, Oliver Guy, retail industry director of Software AG says, “Mobile, cloud, analytics and social media will be fully integrated into a unified merchandising system designed to vastly improve customer engagement.” The evolution is happening round the clock with streamlining pay options, and same day delivery.

Mobile e-commerce also provides retailers an even more sophisticated and geo-targeted platform for market research on consumer trends and habits, further enabling shoppers to access and source desired products and services. An estimated 73% of in-store shoppers find waiting in line their least favorite aspect of shopping, making same-day delivery services all the more appealing. In a recent report by MobStac, (a cloud-based m commerce platform delivering mobile apps for e-commerce sites) by 2017, nearly half of all in-store transactions will be completed via mobile point of sale or a self-checkout feature.

Clicks Are Only a Small Percentage of Retail Sales Now, But Have Exponential Growth Projections

Mass adoption of universal pay options will make it increasingly easier to purchase everything from soap to dog food through a quick click secure transaction on a smartphone. Still, while shopping online has become a popular pastime for some, Jonathan Alferness, VP/Product Management at Google Shopping claims that, “while 87 percent of shopping research happens online, 92 percent of goods are still sold in retail stores.” And according to Women’s Wear Daily, mobile is still just a small part of most companies’ top lines.

Retailers are downsizing physical locations to devote more mindshare to digital sales points. A telling indicator of the changed psychology behind new retail development comes from a comment Denver-based developer John Frew made in the Wall Street Journal recently when referring to the new Westdale development in Cedar Rapids, IA. “The new project will include a hotel and offices…and when complete, there will be about a third less retail space than there was before. We think it fits the market.”

While online sales made up only about 7.7 percent of personal consumption expenditures for apparel, home and accessories categories in 2014, according to Goldman Sachs, that number is expected to nearly quadruple to 26.6 percent of sales by 2018, which could correlate to a further decline in brick and mortar foot traffic and in-store sales figures. Software AG’s disruptive digital trends predictions for 2016 include predictive analytics that enable stores to know what customers are going to want and when, as well as real-time monitoring capabilities that will sense, correlate and automate processes from staffing to inventory. With the precision of the metrics, excess store locations will get eliminated in the process.

The Rise of Same Day Delivery Services

What was once known as a business model for failure, same day delivery platforms have become increasingly palatable for modern consumers. In 2015, Business Insider reported that same day delivery companies would partner with retailers to “grow e-commerce’s customer base, siphoning off one of brick and mortar retail’s last real competitive advantage.” According to their research, one in four shoppers said they would consider abandoning online shopping if same-day delivery was not an option, and the most common shopper demographics were urban-dwelling millennial males. However, 92% of consumers said they were willing to wait four days or longer for their purchase to arrive.

Inc. Magazine recently identified several companies that are defining the same day delivery option including, Instacart, Amazon’s same day grocery delivery platform, and Zookal, an Australian-based textbook delivery that plans to employ delivery drones using the flying-bot service Flirtley. Most notably, San Francisco-based Postmates is positioning to compete with Uber’s marketshare to deliver everything from lunch to clothes and office supplies. Google Express is in on the game, launching a new grocery delivery service in 2016.

UberRush, launched in New York City, and now available in Chicago and San Francisco, is a local messenger service arm of the ridesharing company, allowing users to order local items for quick delivery. Deliv, based in San Francisco, allows retailers to offer same-day delivery to customers for as low as $6.25 per order within 15 miles. London-based Shutl, purchased by eBay in 2013, uses local courier services to deliver packages from retailers within a few hours. Amazon Prime’s same day delivery is now available in almost 30 cities nationwide, (more than double the locations available just two years ago) and has expanded delivery service to seven days a week. EBay now offers one- to two-hour delivery of products ordered from local stores to over 25 cities.

Ready to battle for part of Amazon’s customer base, Daphne Carmeli, the founder of Deliv has developed the company’s efficiency model on the idea that local businesses and retailers have inventory within a five-mile radius of their customers, which is the one thing Amazon doesn’t currently have. Potential venture partners in Silicon Valley have met her with skepticism, but she remains confident. “One way you know you are on to something is when you get polar opposite responses, that is a good sign you are on to something disruptive.”

If there’s one takeaway from the collective methodology emerging from big data, mobile access and same day service, it is that we are in an era of disruptive technology that is influencing and advancing the retail landscape at a rapid clip. Only brands that can fully employ the data on their customer demographics, streamline and automate purchasing and delivery, and develop customized, well-crafted goods and services will survive the pace of progress.

The post Same Day Delivery, Multi-Platform Access and the Mobile Consumer appeared first on PLACES.

The PLACES Team took a look at which malls and shopping centers are thriving in the post-recession millennial generation, vs. the ones that have failed, examining several components of “A Malls” vs. “B Malls” and their re-development across the country. We analyzed the common characteristics of “A Malls” and their growth, as well as the technology that is changing the face of how we learn about and consume products, services and retail goods.

“Malls Are Dying” Is Not the Whole Story

Overbuilding, a mass recession, the rise of e-commerce, and several big brand retailer bankruptcies have forced landlords and property managers to re-envision a Foot Locker into a health clinic, a Sunglass Hut into mixed-use office space. According to Greenstreet Advisors, nearly 25 enclosed shopping centers around the country have closed since 2010, and another 75 are in danger of failing.

The International Council of Shopping Centers (ICSC) reported that since 1990, when 16 million-square-feet of mall space opened, shopping center building has tailed off, and only one large new mall has opened in the U.S. since 2007. Technology and emerging entertainment alternatives have all subtracted considerable traction from America’s traditional enclosed mall model. But it’s difficult to compare apples to oranges.

A combination of socio-economic forces have revolutionized consumer habits and spending across generations and demographics. The number of individuals living below the poverty line has nearly doubled since the recession in 2008, wiping out a large group of consumers who populated the B and C mall brands. Department stores have experienced rapid consolidation, leaving fewer options for traditional department-style anchor tenants, and discount retailers like T.J. Maxx and Target have replaced J.C. Penney and Macy’s as the popular go-to retailers for home essentials and personal care products. In addition, millennials want a product no one else has. Shoppers want discount, but another portion of them want authentic and luxury. The middle has bottomed out. The Wall Street Journal recently reported that “A Malls” currently make up only 3.5% of malls, yet account for 22% of all value. According to Goldman Sachs 2015 list of top 100 malls in the U.S. 75 percent are home to an Apple store, up from 69 percent in 2014.

Short Hills Mall in New Jersey, considered one of the most high-trafficked, and maximum sales per square foot mall properties in the country, has anchor tenants Bloomingdale’s and Saks Fifth Avenue peddling luxury leather and skin creams to a much higher net worth demographic than the malls in tertiary markets with marginalized retail concepts that can’t compete in a more sophisticated retail scene. “B Malls” are traditionally classified by their location in secondary markets, and the range of $300-500 per square ft. in sales, according to National Real Estate Investor.

Century III Mall, once a bustling shopping hub among suburban Pittsburgh residents, recently closed after being burdened by a 70 percent occupancy rate with sales revenue hovering at $200 per square foot. Highland Mall in Austin, TX, suffered a similar fate with a 61% occupancy rate. So what is to become of all the overbuilt square footage in these shuttered properties?

Mayfield Mall in Silicon Valley was bought by Google, and re-purposed as office space for Google Glass. Hickory Hollow Mall became a satellite campus for Nashville State Community College and opened a practice rink for Nashville’s NHL team. Other properties have morphed into apartment buildings, botanical gardens and medical facilities.

When Madison Marquette stepped in to re-develop and manage Richland Mall in North Central Ohio, they knew they had to meet a growing need within the community beyond just retail. In 2013, Avita Health Systems bought the property, providing a new opportunity for food and other mixed-use concepts in addition to providing on-site jobs. By swapping out old infrastructure for the installation of drop-irrigation tanks, the building was retrofitted for a modern energy management plan. When Avita Health System opened Phase I in December 2014, center traffic increased by 15% with a 3% increase in overall sales, a successful model of a strong re-use development.

Since fewer, if any, retail properties are being developed from the ground-up, existing ones are looking for innovative ways to re-market their square footage, like Highland Mall in Austin, TX, which is being converted into a campus for Austin Community College, complete with classrooms, and a culinary arts center. Springfield Town Center in the densely populated suburbs of Northern Virginia, closed for renovation in 2012, after suffering double-digit revenue losses during the recession. It re-opened in October 2015 with a spa, a children’s lending library and a movie theater with recliner seating, and is being re-positioned to take center stage as a community retail and entertainment destination for surrounding residents and businesses.

Experiential Shopping and the Millennial Market

The rise of the millennial spender and the shift in consumer shopping habits is so complex, the Wall Street Journal has dedicated an entire series in their business section to examining the topic. Retailers’ longstanding model of saturating every market with outposts of their brand has been adapted into creating fewer, but more upscale stores and shopping destinations with a multi-purpose appeal.

Bloomberg News has reported that millennials aren’t that into malls, compared to the previous generation X who grew up in the “mallrat culture” of the 90’s. Developers, therefore, are not only focusing properties around housing, dining and entertainment options, as millennials want to live closer to work and play; but also have to think about how to integrate their merchandising into mobile-friendly marketing concepts that draw shoppers into their physical locations, and not just the screen.

Millennials and the next generation of shoppers desire outdoor spaces and garden rooftops, dining options that are local to their environment, and unique retail they can’t find online or in every chain across America. In losing traditional anchor tenants like Macy’s and J.C. Penney, once the go-to purveyors of appliances, lawn care equipment and towels in every color, developers are reinventing the experiential side of shopping, with on-site programming and events like wine tastings, movie nights, and interactive playgrounds to merge the evolving interests of a more connected than ever population of consumers.

The post The Decline of the Traditional Mall and the Evolution of Experiential Shopping appeared first on PLACES.

In the past, the suburban mall attracted shoppers with anchors such as mid-market department stores or big box retailers. How have traditional malls evolved to be more competitive and capture consumer attention? 

AB: The modern mall has been pronounced dead many times recently, but what’s really happening is more of a metamorphosis. Department stores have continued to downsize and close, so there is space available to developers to add more lifestyle and entertainment options to enhance centers.  Today, traditional malls are adding live entertainment and a variety of dining options to transform their spaces into a gathering place for family and friends.  A good example of a concept that incorporates retail, dining and entertainment is the Tommy Bahama “compound,” which offers both lifestyle retail,dining and live music. Many retailers are shifting to an entire lifestyle presentation that includes all sorts of soft and hard goods as well as entertainment and dining. Another brand that exemplifies this lifestyle goods presentation is Anthropologie. Developers that see this shift in retail and translate it into action are evolving their shopping centers to be a more lifestyle-inclusive “place.”Essentially, the transformation is starting with the retailers and moving up to the shopping center developers.

Over the past 12 months, the trend for shopping centers to become lifestyle hubs has been on the rise. How is Madison Marquette transforming its properties from retail-only to community destinations?

AB: Madison Marquette’s Wharf development in Washington, DC, is a good example of this. The Wharf combines hospitality [hotels], office space, residential condos and luxury apartments, and entertainment. It is creating a new district within “The District.”Lifestyle is the focus. The project caters to the people that both live there and visit with tons of great food options, an entertainment venue, and services like a grocery store, a drug store, a dry cleaner and a curated selection of retail soft goods. As it expands to become more of a lifestyle center, The Wharf provides a perfect model of where shopping centers are headed.

How is the national franchising trend benefiting shopping centers?

AB: People are somewhat “bored” with the same retail stores opening at most centers and sometimes within blocks of each other. Many of these retailers, like Gap, are closing locations because they expanded into too many locations, which diluted what originally made them unique. Franchising, however, puts the local businessperson on the front lines of customer service and fashion trends. For example, I recently visited a 700-square-footmen’s store in Fredrick, Maryland, that carried clothing you can’t find anywhere else; the store is in an historic district with a buildout that is “industrial chic.” Incredibly, the retailer also offered its customers a barbershop upstairs as part of its “lifestyle” presentation. It was a great example of what the “new urbanism” has done to reinvigorate downtown areas. It is that contentedness between retailer and consumer that has created a sense of place and a shopping experience that traditional malls don’t offer.

While consumer preferences differ across the country, are there any universal tenant choices that make sense whether in California, Texas or New York?

AB: The “ath-leisure” trend in fashion works in shopping centers across the country. Ath-leisure is clothing designed for yoga or the gym, but it can be worn outside of those environments as fashion, or at least it has become fashion. Retailer examples include lululemon athletica, Gap’s Athleta stores, and even DICK’S Sporting Goods’ ath-leisure line, Chelsea Collective. In fact, most clothing manufacturers offer some type of ath-leisure clothing options now. Another universal tenant choice is retailers that offer the so-called “boho-chic” fashion. We are seeing a lot of women’s stores offering boho-chic brands, and retailers such as francesca’s, Anthropologie, Hemline and fab’rikare becoming staples in many shopping centers throughout the country.

What type of retailers should centers be looking to add to their mix as an alternative way to drive traffic? 

AB: Creating consistent foot traffic is a leasing strategy that many shopping centers have struggled to fulfill. However, with the right retail mix, increasing foot traffic can be a viable solution to a dark corner of a shopping mall. For example, Apple stores always drive traffic. A mix of retailers needs to be experiential, offering a process of discovery. Vintage record stores and clothing stores mixed in with traditional retail adds a hip and cool vibe. Think Urban Outfitters as a one-store example of this with its airstream trailer coffee shop/café, unusual books and gifts mixed with soft goods. To drive traffic, a mix of stores needs to offer customers a unique selection of merchandise at various price points that you can’t find anywhere else.

The post 2015 Leasing Trends appeared first on PLACES.

Bauer Hockey

Known as the premier expert in the ice hockey equipment manufacturer market, Bauer Hockey will dip its pucks into the retail market. The company will open its second Own The Moment retail experience in Bloomington, MN in late fall of 2015.  The Bloomington Own The Moment retail experience will feature an indoor ice rink to provide a unique try-before-you-buy experience.

Bunulu

Bunulu is a specialty retail store concept crafted by Florida-based department store retailer Bealls Inc. and is scheduled to open Q4. Bunulu will cater to a younger shopper (both men and women) featuring active lifestyle apparel and accessories for coastal living. The brand’s website describes the concept as the “next generation of outdoor active lifestyle brands.”

Starbuck Reserve Roastery and Tasting Room

Starbucks Coffee Company is bringing out the sophisticated palate with its Starbucks Reserve Roastery and Tasting Room, a 15,000 square foot flagship specializing in high-end coffees from around the world with openings in Chicago, Los Angeles, New York, San Francisco and Washington, D.C. The roaster is a café and tasting room allows customers to bring the experience home with its iBeacon technology, which gives coffee-drinkers roasting and brewing information via their smartphones.

The Range

A UK-based home and garden products store, The Range is planning to expand its home goodness with the opening of 45 new stores in the U.K. over the next three years.The Range is recognized for its unique variety with more than 65,000 quality products across 16 departments including; DIY, Homewares, Furniture, Lighting, Arts & Crafts and Garden.

Joe & the Juice

European luxury retailers are bringing their unique cache stateside. Joe & the Juice, a Denmark-based coffee, juice and sandwich shop, is capitalizing on Americans’ love for overseas brands and restaurants. Joe & the Juice will delight yanks with coffees, shakes, shots and sandwiches and the first tasters can try the libations in New York City. 

Yo! Sushi

Debuting in Sarasota, FL, Tampa, FL, Paramus, NJ and Short Hills, NJ, this taste of Tokyo is a fresh take on the fast-food concept. Customers can enjoy Japanese-inspired food delivered directly to you on a unique conveyor belt. The cuisine is based on traditional Japanese dishes including sashimi, maki, hand rolls, gunkans, tempura, teriyaki, rice and noodle dishes, salads and desserts. Sushi-eaters can simply sit at the bar or in a booth and take plates from the conveyor belt. Plate colors reflect prices – seven colors, seven prices.

Leica

The iconic German company is delighting shoppers in New York City and Miami and plans to open 200 more stores by 2016. Designed for both novice and experienced photographers alike, Leica’s S2 demo gives photographers a hands-on experience with this groundbreaking camera system in a professional studio setting.

Dressbar

The mass-retailer, Dress Barn, brings a pop-up shop concept to Fifth Avenue. The NYC Dressbar pop-up is an edgier version of Dress Barn featuring a few high-profile designers collections, exclusive to Dressbar, and include LUXE by Carmen Marc Valvo, MiXT by Heidi Weisel, Lovely by Adrianna Papell and dbRSVP by the db Fashion Studio.

The post Retail Trailblazers – Creative, Outside-the-Box Retail Concepts for 2015 appeared first on PLACES.

Q: What does it mean to activate a property? 

MM: Activating a property is the key mechanism for drawing people into the site. Before we can make a site a shopping destination, it needs to become a known entity. The goal is to make the property a part of the community and a place where people want to go.

With customers more frequently shopping online, visiting a shopping center needs to become more of an experience.  It’s not about just picking up a pair of jeans; you need to offer something more. Ideally, activation of a property will start before any development or leasing, and it should continue throughout the life of the property. When a new property is in development, for example, we engage the community right away and get them accustomed to coming to that space in their neighborhood. We do this by creating a thriving atmosphere with community open houses, pop-up stores in temporary spaces, music series and food events that play off the existing neighboring tenants. 

Q: What are some of the top trends in retail activation? 

MM: One of the biggest trends in retail activation right now is pop-up stores. This is a way for retailers to test a new concept on a much smaller scale, but it can also be used as an incubator to see what resonates with the public.

Because pop-up retailers bring a tremendous amount of authenticity and originality to the projects in which they are featured, shopping center owners use this as a way to create buzz about the property and draw traffic. Ideally, a shopping center would do this with multiple pop-ups – which can range from a week to several months each – throughout the year.

Another trend we’re seeing is online retailers creating variations of traditional brick-and-mortar stores. They’re finding that this is one of the best ways to test products with what is essentially a real-time focus group. One example is Birchbox which opened a successful brick-and-mortar store in SoHo in addition to its online platform. Previously, companies were solely brick and mortar with a minimal online presence; now, businesses are exploring a mainly online footprint with a sampling of brick and mortar. 

Q: To what extent are social media and other technologies used in activating a property? 

MM: In its simplest form, technology can be used to communicate anything out of the ordinary.  These messages can range from featured pop-ups to events and new promotions to the announcement of retailers, restaurateurs and services.  Social media is a great way to communicate key messages to the surrounding community and social influencers in your market.

In addition, technology can play an important role inside the shopping center.   No one shops alone; they always have their phone with them. Therefore, we are exploring ways to use cell phones and other mobile devices to bring people into our shopping centers.  Once they’re there, we want to help them navigate through the center, help them decide which stores fit their personalities, and answer any questions they have either through social media or specific “text for answer” applications on their phones.

Interactive information is also of significant interest. Kate Spade was recently constructing a new store, and on the store’s barricade, they installed touch screens that engaged shoppers to explore which product lines were coming and to promote the brand. The interactivity tracked shoppers’ likes and dislikes, something which played a role in helping Kate Spade merchandise the store and gave the brand strong information about the market’s demographics and tastes prior to opening.

Q: Can you describe an example of an activation success story? 

MM: LaBrea in Los Angeles is a great success story.  Madison Marquette purchased a group of buildings, along La Brea Avenue just before the recession hit. One of the buildings included the former Continental Graphics building, previously a premier print shop and Los Angeles-area icon. The group of buildings had been targeted with graffiti, and the structures were being sold as a teardown. Because the property was closed off from the street, you couldn’t see the potential for retail. However, once inside the buildings, there was amazing existing architecture, beautiful vaulted wood ceilings and fabulous existing flooring. Despite its unrefined state, we saw the potential to create a unique urban shopping street that would offer Los Angeles something it had never seen before.

A big part of what made the property activation so successful was the informal LaBrea district business association Madison Marquette created to collaborate with surrounding tenants. We coordinated the activation and used carefully curated events and programming to bring the block alive. The efforts were timed so events would coincide with other in-market promotions, and we took the lead in communicating district-wide happenings to the public via social media and email blasts.

Madison Marquette also brought in a famous muralist, Shepard Fairey, the same artist who designed the famous Obama “Hope” poster, to paint an 8,800-square-foot mural.  The mural wraps around a corner of the property and really gives it a unique identity.  During the creation of the mural, we hosted a social event to further engage the community, and it continues to be a great story for us today when people ask about the mural’s origin.

After the mural was completed, we hosted a two-week art show on site that also included food trucks and pop-up stores. All of these events took place prior to leasing the spaces.  Even though we were making an investment in the location before even having operating tenants, we knew the type of retailers we wanted to attract and the merchandising vision for the property, and we had already begun communicating that vision to the public.

Q: Does the activation attract tenants as well as customers?

MM: Absolutely, yes. In an existing center, the activation increases current customer sales, but it also attracts new tenants. Ideally, we will have a strong enough vision and activation plan to allow ourselves the opportunity to be selective about which tenants we want, choosing the ones that best fulfill our vision and merchandising strategy.

Q: How is activation different in a mixed-use property? 

MM: Madison Marquette owns a mixed-use property called Bellevue Connection in Bellevue, Wash. The top floors are office space, while the lower floors are retail.  The property had an outdated traditional coffee shop on the ground floor.  We were able to replace that tenant with an attractive new food concept growing in popularity within the Seattle market.  Known for quality sandwiches and great breakfast options, the restaurateur also offers coffee, wine and beer, all of which make it a more desirable destination for on-site office workers and the surrounding community.

The key with activation for mixed-use is to find the synergies between the different groups. The retailers, restaurants and services have a captive audience, and the office workers are searching for destinations that offer them not only convenience, but also an engaging and unique experience.

The post The Value of Activation appeared first on PLACES.

How did you develop the concept for Not Your Average Joe’s?

SS: In 1993, at my father’s request, I moved from Colorado to Massachusetts to help with the family business. I soon discovered that there was a lack of quality food at affordable prices in my hometown. At that time, if you lived in the suburbs and wanted good food, you had to travel into the city. So, I opened a restaurant that brought the city to the suburbs. Since I was new to the restaurant business, I was open minded about creating a concept that was previously unheard of in suburban life. 

DM: Steve’s idea was to bring an urban dining experience at an affordable suburban price to his neighborhood, which featured both American classics and global foods. What started out as an experiment with one location has grown into 23 locations that provide delicious made-to-order food in a comfortable and relaxing atmosphere.

What makes Not Your Average Joe’s unlike any other neighborhood restaurant?

SS: Not Your Average Joe’s is an elite combination of made-from-scratch food by real chefs in our restaurant kitchens, innovative structural designs and affordable prices. Each location is unlike the next – we don’t have a specific prototype. We wanted to truly create an experience based on the neighborhood we are located in. For example, at the Glen Mills location in Pennsylvania, we’ve incorporated communal tables made from reclaimed bowling lanes from a local bowling alley.

DM: The food really sets us apart. Not Your Average Joe’s features American favorites as well as a wide variety of dishes from the Pacific Rim to the Middle East and everywhere in between – we offer dishes from places all over the world. We also pride ourselves on special orders. We are known for listening to our customers and preparing food that meets their needs and satisfies their palates. Not Your Average Joe’s is sensitive to dietary restrictions, including gluten-free diets and allergies, too. Our chefs will come to individual table sides to discuss any accommodations we can make to give our customers a more comfortable and pleasurable dining experience. 

Not Your Average Joe’s has been successful in six states. Do you have plans to expand into other areas of the country?

SS: Geographically, our goal is to expand between Boston and Virginia on the East Coast, opening four to five locations a year.

DM: Not Your Average Joe’s expansion strategy will be hyper-selective. We want to be able to hop on a plane and, within a few hours, visit any of our locations.

What are the “must-taste” items on Not Your Average Joe’s menu?

SS: For appetizers, I always order the Edamame Dumplings in a lime chili broth. My salad choice is the Super Crunch Salad, which is filled with healthy ingredients such as avocado, pistachio and kale and has been a customer favorite on the menu for the last 15 years.

DM: My must-taste recommendation is the mouth-watering Fish Tacos, which features seared Ahi Tuna wontons. In the fall, the Coriander Rub Pork Tenderloin brings out warmer flavors for a hearty cold-weather dish.

The post Retailer Spotlight: Not Your Average Joe’s appeared first on PLACES.

Outlet stores are not new. But these days they are increasingly “news.”  B-i-g news.  And the big news is that off-price outlet stores and traditional retail stores are in the process of converging in shopping centers nationwide.

The collapse of class B and C malls is well underway.  While about 60 percent complete, it won’t be long until an estimated 500-plus additional malls close taking with them much of the apparel and housewares business of retail giants like Macy’s, Sears, Dillard’s and JCPenney.  When these malls disappear, small store retailers operating in them must plan for the replacement of hundreds of lost stores and billions of sales dollars.

As this trend continues, savvy consumers have figured out that brands – whether last year’s fashion trends featured at T.J.Maxx and Ross Stores or made-for-outlet (MFO) jeans offered at Banana Republic Factory Stores – represent the value proposition they want as they increasingly embrace the blurred lines between premium brands and their MFO cousins.

Retailers and developers have begun to exploit these conditions by challenging convention, placing outlet format centers in previously forbidden territory while even more audaciously blurring the lines by introducing outlet stores in full-price centers.  Is the introduction of a J.Crew Factory store into Cincinnati’s Rookwood Commons Shopping Center the beginning of the end of the center – or more likely, an example of the new Convergence Era in premium brand retailing?

From the early days of factory outlet shopping in Reading, Pa., to the introduction of “Mills-style” shopping in Woodbridge, Va., consumers have come to appreciate having the choice to buy trusted brands at full price and at off-price factory prices even if it requires shopping trips lasting all day to far-flung locations to find the bargains.

These all-day trips to find the deals are, however, quickly becoming a thing of the past as developments like the Tanger Outlets at National Harbor just outside of Washington, D.C., and New England Development’s Palm Beach Outlets in Florida hit the scene. Moreover, mounting evidence seems to suggest the emergence of a new retail paradigm in which outlet stores are increasingly being blended with traditional retail, along with other new drivers like restaurants and theaters, to create new shopping options.

Three key trends seem to explain this growing evolution: the decline of the department store, the transfer of many class B and C malls into the hands of newly formed caretaker owners from stronger premium mall owners, and the increasing willingness of consumers to more broadly embrace outlet stores.

The Decline of the Department Store

Department stores continue to experience negative growth while discount apparel represents the fastest growing segment in both commodity and specialty brick-and-mortar retail.

Department stores –not just Sears, JCPenney and Macy’s, but even Nordstrom full-line stores – are increasingly under assault. This year, commodity retailers Ross, Marshalls, T.J.Maxx and Nordstrom Rack will together add over 250 stores.  ULTA Beauty will add another 100 stores, and Sephora maintains a large open to buy.  Home Goods and Bed Bath & Beyond also continue to seize the opportunity to gain market share and are opening stores at a brisk pace.  And this year, Swedish retailer H&M will add the bulk of its 400-plus new stores in the United States and China.

As a result, the department store industry, which has been in a slow and steady decline for decades, is reeling.  Department store giant Macy’s recently lowered sales guidance for the year, while regional favorite Belk announced that it has hired Goldman Sachs to assess “strategic alternatives.”  All this is happening while Sears slowly carves itself into REIT obscurity and JCPenney struggles to regain sales from its disastrous courtship with Ron Johnson.  The result: Each month, more and more B and C malls quietly slip into receivership or a date with the “special servicer” while powerless to stop the megatrends behind their slide into retail obscurity.

Caretakers vs. Mall Owners

Today’s B and C malls – which are mostly disassociated with their now vastly consolidated A mall owners like Westfield, Macerich, GGP, Taubman and industry giant Simon Property Group – are no longer being supported by their stronger former owners, leaving hundreds of weaker malls primarily in the hands of caretakers like Washington Prime, Rouse and fledgling Starwood Capital.

As a result of the weakened department store industry and the loss of ownership leverage created by decoupling B and C properties from stronger A mall REIT owners, retailers and manufacturers who control coveted upscale brands are less likely to keep unprofitable stores open and are more likely to place competing outlet versions nearby.  The result? Retailers and competing developers are now aggressively placing off-price outlet stores in locations previously considered off limits, and retailers like Banana Republic, J.Crew and Brooks Brothers are leading the charge.

Consumers Embrace Outlet Stores

Consumers now not only accept outlet stores as readily as their full-price siblings, but they may well prefer them.  Consumer research firm August Partners has been tracking this trend for years.  In a recent national study of the top 50 U.S. markets conducted in partnership with ICSC/Value Retail News, August Partners’ president, David Lobaugh, concluded, “The results confirmed … that outlet center shoppers out-earn and out-spend mall shoppers on fashion goods; further, that they dine out more often and spend more on dining out … and that they are more brand-aware and brand influenced.”

Lobaugh also points out that outlets generate nearly 10 percent of U.S. shoppers’ visit share, yet according to ICSC/CoStar figures, the segment represents less than 1 percent of shopping center industry GLA.  And while malls generate nearly 14 percent of tested venue traffic, they represent 18 percent of industry GLA. This would seem to indicate that the outlet segment, contrary to the viewpoint of many veteran industry analysts, is far from being overbuilt and may even be vastly underbuilt.

With these trends firmly in place, blending of full-price and off-price apparel has become not only accepted, but has become a strategy of preference for so many retailers that it may well be leading the industry to its next big evolution, the “Great Convergence” of full-price and outlet stores.

Traditional small store mall retailers, faced with the eventual loss of thousands of stores as B and C malls fade into obscurity, are increasingly turning to outlet stores to fill the gap.  Even “disposable” clothing retailer Forever 21 has developed an off-price version of itself labeled “F21 Red.” Moreover, developers are facilitating retailer expectations by rapidly adding outlet centers and removing any pretense that any functional distinction still exists.  This led ICSC’s SCT Week to pose this question in a recent article headline: “Can full-price stores and outlets coexist in the same mall?”

One drive down Florida’s Interstates 4 and 75 illustrates the transitional state of affairs in the specialty retail portion of the shopping center industry.  Premium Outlet centers in Orlando and Ellenton pump out record sales, while in nearby Sarasota, the development team of Taubman and Benderson reverted to a traditional mall format with relocated Macy’s, Dillard’s and a small Saks Fifth Avenue store anchoring its gleaming new Mall at University Town Center (UTC) project.  Restaurants are relegated to the perimeter of the mall, while right across the street, Nordstrom Rack, which substitutes for the cancelled full-line Nordstrom store once planned for the site, sits alongside Ross, T.J.Maxx, Steinmart, Bed Bath &Beyond, HomeGoods and ULTA Beauty.

While the jury may be out on Sarasota’s UTC center, it is not out on the rapidly emerging Convergence Era. Following its successful introduction of The Fashion Outlets next to O’Hare airport in Chicago, Macerich is teaming up with Philadelphia-based PREIT to reintroduce a 1.4 million square foot Gallery mall in downtown Philadelphia as a premium brand outlet offering.  Macerich is also leading the development of another outlet center at the former location of San Francisco’s Candlestick Park.

And could anyone have imagined, even a few short years ago, an urban-style mixed-use center positioned squarely in the middle of the outlet retail spectrum featuring additional offerings like LEGOLAND Discovery Center, AMC Theatres and over a dozen restaurants from Legal Sea Foods to Vancouver’s Earls Kitchen + Bar and a PAUL bakery?  Perhaps not, but that is exactly what Federal Realty Investment Trust created in its unprecedented 45-acre Assembly Row project just outside downtown Boston last year.  Assembly Row features those retailers and more in a mixed-use street format along with high-density residential and state-of-the-art office space situated next to an MBTA Orange line transit station, a perfect example of convergence in practice.

Watch for developments like these to not only continue during the Convergence Era, but to accelerate in the coming years.  As retailers find greater sales and profitability in their outlet formats, and as B and C mall sales opportunities continue to contract, the industry may well see Convergence Retail emerge as the dominant middle-market specialty retail format particularly as the final chapter in the end of the Regional Mall Era is written. Savvy consumers who are quite pleased with Convergence Retail will have the final say. Is anyone betting against them?

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Once an afterthought among retailers, these modern grocery stores are now able to provide shopping centers and other mixed-used properties with a solid traffic driver that has remained resilient even during challenging economic conditions. These stores have been adept at understanding local market tastes and trends – expanding the grocery shopping experience by incorporating conventional retail themes such as entertainment, luxury and casual dining.

The past 20 years have ushered in many dramatic changes to the way grocery stores do business. What were once straightforward, no-frill stores people went to on a weekly basis out of necessity have transformed into more frequented destinations, not only for routine shopping, but also a memorable, personalized experience. Whether it’s checking out the oyster bar, tasting new products, or enjoying live entertainment and cooking classes, customers are now able to enjoy a number of amenities that had previously not been available to them.

Grocery stores weren’t immune to the financial crisis in 2008. As consumers cut back on all aspects of their budgets, they also spent less money on food shopping. According to a recent report by the United States Department of Agriculture (USDA), consumer spending on food dropped by more than 5 percent from 2006 – 2009. However, it is also quite evident that grocery stores were among the sectors that not only recovered quickly, but also rapidly adapted to accommodate an emerging consumer interested in organic food, artisanal baked goods, pre-prepared meals and freshly roasted and sourced coffees and tea. When the economy started to improve, Americans flocked to specialty food chains that provided a higher level of service with more gourmet and specialty options.

Hard economic data gives further insight into why grocery anchored shopping centers have become so successful. First, today’s shoppers visit their local grocers on average of around two and a half times per week, making for a weekly return rate most shopping center retailers would envy. They also offer retailers a successful blueprint that has demonstrated a low susceptibility to the always looming downward oriented business cycle. In turn, this has made them more attractive co-tenants for other retailers, who may conversely be more vulnerable to these cycles and who are seeking to benefit from the grocery’s guaranteed foot traffic.

Specialty grocery stores – as well as larger “traditional” grocers – have been quick to fine-tune their offerings according to geography and demographics. At Madison Marquette’s Mercato, a platinum-level mixed-use center in Naples, Florida, a Whole Foods anchor has incorporated an international olive bar selection, expansive wine and beer options, and an extensive  delicatessen, grill and bakery popular with many center residents and area shoppers. Numerous specialty grocery anchors also offer high-end household goods and an array of “order ahead” services typically unavailable at more conventional food markets. Other specialty grocery anchors cater more specifically to niche food shoppers who are seeking organic products or value-driven “fresh and local” produce, meats and, fish.

The future for grocery store anchors in the world of retail suggests continued success with one important caveat. As shoppers continue to exhibit some fickleness in their preferences, it will be important for these stores to continue tracking tastes and trends and to modify their offerings and physical environment as necessary.

Brick-and-mortar stores, as well as their online counterparts, are constantly looking for new ways to become more attractive destinations for consumers. Grocery stores are no exception. Increasing demand for more experiential shopping opportunities will continue to play an influential role for retail strategists. Today, perhaps more than at any time in our past, it’s not just about what the shoppers are buying, it’s also about the time they spend doing so. Because of this, specialty grocery stores are now working toward redesigning their physical spaces, improving upon aesthetics, adding state-of-the-art shopping baskets, and hosting special events like cooking classes, wine tastings, cookouts and even the occasional concert. To complement these in-house improvements, grocery stores have also made it a top priority to become more active within their local neighborhoods. By hosting charity events, donating food to local food banks and working with local schools to fundraise for student activities, many grocery stores have confirmed their commitment to improving their communities.

While specialty grocery stores seem foolproof for centers looking to drive traffic, they do face some stiff competition from discount mass grocers like Walmart and Target, who offer customers the ability to grocery shop on a budget as well as shop for other goods most specialty food chains do not offer. Additionally, the ever-burgeoning presence of the Internet – where people are now looking to save time and buy their groceries – may be a future source of competition for grocers. Grocery stores, however, have not been vulnerable to the internet at this point.

The differing needs of specific markets are of foremost concern when deciding what kind of grocery anchor is best suited to draw in customers. Income levels, taste, demand for variety and demographics are just a few of the variables to consider when identifying an appropriate grocery tenant. In areas with affluent populations, smaller specialty grocery stores may be the most appealing options, offering high-end items like organic produce, in-store butchers, gourmet cheeses, and craft bakeries. In areas that are more culturally diverse, however, an international grocery store may serve as the better option.

Rising to the challenge of meeting the needs of customers not only helps to cement the viability of grocery anchors, but also plays a pivotal role in increasing the overall value of shopping centers and mixed-used properties. The ability of anchor stores to attract a high volume of retail traffic is inherently crucial to evaluating these locations’ worth as appealing investment opportunities. When these grocery stores are positioned to meet and satisfy specific market needs, they can provide investors with generous returns and dramatically increase the overall valuation of centers as a whole.

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 As competition for consumer loyalty grows stronger each year, retail centers must make every effort to stay relevant with their tenant mix and marketing platforms. Leasing and property management teams must work together to assess consumer needs to provide retail, entertainment, dining and service offerings shoppers desire. They must also create an appealing environment to enhance shoppers’ experiences — one that fits within the local community’s specific culture. While there is no exact formula for leasing and property management success, this article will explore some of today’s most popular retail and service concepts and the increasing demand for environmental sustainability.

Effective leasing strategies continue to require careful attention to local markets and their demographics. While consumer preferences differ across the country, there are universal tenant choices that make sense whether in California, Texas or New York. There is a sustained interest in craft breweries and localized eateries in all our centers – from gastropubs and craft-beer bars to an array of specialty fitness centers. When these are matched with centers that offer creative community events and programming, there is strong potential to maximize the center’s strength in the community.

According to The Wall Street Journal, “in the early days of craft brewing, a couple of decades ago, bottle shares were informal gatherings of home brewers and collectors.” Today, of course, there has been an explosion of interest in craft brewing and in the restaurants, pubs and bars where they are available. Placing craft brew stores in a center optimizes high customer traffic and a loyal clientele educated on the advantages of buying local, farm-to-table and quality beverages, food and retail.
Additionally, the conventional gym of decades past has made way for a proliferation of boutique fitness stores and chains. Many of these focus on newer approaches to cardio, strength training and
core conditioning. Soul Cycle is the hottest trend in spinning; Melt and Bikram Yoga are “hot” yoga chains that are predicated on the detox and muscle-warming advantages their system emphasizes; Orange Theory centers on the philosophy of high-intensity interval training using individual heart monitors; and REI’s training walls for rock climbers are all attracting a wide array of fitness needs.

Along with the heightened appeal of these fitness centers, specialized health and beauty services provide unique experiences that differentiate them from competitors. These include makeup and blow-dry bars; skincare experts such as Skin Laundry and Pucker in New York City; and countless chain tanning, nail and micro massage salons. Concierge cinemas like Silverspot and iPic have become a sought-after tenants for regional malls, mixed-use centers and urban infill projects. With their platinum level amenities including oversize leather seats, dining options and reserved seating, these theaters appeal to young and old alike.

Consumers today want to live and work near where they grocery-shop, work out and dine. Centers are therefore increasingly looking at alternative ways to drive traffic such as next-generation fitness and personal service options to meet demand.

Finally, centers that have developed active and strategic community events and organizational tie-ins retain superior customer loyalty and satisfaction. Whether with children’s events during the holidays, live bands on weekends or charity drives that benefit local philanthropies, centers can remain top of mind with a grateful and appreciative local audience and clientele.

Retail Centers Make the Environment a Priority

Sustainability is a mainstay as recycling, upcycling and reducing natural resource consumption becomes increasingly embedded in our daily routine. Retail centers and leasing management firms are hyper-aware of the need to create an environmentally sound practice, which requires commitment and cooperation of both tenants and property managers. “Green leasing” is becoming conventional as more and more centers are seeing environmental clauses built into their building agreements. With the operational cost savings, marketability and need to be on trend with developments in environmental standards, a higher number of property managers recognize the direct link green practice has in competing in the national and global marketplace.

There are myriad ways landlords are instituting environmental savvy with their properties, from adding in requirements and specifications to lease agreements to value-engineering and retrofitting older centers to make way for more modern materials and engineering, including solar panels and green roofs. And there are smaller ways to move toward the greening of centers beyond the large scale.

According to Entrepreneur, using greener, less toxic cleaning products, switching to energy-efficient LED or CFL lighting, foregoing the excess of a shopping bag for every purchase and keeping lights and other electronic devices on timers (to reduce electrical usage)—are all small steps toward greening the retail space.

According to Shopping Centers Today, landlords are finding ways to conserve water and reduce waste by re-crafting green roofs, (which filter storm water and lower HVAC costs) and installing resource efficient plumbing fixtures. Senior water attorney for the National Defense Council Larry Levine says, “Not only does investing in efficient water systems serve the public interest through conservation and pollutant remove, it adds to property value.”

The U.S. Department of Energy released data that commercial buildings account for 35 percent of electricity consumption in the U.S. and 40 percent globally. These numbers fuel an even greater need for an overhaul in environmental strategies for both chain and independent retail. President Obama’s Better Building Initiative, which seeks to reduce energy consumption by 20 percent a year through tax incentives, has created an inducement for building owners to engage in sustainable retrofits and encourages landlords and property managers to be creative in running the logistics of such measures. California has passed legislation mandating the disclosure of building performance to new tenants and buyers in an effort to increase efficiency metrics of existing buildings through retrofits.

More and more communities are requiring recycling programs, which provide an even stronger platform for local outreach, participation and education into the benefits of green living habits, both privately and commercially. By capitalizing on green technology and including green leasing requirements, properties can envision sustainable growth for the future of their business.

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