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The headlines in the news highlight the negatives, closings, bankruptcies and daily changes in the retail market but the International Council of Shopping Center (ICSC) Conference has proven that brokers know retail is here to stay.
What’s going on in Retail?
Many of the main takeaways from the ICSC Conference were focused on the ever-changing retail market and the elements impacting it. One of the biggest factors contributing to the changing demand and the growing rate of closings and bankruptcies is e-commerce and the ever-evolving needs of consumers over the years.
They are no longer drawn to any old store. Consumers want a new, engaging and compelling shopping experience. Typical retail stores are fighting to find that balance of the new demand and technology advances within the market. Some are excelling and others are falling behind. Friedman’s Alan Stern, Vice President, Brokerage Services, who attended this year’s ICSC Conference explained, “many retailers commented on having to excel in excellent customer service, providing great customer experience, definitely maintaining brick n mortar but with innovative products. Everyone is still very concerned about the ever-expanding e-commerce business.”
What’s Changing?
With changes in consumer’s wants, the idea of retail is changing before our eyes. There has been a growing influx of demand for retail concepts focused on entertainment and experimental. The demand for mid-priced apparel has taken a blow in the retail market with a mass of closures, while the demand for discount and lower priced retailers are hitting record sales and the demand for retail sites for the discount and lower price retailers are filling in the vacancies left behind from the mid-priced apparel companies.
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What’s in Store for Big Box?
Landlords shared their concerns over big box stores with Alan Stern at the ICSC Conference, “they have concerns with big boxes trying to downsize or vacate. It’s very difficult to find replacement tenants or the landlord must consider investing a tremendous amount of money in demising the space. Even once the landlord has decided in demising, it’s sometimes difficult (depending on the location) to find the junior box type tenants along with maintaining market rates.”
Where does Retail Stand?
The retail market may be changing but the sentiment is still positive. The retail market is still growing strong and has shown a positive number in leasing activity since the beginning of the year. Landlords and retailers are embracing change and preparing for the ever-changing demand for retail. Technology may seem like it is a negative factor being placed on the retail market but it is not being perceived as a threat to people within the market. Many brokers and retailers are embracing technology and are using it as a valuable marketing tool to get creative within the market. They aren’t going down without a fight. At 7.9%*, the overall US shopping center vacancy rate is the lowest rate since 2009 and average rental rates are also the highest they have been since 2009, standing at $15.20* per square foot.
Retail shifts in the market are inevitable with endless new developments but the underlying theme of the ICSC Conference relayed massive retail changes with opportunities on the horizon. The resilience of retail will continue to flourish.
For more information on the retail market in your area, contact a specialist on Friedman’s Retail Disposition team.
*Source: costar.com[/vc_column_text][/vc_column][/vc_row]
