by Dan Rafter
Mark Kornfeld, senior associate for retail and new development for St. Louis’ Sansone Group, has some good news: Consumers are more confident today. Because of this, they’re heading back to strip centers and grocery stores.
Kornfeld recently spoke with Midwest Real Estate News about the retail recovery in his market. Here’s what he had to say.
Midwest Real Estate News: You specialize in the retail sector. How strong is this sector today in St. Louis?
Mark Kornfeld: The retail scene is improving. We do have new retailers that are coming to St. Louis, and we are seeing some of the existing retailers expanding. The economy has gotten better. When the economy was very bad, it took a toll on development and on retailers in general. Overall, the stronger economy has people shopping again. We are seeing more consumer spending than what we’ve seen in the recent past. That has helped the retail market improve.
MREN: What kind of retail are you seeing coming to St. Louis?
Kornfeld: One of our most active retail types is the specialty grocer. We are seeing grocers such as Fresh Thyme, Lucky’s Market and Walmart Neighborhood Market becoming active in our market. Some of the existing specialty grocers like Trader Joe’s are expanding, too.
But specialty grocer isn’t the only area in which we’ve seen more activity. Menards is very active in our market. Gander Mountain has made an entrance in the St. Louis market. Other sectors that are doing well as far as retail goes are food and service-type uses. Gas stations have been very active.
MREN: What are the gas stations doing?
Kornfeld: The QuickTrip gas stations in our market have directives for all of their stores. During the next five to 10 years, they are building what they are calling their Gen 3 model. Any store that is not one of their Gen 3 models will be either converted or torn down and rebuilt. They are trying to get people past the thought that you can’t get a decent meal at a gas station. The food they are offering at these new models is amazing. They are catering lunches in the corporate world. The catered a lunch for our entire office. The food was fresh. If the wrapper didn’t say QuickTrip, you never would have thought the food came from a gas station.
MREN: What kind of trends are you seeing in the St. Louis retail sector?
Kornfeld: For a good run of three or four years, we’ve been in a tenants’ market. We are now 100 percent in a landlords’ market. Rents are increasing. There is very little vacancy in our good, core markets. When you do have vacancies in our core markets, the retail spaces are gone before the “For Lease” sign is in the window. I can’t tell you the amount of calls I get for our core markets. They’re not calling about specific vacancies. They are asking me if I know of any struggling tenants or tenants whose leases are going to expire soon. The brokers are trying to create opportunity. The opportunities are not just sitting there in our good, core markets.
MREN: What needs to happen for the retail sector in St. Louis to get even stronger than it is today?
Kornfeld: We need more new construction in retail. The challenge on that front is that the cost of the land in our core markets is so expensive because the vacancy rates are so low. It’s hard to make the construction numbers work. What we see over the next two to three years, though, is more construction coming out of the ground, more large-scale developments. That type of activity is on the verge of coming back. We think we will start to see more large power centers start to pop up.