By Eteri Zaslavsky, managing director, and Amy Levin, director of leasing
Retail real estate lives and breathes with an overall vibe that exists—at a trade show and in the market. The momentum and the trend lines that build from one industry event or trade show to another can set the tone for the quarter and year to come.
Based on that premise, and the vibe that was evident at the two-day ICSC Deal Making Trade Show in Chicago last week, Next Realty experts see a positive year for retail real estate—for both leasing and acquisitions—through the balance of 2015 and well into 2016.
In a show that is greatly condensed from the annual trade show in Las Vegas in May, the vibe was intense. Retailers and owners, buyers and sellers made efficient use of their time to pave the way for transactions to bolster occupancies, and offerings to enhance portfolio returns.
Some of the highlights that took place at Chicago’s Deal Making Show included:
- Today it’s healthy foodies–One of the hottest concepts today are restaurants with an expanding menu of healthy items. Alongside the list of ingredients is a calorie count, ensuring that customers know exactly what they are getting. Also on the rise are more than 27 active made-to-order pizza restaurants. While these restaurants don’t necessarily take a lot of space—foot prints typically range between 2,000 and 2,750 square feet—there are enough of them out there looking for end caps, out lots, outdoor seating areas and drive-thrus to make an impact on a center’s tenant mix.
- The mattress “giants” continue to thrive—It seems as though each year, or every couple of years, one category of retailers dominates the space. And then, almost as quickly as they were hot they cool. However, mattress retailers like Sleepy’s, Pure Sleep, American Mattress and Mattress Firm are continuing to compete for the best space.
- There is no escaping, only embracing, technology—Quick-serve and fast-casual restaurants demonstrated how they are increasing the use of technology to make things move even quicker and faster. Ordering electronically from tabletop technology or from an iPhone/Smart Phone is becoming more and more commonplace. While this may not have a significant impact on real estate, it does mean “technology options are important features that factor into the consumer’s decision to choose a restaurant.”
- Value remains a top seller—While there are many indicators that point to a continued strengthening of the economy and stable to increasing consumer confidence, value-oriented, discount retail continues to be a top seller. Those discounters that remain the most active include TJ Maxx, Marshalls, Hobby Lobby, Burlington Coat Factory and Dollar Tree, to name a few.
- That’s Entertainment!—Going to the movies is no longer about getting a ticket, soda, popcorn and big box of candy. There have been and continue to be plenty of venues that look to raise the bar and both expand and enhance the customer experience. New concepts that were seen at Chicago’s ICSC included several that match seeing the latest blockbuster film with going to a brewing company for craft beers. And there are more dinner and a movie concepts looking to break through with our fascination with dinner and the silver screen.
- Good Money Chasing Deals—in the never-ending quest to acquire quality retail real estate, there continues to be tremendous competition, with lots of money chasing the top deals that are in the market. This includes anything from strip centers to regional centers to net lease properties. This keen interest, and great supply of capital is causing people and deals to be more creative, including earnest money going non-refundable sooner.
After a number of years of concern and caution in retail real estate—from tenants to landlords to investors—the energetic and at times almost frenetic pace of the industry today is a welcome relief. Now, after the show, it’s time for everyone to go back to their offices and work through the talks that were initiated and the optimism that was experienced over a couple of days when the vibe was as strong as it has been for a long time.