Now’s the Time to Expand and Renovate in Retail Real Estate

Improvements are Key to Attracting Tenants, Shoppers and Investors

Current market conditions present a strong incentive to evaluate the repositioning of a retail property. Most important, financing rates are – at least for now – at historic lows. The number of tenants looking for space is increasing and construction pricing remains competitive. Whether it’s a full redevelopment or a simple cosmetic “facelift,” investing capital in retail real estate assets can help gain that competitive edge needed to attract tenants, consumers and, ultimately, investors.

Levin Turns Spotlight on Its Construction Management Services

Levin Management is spearheading expansion efforts and renovations at several shopping centers. This multi-venue initiative includes adding square footage at St. Georges Crossing in Woodbridge, N.J., where we will be building 23,000 square feet of space for TJ Maxx on a newly acquired adjacent parcel of land. Similarly, at Mid-Town Plaza in Middletown, Pa., we have orchestrated the purchase of an adjacent parcel to accommodate the construction of a 7,381-square-foot AutoZone.

Additionally, at Clifton Plaza in Clifton, N.J., we are delivering a 15,000-square-foot newly built building for Blink Fitness. And, at Twin City Shopping Center in Jersey City, N.J., we completed a full renovation to enhance that property’s curb appeal.

Last September, HomeGoods at The Shoppes at Flemington held its grand opening. Levin’s leasing representative Jake Frantzman negotiated the transaction, which included construction of a new 22,000-square-foot building for the home fashions retailer. In addition to providing full-service management and creating marketing events for the center, Levin served as construction manager for development of the new retail space. Levin also directed the process to secure the land development appraisals for the project.

HomeGoods at Flemington is a great example of the broad scope of services that Levin provides, from securing a tenant and assisting in lease negotiations to providing the land development approval and construction expertise required to get a project designed, built and delivered on time. Levin’s property management group coordinated with the construction department to ensure that construction of this new building had little, if any, impact on the center’s existing retailers. All of these in-house resources are invaluable throughout the leasing process.

At a time when expansion in commercial retail real estate is driving stellar results, our construction management capabilities are serving our portfolio properties well. We have a long track record of successfully managing the design and construction of real estate projects from start to finish, and a reputation for completing them on time and on budget. Our construction management capabilities cover every aspect of construction project management from fitting out individual tenant spaces, to handling shopping center renovations of any scope, to overseeing property expansions and full redevelopments. Levin will be building on these capabilities in the coming months as the appetite for expansion and renovation continues to grow.

 

 

Retail Real Estate Outlook for Q4 is Bright in the Northeast

Strong Demand in Commercial Retail Leasing, Vacancies Decline, Area Developers are Active Again

Moving into the final months of 2014, the outlook for retail in the Northeast is expected to continue on its positive course. At Levin, we are seeing demand from national, local and franchise companies across a broad range of categories. Vacancies are declining and rents are trending up for quality properties. Perhaps the most valid reason for optimism is that developers have again become active in our region, indicating a growing confidence in the future of the retail sector.

Retail Leasing is Up as Tenants Look for Quality and Location

Despite continued performance uncertainty for some retailers, leasing has picked up, particularly among tenants looking to establish or expand their footprints in the Northeast. Grocers, affordable fitness chains, off-price retailers and fast-casual restaurants are among the most active categories.

In turn, much of the “good” retail space has been absorbed already, and what remains available is commanding higher prices. At the same time, credit tenants remain focused on these better-quality, well-located assets, resulting in continued challenges for Class B properties and those in secondary locations. Retail real estate landlords are becoming more creative in their approach to leasing these properties, and are considering a wide variety of potential uses for their space. Watch for some retail real estate trends to emerge from this environment.

New Construction, Renovation and Expansion are Market Drivers

The increasing pipeline of new construction and the success of recently completed ground-up and renovation projects are bright spots in our regional retail real estate market. And while we will continue to see quality inventory added to meet growing demand, the maturity of the market, combined with lengthy approval and building processes, should keep the inventory of available properties in check. In other words, we do not anticipate oversupply anytime in the near future.

As such, we expect the market’s stability to increase gradually over the next couple of years. A continued low interest rate environment bodes well for the positive construction and investment activity we are seeing today. We will be keeping a close eye on that critical driver in the months ahead.

Reinventing the Town Square for 21st Century Shoppers

Hamilton Plz  Hamilton, NJ Levin Properties
Consumers Seek Retail Venues that Provide Connection and Experience Sparking a Retail Real Estate Trend

As far back as ancient Greece, the public square has been the center of civic and social life, the magnet that drew people together, the place to gather not just to shop but to recreate and connect. Successful merchants knew that proximity to the community hub was essential to their success. The power of community and the human need for social experience may be things modern retailers have ignored at their peril. Fortress malls, isolated big box stores, and single-focus shopping centers aren’t likely to attract the ever-growing population of online consumers. To maintain their edge with shoppers, retail venues will have to revive an older game plan and become places that offer more than just access to merchandise.

“Place-Making” Emerges as Retail Real Estate Trend
Architect Dustin Watson, a partner at global design firm DDG in Baltimore, calls the response to the consumer’s need for an experiential retail real estate environment ‘place making.’ “Place-making is the most essential element for creating value in today’s competitive retail environment,” he writes in a recent article for Mid Atlantic Real Estate Journal. “To attract shoppers, keep them shopping – and spending money – for longer periods of time and bring them back again in the future, retail centers need to create a sense of ‘place’ that was formerly taken for granted.” He cites the D.C. area’s Bethesda Row and Station Park, outside Salt Lake City, as models of place-making. Both projects, along with other notables Crocker Park (Cleveland, Ohio), Victoria Gardens (Rancho Cucamonga, Calif.) and City Centre (Houston, Texas) are mixed-use, multi-block areas that invite the community in with events and accessible, ample exterior space that in some cases replicates an urban grid or revives an existing thoroughfare. Tenants include restaurants in different price ranges, office space, services, entertainment, lodging and a diverse collection of local and national retail brands. Sounds a lot like the old-fashioned downtown hub, right?

And speaking of downtown hubs, Walter Loeb, publisher of Loeb Retail Letter and consultant to domestic and international retail companies, predicts in a recent blog post on forbes.com that what he calls “hub destination centers” will be key to the survival of retail real estate in the coming years. These centers, he writes, provide newer suburbs that lack a town center and older ones who’ve seen a decline in their retail core with a place for residents to gather for shopping, lifestyle interests and social interaction. Hallmarks of these hubs include access via public transportation (Bethesda Row, Crocker Park and Station Park), parking, exterior spaces (proven desirable even in less than temperate climates), a range of tenants (including offices, hotels, professional services, event areas, and entertainment), plus a diverse choice of restaurants, including fast-casual dining in lieu of food courts. Reliable security is a must as well.

It’s important to note that recent retail commercial real estate projects that fit the visions of Loeb and Watson are conservative in scale compared to destination giants like Mall of America and Tyson’s Corners. And although Station Park draws shoppers and tourists to its spectacular “dancing waters” fountain, the entertainment offerings of the hubs tend to be more low-key, urban in feeling and community related (think classic downtown). With smaller stores, another retail real estate trend, these new venues can be more compact and navigable.

What’s ahead for the hubs? Will more retail real estate developers launch new versions of Bethesda Row? Will hubs influence shopping center design and renovation? Perhaps the popular lifestyle centers are leading the way. A retail real estate trend is in the making here. Let’s see where it goes.

Have you visited any of the new-style shopping venues mentioned in this blog post? Please share your experiences and impressions with us here at Retail Property InSites.
Look for more news and observations from Levin Management executives in upcoming posts.

Brick and Mortar Stores Top the Class for Back-to-School Shopping

But Webrooming Is the New Retail Real Estate Trend to Watch

Gone are the days when back-to-school shopping was concentrated in one big spree that encompassed everything from Nikes to notebooks. Today we have a season stretching from summer well into September, as value-focused consumers stalk the last of the markdowns. Though vacation is over in many areas, back-to-school (b-t-s) shopping continues with the National Retail Federation projecting total spending to reach $26.5 billion. Where those dollars will be spent is a subject of intense interest to retailers and the retail real estate industry alike. Surveys by Accenture, Brand Keys and Deloitte, all released early this summer, revealed some of the consumer attitudes we are now seeing played out in brick and mortar stores and on retail websites as shoppers gear up for a new school year. Here are the highlights of those studies, as reported by Women’s Wear Daily and Forbes.com.

Shoppers Favor Stores, but Online Influences What They Buy and Where

Accenture’s survey of 500 U.S. parents of students K-through-college found that 89 percent plan to do “most” of their b-t-s shopping in a physical store. However, online plays a big role in their purchase decisions, with 79 percent indicating they will browse online to view products, look for specials, check product availability and do price comparisons among stores prior to heading out to shop. Deloitte’s study of 1,000-plus parents with teens or younger kids yielded similar feedback, with 57 percent of respondents planning to conduct online research prior to actually going shopping. The Deloitte respondents also indicated that their online research would not be limited to retail sites. Eighteen percent of parents with elementary students or high schoolers and 44 percent of those with college-bound kids said they planned to visit social media sites for help in b-t-s shopping and retailer sites to read consumer-generated product reviews and comments.

This online-offline scenario has been dubbed “webrooming.” The Accenture study refers to it as “seamless retailing,” while others see it as a synonym for the familiar retail buzzword “omnichannel.” But whatever it’s called, shoppers going online before going out to a store is a retail real estate trend to watch and respond to.

Dave Richards, managing director of Accenture’s Global Retail Practice, offered this advice in a statement about the rise of seamless retailing.

“Since many will be heading to the stores to shop after browsing online to find the best deals and check product availability, it is imperative for retailers to introduce mobile devices, train associates to solve problems and support sales. They also need to add wireless networks to create interactive experiences, and connect in-store shopping experiences with omni-channel capabilities. Retailers have an opportunity to position their stores as the epicenter for product support which is critical to a brand’s customer loyalty.”

Alison Paul, Deloitte’s vice chairman and its retail and distribution practice leader, suggests that retailers “need to consider how consumers’ digital interactions – not exclusively purchases – influence what they do and don’t buy in the brick-and-mortar store.”

Retailers, Paul continues, should look at the opportunity offered by their online and mobile channels to “drive traffic and revenue at the physical store, rather than viewing it as merely a point of purchase, where it actually tends to deliver lower sales than the physical store as a whole.”

Beyond Webrooming, A Growing Acceptance of Online Shopping for B-T-S

While stores will still dominate this b-t-s season, a growing number of shoppers seem to be not just webrooming but buying online. The Deloitte survey respondents indicated that online sites were their second favorite b-t-s shopping platform (just behind discount and value department stores), tying with office supply/technology stores for the first time. The study also discovered that the number of b-t-s shoppers who prefer to buy online and then pick up their purchases at a store rose from 33 percent to 40 percent from last year. While a recent b-t-s consumer survey by Brand Keys (8,300 households in nine U.S. Census regions) saw the preference for online b-t-s shopping increase by 30 percent. Home computers seem to be the top choice for doing online buying, according to the Accenture study, with only a third of parents going mobile on smartphones or tablets.

What drives b-t-s purchases online? The Accenture respondents cited special web-only discounts as their chief reason to buy online, followed by convenience. And what makes consumers seek out the in-store experience instead of staying home and clicking a few buttons? As might be expected, it’s the need to physically inspect clothing and accessories before buying—an experience that can’t be matched online. At least not yet.

For more details on the Accenture, Brand Keys and Deloitte studies, including projected spending levels, consumer preferences by store type, purchase categories, and purchase influencers, or for an overview of trends in the b-t-s season from the National Federation of Retailers, follow the links below:

www.wwd.com/retail-news/marketing-consumer-behavior/b-t-s-stores-still-the-preference-over-online-7823535

www.forbes.com/sites/barbarathau/2014/08/12/the-back-to-school-forecasts-are-in-kicking-off-make-or-break-holiday-season-for-retailers/

www.nrf.com/backtoschool

Look for more news and observations from Levin Management executives in upcoming posts here at Retail Property InSites. Please join us and share your comments about our posts or about your own management experiences and challenges in retail real estate.

Levin to Exhibit at ICSC PA/NJ/DE Idea Exchange See You at Booth 407, Pennsylvania Convention Center, Sept. 8-10

Levin will host a booth at the International Council of Shopping Centers’ (ICSC) annual PA/NJ/DE Idea Exchange in Philadelphia. The three-day event is scheduled for September 8-10 and offers a unique opportunity to gain insights into key issues facing the industry in the Mid-Atlantic region. Attendees will find networking and deal-making opportunities, along with informational programs. The roster of presenters, panelists and keynoters reads like a Who’s Who of top names in commercial retail real estate and related fields. Topics to be explored include marketing, finance, e-tailing, and demographic and trends analysis, plus a Developers’ Showcase featuring the region’s new major projects.

A full schedule, speakers’ list and registration information are available now at www.icsc.org and you can join the ongoing Twitter conversation for the latest updates on the event using hashtag #PNDIDEX. Just follow @ICSC.

See you at Booth 407 in the Pennsylvania Convention Center (1101 Arch St., Philadelphia) on September 10th. We’ll be posting our take-away from the event here on Retail Property InSites after the show.

Look for more news and observations from Levin Management executives in upcoming posts. Please join us and share your comments about our posts or about your own management experiences and challenges in retail real estate.