Booming Industrial Market Heightens Demand for Third-Party Management

The industrial real estate market in New Jersey continues to thrive due in no small part to the rapid growth and evolution of e-commerce retailing. Last-mile distribution facilities – from which goods are stored and delivered directly to the consumer and local retail outlets – are becoming more reliant on well-located and well-operated warehouse space. This is particularly evident in core Garden State submarkets, where demand for space proximate to transportation networks, the Port of New York/New Jersey and New York City is stronger than ever before.
Continue reading “Booming Industrial Market Heightens Demand for Third-Party Management”

It’s an Omnichannel World but Retail Stores Continue to Rule

Consumers Love Online but Still Prefer Shopping at Bricks and Mortar

You know there’s a big retail real estate trend brewing when Amazon, the premier pure play online retailer, announces a plan to open 300-plus book stores. Yes, that’s stores, as in bricks-and-mortar establishments. Market tests of on-campus locations and pop-ups in major cities preceded their February 4 announcement. Amazon’s move is an important indicator of the increasing success of omnichannel and an acknowledgment of the role of the physical store in branding and building sales in concert with online and social media. But the successful bricks-and-mortar establishments of the new omnichannel era we’re doing business in are not your grandpa’s retail store. Read on for a quick glimpse of what’s happening and what’s ahead.

The Traditional Store is Morphing into an Omnichannel Hub

As a leading retail real estate company and one of the top construction management firms in the Northeast, Levin is excited about the coming changes in store design. And, of course, we’re pleased that bricks-and-mortar establishments continue to be favored by America’s shoppers. (Over 90 percent of the transactions in December 2015, in fact, took place in a store, according to the ICSC). http://www.chainstoreage.com/article/icsc-omnichannel-wins-physical-stores-epicenter

As one ingredient in the omnichannel mix, stores now and in the future will have to offer more than just physical access to merchandise. Today’s consumers tend to have pre-shopped online and expect the store to be just one element in a seamless purchasing experience. Store design and construction will have to accommodate “click and collect” purchases made online and picked up in-store, plus returns and exchanges – that means easy in-and-out and space to hold pre-ordered merchandise. The demand for same-day delivery will have implications for parking and loading vehicles.

Information-on-Demand and an “Entertaining” Environment: Retail Real Estate Trends to Watch

Omnichannel shoppers expect web-supported shopping. That means kiosks and touch screens that let them check product availability and place orders, plus store associates with tablets to provide up-to-the-minute information and hassle-free checkouts. As a model store environment, think Apple.
Virtual fitting rooms and same-day delivery are predicted to shrink the selling floor, with more space going to lounges for food and beverage services that rank high, especially with Millennial shoppers. Since omnichannel shoppers prize the VIP treatment, expect to see more sensors, beacons and other electronics that will allow a retailer to deliver coupons and points to mobile phones and direct shoppers to merchandise based on their purchasing profiles. Retailers on the leading edge of omnichannel have already introduced these in-store features. Take a look at Crate & Barrel, NordstromStarbucks, and Top Shop to name a few. Expect more to come. https://erply.com/case-study-how-you-can-copy-nordstroms-secrets-to-massive-retail-success/ and http://insider-trends.com/why-omnichannel-is-the-elusive-holy-grail-of-retail-and-three-retailers-who-have-found-it/

No Longer a Secondary Player, Logistics are Now Key to Omnichannel Retailing

Click and collect and in-store online ordering, both with demand for same-day delivery, have placed new importance on logistics. Warehouses and distribution centers will need to be in closer proximity to stores. Some retail real estate trend watchers predict that large warehouses will become the hub, with smaller centers near stores serving as the spokes in the delivery wheel. The possibility that retailers may supplement their flagships with pop-ups or small specialized boutiques will mean further logistical challenges. http://www.inboundlogistics.com/cms/article/new-retail-strategies-its-a-store-its-a-site-its-a-warehouse/
Warehouses, whatever their size or location, are facing changes driven by the fulfillment of small individual orders with quick turnaround. The impact on IT, employee levels, building design and configuration, and transport are massive, along with the need for acreage in densely populated areas. Retail real estate and construction management are certain to feel the effect of these changes in logistics.

Every Step in Omnichannel Leads to Another Step

The convergence of the virtual and the physical in retailing is just the beginning. As that blend is achieved, new doors are opening. Retailers and the businesses that service them will have to walk through those to succeed in the evolving and complex world of multichannel.

Hot Retail Real Estate Market Spawns Construction Boom

Flight to Quality is Seen in Major Retail Corridors in the Northeast
Heading into the heart of 2015, the Northeast retail real estate market looks robust. Tenants wanting to establish or expand their footprint here have turned aggressive in leasing, absorbing much of the prime retail space. What remains is commanding higher prices.

The result? An emerging supply/demand imbalance for Class A space that is beginning to create some barriers to entry for retailers, while spurring expansion of existing shopping center properties. For these new projects, flight-to-quality is a common theme, with developers focused on opportunities in established retail corridors, especially those offering the strength and stability of a grocery anchor.

Levin’s Construction Management Services See Strong Demand 

Examples of this retail real estate trend can be found in Levin’s own leasing and management portfolio. Our construction management team recently began an expansion of St. Georges Crossing, a fully leased, 317,000-square-foot property in Woodbridge, N.J. After arranging a long-term lease with T.J.Maxx, we broke ground on a 23,000-square-foot building for the fashion retailer, which will occupy a newly acquired parcel of adjacent land. Similarly, at Mid-Town Plaza in Middletown, Pa., we orchestrated the purchase of an adjacent parcel to accommodate the construction of a 7,380-square-foot AutoZone.

Additionally, at the 80,000-square-foot Clifton Plaza in Clifton, N.J., we leased and delivered a 15,000-square-foot, newly constructed building for Blink Fitness. And in Flemington, N.J., we orchestrated a lease with HomeGoods at The Shoppes at Flemington and then oversaw approvals, contractor sourcing and construction of a 22,000-square-foot, free-standing addition.

Flight to Quality Drives Expansion Projects in Key New Jersey Retail Areas

Reflecting the flight-to-quality play, Stafford Park, a thriving, 650,000-square-foot shopping center in Manahawkin, N.J., has been approved for an additional 195,000 square feet – including several prime pad sites. The retail portion of Stafford Park includes anchor tenants Costco and Target, plus PetSmart, Dick’s Sporting Goods, Best Buy, Ulta and Olive Garden.

In Southern New Jersey’s Burlington County, the ShopRite-anchored Bordentown Plaza provides a great example of shopping center redevelopment driven by the need for competitive positioning in an established retail corridor. ShopRite is slated for a complete renovation and expansion, and the entire, 179,000-square-foot center itself will be updated and repositioned. As the property’s retail leasing advisors, Levin is marketing more than 100,000 square feet of existing space, plus proposed pad sites.

Outlook for Retail Real Estate in the Northeast: Increased Stability

The success of recently completed ground-up and renovation projects are bright spots in our region. 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, will keep expansion in check. In other words, oversupply should not be a concern anytime in the near future. We expect the market’s stability to build steadily over the next couple of years. A continued low interest rate environment bodes well for the positive construction and investment activity we are seeing.

As always, well-located shopping centers with a strong tenant mix and curb appeal continue to draw retailers, consumers and investors. At the same time, we see some strengthening in the demand for properties in secondary positions. Landlords are becoming more creative in their approach to leasing in these spaces and are working hard to establish their properties as attractive alternatives to the scarce Class A’s.

The outlook for Northeast retail real estate remains nothing but positive through the balance of 2015 and beyond. Demand from national, local and franchise companies in active categories – including grocers, affordable fitness chains, off-price retailers and fast-casual restaurants, among others – will continue to drive vacancies down and rental rates up. And the level of development activity – both for new projects and expansions/renovations – speaks to growing confidence in the future of the retail sector in our area.