Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/231459
needs and values of the communities they serve. It isn't easy, but the result of all that time and effort is well worth it, namely, the kind of properties that can help keep the industry vibrant in 2014 and for years to come. Greg Schuster, Senior Managing Director Cassidy Turley Washington, D.C. Continued growth of e-commerce is changing buying patterns and radically shifting the way many retailers look at their real estate. This trend will only accelerate over the next three years. This is partially driven by Amazon's aggressive expansion of its supply chain network as it seeks to roll out same-day delivery capabilities. Whether they are successful or not, they are creating an infrastructure that will be able to deliver nextday delivery profitably. Responding Grocery is going strong, though most of the action is coming from new, smaller concepts, while many older, smaller, traditional grocery chains are in contraction mode. —Greg Schuster, Cassidy Turley 40 SC T / J a n u a r y 2 0 1 4 to this threat has become the focus for many retailers. E-commerce will never replace the shopping experience, but it will create many challenges for retailers that do not master a comprehensive omni-channel approach. Since shopping is about the experience, and e-commerce is about convenience, retailers who fail to grasp the new interactive retail paradigm will continue to struggle. Which markets are hot? Everything follows basic consumer trends. Foodrelated retailers — from restaurants to specialty grocery chains — and servicerelated retail are white hot. Retailers are still cautious in their growth and are focusing on urban over suburban locations. They are expanding most aggressively in markets where local economies are ahead of the curve. In general, U.S. coastal and select markets in Texas and Florida are faring better than most. Population growth and in-migration continues to be a trend, but even some classic Rust Belt cities, like Detroit and Cleveland, are reporting significantly lower levels of shopping center vacancy. Class-A space is in short supply in virtually every major U.S. marketplace. This has driven something that we have not seen since the onset of the Great Recession: new ground-up development. When it comes to food-related retail, restaurants are leading the charge, particularly fast-food and new fastcasual concepts. The reason is simple: They don't compete with the Internet. Grocery is going strong, though most of the action is coming from new, smaller concepts, while many older, smaller, traditional grocery chains are in contraction mode. That said, this is the twilight of the big-box store. Ten years ago anchors and box stores drove expansion. Now, with few exceptions — Target and Walmart — nearly every major box chain has reduced its footprint, and most are either in con- solidation or flat-growth mode. It's an entirely different story for discounters, off-price apparel and dollar stores, all of which continue to post record growth and have largely been responsible for backfilling nearly all of the big-box space that went vacant. Largerbox users now seek junior boxes, and with restaurants emerging as the most vibrant single-growth sector, demand is strongest for small space — less than 10,000 square feet and, often, less than 5,000 square feet. Randy Blankstein, President The Boulder Group Northbrook, Ill. The net-lease sector of the commercial real estate market has been a safe haven for capital as a variety of investors have been attracted to the stable cash flows this asset class has provided in recent years. When the economic downturn occurred, netlease properties provided a viable option for fixed-income investors as net-lease properties offered higher yields than corporate and government bonds. Additionally, net-lease real estate provided steady cash flow and superior performance to other real estate options in the most recent recession. As the popularity of the net-lease sector has grown, individuals and institutions began to accept net lease as a primary investment option rather than an alternative investment vehicle. Due to a larger investor base than historical standards, the net-lease industry experienced record transaction volumes in 2013. With the baby-boomer population aging, many private owners of management-intensive properties will increasingly utilize 1031 exchanges to acquire net-lease assets, which provide a more passive income stream. Furthermore, net