ProSpeak

Retail Real Estate is Getting It’s Groove Back
Aug 5, 2019
Tyler Binkley, Xplor Commercial Real Estate
ProSpeak

Retail real estate has seen a dramatic change since the first online transaction happened in 1994 and Amazon opened its virtual doors in 1995. Over the past 24 years, there has been a sizable shift in industry trends. With this shift, the future of brick and mortar may look bleak.

The impression of a dying market comes with the bankruptcy announcements of retailers like Sears, Kmart and Toys R Us. A positive future is hard to see in the vast sea of vacant stores.

As with every major market trend, we in the Midwest look to coastal markets to preview what will come in five to 10 years. Coastal markets are seeing a shift from online retailers. Traditional online stores are moving into strip malls and stand-alone stores, as well as offering online options to cater to a larger market. Millennials, who are the driving force of the retail future, are going back to an interactive shopping experience, and retail CRE is reflecting that shift.

A great example is the redevelopment of Jefferson Pointe. Shoppers still want to go to a physical store, however they no longer want to spend hours to do this. Major shopping malls are redesigning their centers with drive-up service and parking that is closer to store fronts. This accommodates all kinds of shoppers. 

Other recent trends include filling a long-term vacant space with a pop-up. A lease structured similar to a Halloween store, fireworks shop or shopping mall kiosk allows a retailer to occupy a space for a short-term period, in hopes of leading to a longer term lease. After experimenting with pop-up stores across the nation since 2016, Amazon CEO Jeff Bezos announced in April 2019 the expansion of Amazon Go, a brick and mortar cashier-less store. The 11th location in the nation is a 1,750-square-foot store modeled similar to a Kroger Marketplace or Super Target, offering a variety of goods and groceries. Even the biggest online retail shopping site knows the importance of a physical location.

Adaptability and foreseeing market shifts are key in staying positive with the retail outlook. According to the U.S. Commerce Department, online sales account for 12 percent of total market share. Brick and mortar is not dead, it is just reinventing itself to accommodate new shoppers and their evolving tastes. 

Xplor Commercial Real Estate

Phone: (260) 414-0617

Email: tbinkley@xplorcommercial.com

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