ICSC’s RECon 2019 in Las Vegas provided a very good vibe for new deals and excitement not seen since before 2007. Unofficial statistics noted that attendance was up, likely above 37,000 with more than 12,000 exhibitors. Low interest rates, heightened consumer demand and an overall positive national economic outlook provided the backdrop for the increased optimism. Here are a few take-aways from this year’s show.
Physical Footprint is Growing.
According to IHL Research, tenants operating more than 50 locations opened about 3,800 more stores than they closed in 2018 and pure play e-commerce stores plan to open approximately 850 brick-and-mortar locations over the next five years. Further, about 85 percent of retail purchases are still made in brick-and-mortar locations.
Retail Not Being Overbuilt.
Marcus & Millichap stated that retail is no longer being overbuilt. Statistics show that between 2014 and 2019, the market added 263 million square feet of retail space, which is about as much that came online in 2007 and 2008 alone, at the peak of the last market cycle.
Creating More Time for the Consumer.
CBRE noted that more stores, like WalMart, are moving pick-up and return areas to the front of the store as well as establishing designated areas for ride sharing apps. Grocers, like Kroger, continue to blend technology with convenience, “rolling out” autonomous delivery vehicles in the Houston market. Azor Realty Services stated that within the next few years, half of all 7-Eleven stores are expected to be cashier-less.
Medical as a Driver in Leasing.
Phillips Edison & Company anticipates that 15 to 20 percent of the leases it executes in 2019 will be medical related. Health and wellness services traditionally located in office buildings, like dental, physical therapy, and medical imaging providers, are relocating or expanding into grocery-anchored shopping centers. These tenants bring in a sustained level of foot traffic for shopping centers. JLL reports that medical tenants also have overall higher credit ratings, which can provide further stability to the centers that house them.
Smaller Formats.
The show also highlighted a number of major retailers testing smaller spaces. For instance, Aldi UK implemented “Aldi Local” in London, which totals 6,500 square feet. Topgolf created “Fore-front”, a golf entertainment venue opening small-format locations. Further, Whole Foods opened “Daily Market” in Manhattan, a store dedicated to grab-and-go with self-checkouts.
Stark & Stark’s Shopping Center and Retail Development Group assists national, regional and local owners and developers throughout the tri-state area. Gathering the strength, education and real world knowledge of more than 25 interdisciplinary attorneys, our Group is dedicated to all aspects of the market, including leasing, sales and refinance, land use, liquor licensing, franchising, environmental, enforcement, compliance, mixed use, construction, tax appeals, and condemnations. Our attorneys are actively involved in the shopping center and retail development industry, holding leadership positions within a number of organizations. These industry groups provide us with insight and knowledge on the most up-to-date issues you face.
For more information on how Stark & Stark can assist you, please contact shareholder Thomas Onder at (609) 219-7458 (tonder@stark-stark.com), Dolores Kelley at (609) 791-7005 (dkelley@stark-stark.com) or Eric Goldberg at (609) 791-7013 (egoldberg@stark-stark.com).
