Optimistic About Retail? You must have been at RECon 2013



Restaurants like Ling & Louie's are building both pad and airport concession spaces to expand their brand.

Last week I attended RECon 2013, the annual global event for the retail real estate community held in Las Vegas.  After sharing stories, ideas and trends with 30,000 of my best friends I’d say the pulse of the North American retail industry is guarded optimism.  With housing in the white-hot zone I trust the adage ‘retail follows rooftops’ will prove itself once again. 

These are the trends to keep in mind:

1.  Growth will be modest.  Overall growth will stay in the single digits for now.  Helpful factors include:  a better capitol market, an uptick in consumer spending and increased restaurant income.

2.  Re-purposing is winning over ground up.  Non-retail and class-C retail spaces are being remodeled for quality retail.  Previous failed big boxes (Circuit City, Linens & Things) are being rapidly absorbed.  Projects once started and abandoned in the recession are coming alive again.

3.  Shift toward urban density.  The millennium generation is moving away from the suburbs and toward the rewards of urban living – more diversity, interaction, entertainment and choices.  Retailers are running sprints to catch this growing consumer clout.  Super store Walmart is rolling out 40,000 sf neighborhood stores and 15,000 sf express stores.  Home Depot began introducing down-sized versions over a decade ago.  Target recently rolled out City Targets in Chicago, Los Angeles and Seattle, and Office Depot has designed stores to sell 4,500 items, half their typical inventory.

4.  Brands are re-tooling.  New brands are challenging the established brands, pushing some of those brands to re-tool and reinvent.  Tenant improvements and in-store re-design are must-have skills for retail designers.

5.  Know your malls.  Outlet malls with name brand anchors are going strong.  Outside the very dense metropolitan areas (D.C, New York) standard consumer malls are currently built out, or even over built.  The big trend - the fastest growing segment of retail real estate in America - is the Hispanic Shopping Mall.  It's phenomenal!

 

Looking to serve 50 million US Hispanics, these popular malls are coming into their own in California, Arizona, New Mexico, Texas, Oklahoma and other mostly southern states.  Savvy developers are actively mining this new niche with a spending power expected to reach $1.3 trillion by 2015.  Read more in Part II of this blog next week:  Retail Gold Rush – Hispanic Purchasing Power becomes a Major Player.  –

 

Craig Slocum, AIA is a principal with CSHQA and a leading retail designer for the firm.  National clients include Buffalo Wild Wings, Ling & Louie's, Albertsons, Safeway, Moxie Java, Dutch Bros., Walgreens, KeyBank and T-Mobile.