If The International Council of Shopping Centers’ (ICSC) New York Deal Makers conference is any bellwether of what’s to come in 2017 for real estate and development, then there is a lot to look forward to. Bigger and better than ever, last month’s conference boasted a record 10,000 developers, retailers, brokers and other real estate professionals at the two-day conference at the Jacob Javits Convention Center. The feeling inside the conference was one of optimism, with upbeat predictions about holiday sales and ambitious booths dominated by major redevelopments such as NYC’s Hudson Yards and Baltimore’s urban renewal plans for Port Covington.There was so much to absorb from the ICSC conference, and the shape of retail is rapidly changing. Here are a just a few things to watch in 2017:
1. Blended Concepts: It’s all about hybrid retailers that blend multiple concepts under one roof and that engage consumers with dynamic products that complement each other. Retail is fast becoming more about creating community, with products and transactions being secondary. Consumers are more likely to buy and become repeat customers from retailers that provide an experience above and beyond shopping. Also, with all the stress on people’s time, it makes sense to combine as many things as you can in a store which is probably why dual-concept spaces -- two experiences in one location -- are such big hits.
2. Food halls are hot, but for how long?: Food halls are sweeping the nation. Although the idea feels new to the U.S., they are modeled on European marketplaces that combine locally-grown products, communal dining experiences and shop- and eat-in stalls. The next generation of consumers is hyper focused on healthy eating, local cuisine and ethical food sourcing, fueling this explosion of food halls. From Eataly’s Italian mega-markets to more ethno-centric experiences like Latinicity in Chicago, the offerings are diverse and are magnets for locals and as well as tourists in many urban neighborhoods throughout the country. There are a reported 30 food halls open or planned for New York City alone, and nationally food halls saw 37 percent growth in 2016. But not all food halls are created equal; my prediction is that there will be some attrition in that segment as the weaker operators struggle to make a profit.
3. Clicks to bricks or bricks to clicks?: The last few years have seen retailers panicked about the online shopping world, yet there seems to be a new attitude: brick and mortar stores are increasingly used as showrooms, brand expressions and fulfillment networks, which can have a major impact on commercial real estate. While ecommerce has disrupted and revolutionized the shopping experience, many retailers are using online platforms to drive consumers to store locations to touch, feel, and try on unique clothing or eyewear that -- here’s the catch -- they can still only buy online. Sound strange? It’s actually good business sense for certain retailers, especially those in urban locations. Smart retailers are investing in refreshing the in-store experience, leveraging physical stores and well-trained employees to provide exceptional service and uniques experiences. Consumers can order online and have merchandise sent home -- no inventory required on site for the retailers -- so stores can be smaller and more efficient. Plus no shopping bags to carry for the consumer! Win-win.
So what does this mean for real estate development? Retail is essential to creating vibrant, mixed-use development projects. Keeping on top of commercial real estate trends in the Boston and New York real estate markets is key to building communities that people want to live and work in, and visit.