By Clayton McKinnon, Director of Business Development
This past weekend was my youngest daughter’s birthday, and we celebrated in Atlanta. We went to Avalon to get dinner. Dinner turned into window shopping, which turned into real shopping, and by the end of the night my family had spent a full night out within the Avalon mixed-use property. Just five years ago, I was the project manager helping to build Avalon and at that time, it was one of the first projects of its kind — a vibrant community where you can shop, work, stay, live, play, and eat. Avalon was just the beginning of a new trend in retail development, a trend towards building experiential destinations which has continued to evolve and completely transform the retail industry and the shopping experience.
That’s why I’m so excited to attend the International Council of Shopping Centers RECon event in Las Vegas next week. It’s the perfect place to discover and discuss the latest and most exciting trends in retail development. Last year, Stacey Berthon shared his biggest takeaways about the future of the industry in this blog post. He was spot on, and what he noted as emerging trends last year, have grown to impact every facet of the industry. Based on the market climate and what we’re seeing in new retail and mixed-used projects, here are 5 things I think everyone will be talking about this year at RECon:
1. Innovation in Retail Technology
I’m excited to hear more about the innovation in retail technology and how it’s impacting and disrupting the industry, in a way that’s great for shoppers. The use of tools like visual searches continues to increase, and it’s impacting online retailers and brick and mortar stores alike. If a shopper sees a picture of something they want to buy, they can upload it to Google Images, Pinterest Lens, or other similar apps, and immediately get results letting them know where they can find it — both online or at nearby stores.
2. Continued Online Integration
For a very long time, we’ve heard retail is dead. The big box stores are closing, and shoppers are buying everything online. But that’s simply not true. In fact, we’re continuing to see traditionally online only retailers like Amazon and Warby Parker, expanding into brick and mortar retail by opening new stores or partnering with existing ones. Furthermore, a study by ICSC shows that online brands thrive from brick and mortar locations. When a store closes, their online sales take a dip. One example in the study shows a 77% decrease in online traffic when a brick and mortar store closes. In contrast, when a new store opens, their online traffic jumps an average of 37% in the quarter following the store opening. I think we’re just seeing the beginning of online integration in the shopping experience, and I’m excited to discuss it further at RECon.
3. Changing Footprints
Big box stores are closing, but it’s not necessarily a bad thing for developers — in our experience, it’s an opportunity. When one massive department store closes, it leaves behind a lot of potentially profitable space for the development owner. Retailers with a strong online presence don’t need as much square footage, which allows developers to redevelop these big boxes into multiple store fronts for potential tenants. In short, the same size shopping center can host twice as many stores. Here’s an example of ways owners are increasing their profitability by changing the footprint of their big box assets.
4. Sports and Shopping
One of the most exciting trends I’ve seen recently, is the continued convergence of sports venues and mixed-use developments. The biggest example that comes to mind is Texas Live! which sits next to Jerry World, or the AT&T stadium. Texas Live is a total entertainment destination, with restaurants, retail and entertainment tenants, a hotel, an outdoor event space, and much more. The draw of two major sports teams, like the Dallas Cowboys and Texas Rangers, is the perfect opportunity for mixed-use developers. The crowds are already there, so give them a place to eat, drink, shop, and stay before and after the game. I’m looking forward to seeing how other developers across the country are continuing to leverage athletic venues into major retail opportunities.
5. Strategic Thinking
One of the most valuable takeaways I always get from RECon, is what is the overall atmosphere or vibe of the industry. When you have retail stores, developers, brokers, leasing agents, lenders, and retail A/E/C industry partners in the same place, it’s the perfect opportunity to take the industry’s overall pulse. We’ve been through a recession, then seen an explosion of new development deals, and now I think we’re going to see a different attitude. I think developers are being more strategic with their planned projects. Researching market conditions and profitability have always been critical with retail development, but I think now it’s being taken even further. Our clients are thinking through every aspect of their projects, using new tools to locate the perfect piece of property where local demand exists, and vetting their builders more than ever before. If you’re building a mall, you need someone with mall experience. But now, developers are signing on to build retail spaces, multifamily apartments, office space, hotel rooms, outdoor amenities, entertainment venues, and more. Developers need to partner with builders who have experience building the variety of market sectors that make up the modern mixed-use property.
RECon is one of my favorite events of the year. It’s a time to catch up with old friends, meet new people, but mostly — an opportunity to talk with the leading innovators of our industry. I think the best part of building mixed-use projects is the energy and excitement that surrounds them. RECon is filled with that same kind of energy and I always come away with a rejuvenated passion for building mixed-used projects and new ideas for how to help our clients stay at the forefront of the latest trends in retail.