December 6, 2018
Retail is evolving so rapidly that shopping center owners are holding conversations that wouldn’t have come up even a few years ago, CBRE’s Ellen Rudin told Connect Media. Conversations on topics such as how to determine the formula for rent based on store revenue per square foot, when a share of that tenant’s revenue may not come from in-store transactions at all, but rather from online sales.
With brick-and-mortar operators ramping up their e-commerce platforms, and pure-play e-tailers opening physical stores, “It’s all becoming one,” said Rudin, who was recently named senior managing director of retail for CBRE’s Northeast division.
One of her key responsibilities, she said, is to help clients “connect the dots” in terms of which aspects of CBRE’s retail platform are most relevant to their specific needs. It’s a platform that’s arguably more comprehensive, and granular, than it would have needed to be a decade ago.
Another sign of changing times: the repositioning “opportunities” presented by anchor tenants going dark. Just a few years ago, the loss of a Sears or Toys R Us would have been seen strictly as a problem, strictly as a sizable space that had to be re-leased ASAP.
“People have a totally different mindset now,” Rudin explained. “Now it’s, ‘okay, what can I do with it?’”
Those opportunities often mean bringing in now-desirable tenants that wouldn’t have been considered not so long ago. Fitness centers, healthcare uses and education all may come into the mix, along with dining and entertainment options, when repositioning a center.
“It’s all about the draw,” said Rudin.
As one way of drawing shoppers—even when they’re ostensibly just coming to the store to pick up an online order—brick-and-mortar retailers have gotten creative with “experiential things,” such as in-store cooking classes, along with other incentives, Rudin said. One frequent byproduct of these traffic-builders, she pointed out, is unplanned purchases by shoppers who originally thought they would stop in and get out quickly.
Repositioning opportunities also deepen the investor appeal of, say, a Class C mall with 45% vacancy. “You’re not seeing them just sitting dormant in many locales,” Rudin said, while acknowledging that such malls are candidates for reinvention rather than simply re-leasing.
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