May 9, 2018
By Dennis Kaiser
As we countdown to this year’s ICSC RECON (May 20-23 in Las Vegas), the commercial industry has one major focus: identify the next wave of expanding tenants and opportunities in the market. Despite headlines that focus on the bankruptcy of high-profile retail stores, the sector continues to make steady gains. We sat down with Coreland Companies’ Matt Hammond to find out the overarching trends, top preforming categories and strategies in our latest 3 CRE Q&A.
Q: What are the larger trends driving the retail sector today?
A: We continue to see major shakeouts in traditional retail categories, but a bit of volatility generates leasing opportunities and enhances rental rate growth. From grocers to soft goods to restaurateurs, retailers remain motivated to identify what works best across Southern California.
The traditional ‘box’ retailers remaining are those that have successfully adapted their model to our Amazon-influenced world. Target, Walmart, Kohl’s and Dick’s, for example, have made major strides by adjusting their prototypes, engaging in key partnerships and truly embracing omni-channel marketing.
Q: What are some of the strongest tenant categories you see across the retail landscape?
A: Off-price retailers remain stable as the ‘treasure hunt’-type of retail experience offered by Ross, Burlington Stores, and Five Below is here to stay. Fitness also continues to thrive as 24 Hour Fitness, LA Fitness, Planet Fitness, and Crunch continue to expand, and boutique fitness franchises such as Orange Theory Fitness and 9 Rounds remain in high demand throughout neighborhood shopping centers.
Q: What trends are you tracking within the grocery and food sectors?
A: Grocery remains the best attraction for investors across property types. In addition to being less vulnerable to the online marketplace, the typical grocery store location has evolved dramatically. They have proven to be viable anchors to malls, power centers, lifestyle centers and mixed-use developments. Grocery Outlet, Aldi and Sprouts are among the most aggressive, although each taking a calculated approach to ensure they are accessing their customer base.
In the food category, expect to see natural turnover among restaurant concepts. Food trends will shift and poor operators will be replaced with new and better uses. On the West Coast, there is a lot of buzz surrounding the breakfast / brunch concepts of Snooze and Breakfast Republic. Both have vibrant atmospheres, serve creative twists on traditional breakfasts, and feature rotating list of craft beers and creative cocktails.
While Starbucks and Dunkin continue to compete for drive thru sites, third wave coffee concepts such as Portola Coffee Roasters and Philz Coffee are flourishing throughout specialty and neighborhood centers in Southern California by roasting their own beans and boasting organic, sustainable brews.
For comments, questions or concerns, please contact Dennis Kaiser