May 25, 2016
Connect Media is amidst the more than 36,000 retail industry leaders gathered in Las Vegas this week for the International Council of Shopping Centers’ RECon show. We connected with JLL’s James Cook, one of the top retail research minds in the industry, to gain his insights about the trends shaping the sector.
Here’s the third in a series of deeper dives with James.
Owners of neighborhood and community centers can continue to expect demand from grocery occupiers. Grocery sellers are focused on creating a unique shopping experience in order to attract loyal customers. Grocers are competing in three arenas:
- Price: Limited assortment discounters like Aldi and Lidl continue to grow.
- Convenience: Click-and-collect grocery, new locations in offices and malls.
- Experience: Grocers like Ralphs and Whole Foods have restaurants and bars.
Across the nation, new demand from grocery-oriented users has propelled much of the new retail construction. While retail construction levels overall have remained modest since the recession, they are growing annually at sustainable levels.
- 2015 New retail space delivered: 81 million+ SF
- 77.5% in two broad categories:
- freestanding retail buildings (50.9%) and
- neighborhood and community shopping centers (26.5%)
- More than two-thirds of new construction occurred in categories dominated by daily needs
In the short term, the growth prospects for grocery are good, as discretionary spending will continue to grow. As per capita disposable income continues to rise in the U.S. along with total urban population, expect shoppers to continue driving demand for grocery sellers in all price categories.
- Owners of neighborhood and community centers can continue to expect demand from grocery occupiers. In some communities, this will primarily come in the form of limited assortment discount sellers. In urban markets, higher-end grocers offering an artisanal foodie experience will be adapting their typical prototypes to fit unique urban spaces in residential towers, office buildings and even regional shopping malls.
- Demand will certainly continue in suburban and urban markets in and around places like Los Angeles and Houston, where a steady stream of new residents propels new construction.
From the European model of limited selection, self-service and deep discounts, to the high-touch experience found at a large gourmet market, community and neighborhood centers will continue to experience dropping vacancies and sensible levels of new construction in order to meet the demand.