According to attendees of ICSC’s RECon 2017 show in Las Vegas, many factors are changing the retail real estate industry. Consumer behavior, boredom and lack of a unique experience are all reasons malls and retail stores are struggling across the country. Retail stores need to be highly concerned about offering their target markets a satisfying experience that they simply cannot get by shopping online.
Thomas E. Dobrowski, from NGKF noted that a lot of today’s struggling malls need to be redeveloped and their space utilized into something more accommodating for their area. Malls are fading fast and they are selling for 10 to 60 cents on the dollar. Retail stores may see a bit more glimmer of hope than the classic mall shopping centers across America. Their convenience is a major factor to many consumers; however, if they can’t differentiate themselves with their merchandise then they may see more of their target market shopping online due to boredom.
Spencer Levy, head of research for real estate services at CBRE, insists that the retail sector is much stronger than the negative “chatter” would have you believe. “There are pockets of weakness. Part of the opportunity today is to exploit the weakness by exploring buying in strong secondary markets. I believe there will be a snap back.”
Investors should keep in mind that this is not an environment for novices and property owners need to be very careful about setting rents at the right level to maximize profits. Retail success is still out there, and great opportunity still lies ahead if you can offer your consumer a unique experience and incentives that captures their attention.