How a Real Estate Boom Is Changing Retail Environments
From Wells Fargo’s recent purchase of its London headquarters to the ongoing additions at Westfield Century City in Los Angeles, several companies are getting major real estate upgrades this year. According to experts, footwear brands and retailers are among those that should turn their attention toward real estate ventures.
John Brod, a partner at ABS Partners Real Estate, said the biggest challenge is understanding a retailer’s specific needs. “It’s no longer a situation that a space is going to be leased given a terrific location. It’s much more a question of leasing space, no matter the location, of knowing what the retailer needs to be successful and addressing those issues,” he explained.
This year, stores and property owners alike need to have an enhanced comprehension of these necessities, Brod said. “Smart landlords today need to understand the retailer’s mentality — especially sales per square foot, retail turns, seasonality of merchandise, storage of merchandise and how it’s handled and delivered to the floor,” he said.
“The best actionable steps retailers can take moving into 2018 is to be acutely aware of exactly who their customer is and evaluate retail space with a very conservative model, taking into careful consideration footfall, co-tenancies and, of course, economics,” he continued. “Don’t be afraid to ask a landlord to adjust terms based on retail performance.”
Andrew Mandell, vice chairman and principal of commercial real estate broker Ripco, added that brick-and-mortar retailers must adapt to the evolved landscape. “If [retailers] do not improve and integrate their online business, they will struggle,” he cautioned. He pointed out that in New York, in particular, opportunities in 2018 will present themselves around Times Square, Herald Square, Hudson Yards and the Flatiron District, among other locations.
Julia Maksimova, director at KW Commercial — Keller Williams Realty’s commercial real estate arm — agreed that there is plenty that retailers can do to stay on top of real estate-related initiatives this year. “Pop-up shops are a great way to gauge the market,” she said, noting that creating a story around the brand and shaping the shopping experience can be critical moves.
Maksimova cited reassessing retail portfolios, using in-store technology “to get into the minds of the shopper” and “capitalizing on the existing store to create an experience for the shopper” as key steps retailers can take to ensure a successful 2018.