Knowing the dynamic new retail market is key to identifying the right tenants to target.
While the retail market has always been a moving target with evolving concepts, consumer preferences and economic factors, never has the market shifted as dramatically as it has over the last half decade. The economic collapse in 2008 reshaped the retail landscape. While the economy continues a slow recovery with decreasing vacancies and increasing retailer expansions, the post-2008 retail landscape has morphed into a mosaic, highly reflective of local tastes, preferences and trends.
With this new landscape comes the need for a new leasing strategy. Gone are the days when leasing agents could plug in Retailer X at an enclosed mall in rural North Carolina, a lifestyle center in Los Angeles or a mixed-use community in a Washington, D.C., suburb. This strategy no longer works primarily because national retailers are still hesitant to open at new locations — particularly in smaller markets. While retailer expansion plans are increasing, they are doing so at a very slow rate and the mid-price point concepts that were driving the industry several years ago have stalled.
Additionally, consumers have grown smarter and savvier — they want unique, high-quality options and are armed with technologies that allow them to price shop with the scan of a barcode or click of a button. Shoppers are not looking for formulaic shopping centers with older, tired selections.
As such, leasing agents not only need to be creative but they also need to be strategic. The challenge is to embrace this new market rather than fear it and to look for those retailers and concepts that can excite, expand and thrive along with you.
Know your market
The key to this new market: know it! Understanding what the consumers have, want, need and expect is vital to identifying the right tenants to target and in turn to convince prospects that you offer a desirable market for them to open in. This knowledge goes beyond demographics.
Leasing agents need to live and breathe their market and understand not only the consumers, but also their shopping habits, the existing retail mix, nearby competition and the economic climate. Gathering market information is now a grassroots effort. In addition to demographics, exploring the community and competitors now plays a crucial role as well. Where are consumers currently shopping? What concepts are thriving? What merchandise and particular brands are selling? At what price points are people in the community buying? Understanding the shopping habits and preferences of the community enables you to identify how to fill those needs while not oversaturating the market.
Armed with this information, leasing agents can identify which retailers will thrive in the market. It also enables us to find creative solutions to fill those needs. Research may reveal that consumers desire a particular national brand that is not currently available in a specific market. Market needs can still be met by identifying a local or independent retailer that offers that brand within its merchandise mix.
An additional benefit generated from a deep understanding of your market is the ability to identify new and emerging concepts. Today's economy has produced myriad new entrepreneurs and if you can identify and develop a relationship with these entrepreneurs early, you are at an advantage when they are looking to open new locations. This is especially true in the food and beverage arena, which has become a significantly larger portion of our retail mix as customers increase demand for "Eater-tainment" offerings.
New store openings and retail expansions may not be where they were five years ago, but opportunities are out there. By putting boots on the ground and knowing your market's needs you equip yourself with the tools to creatively fill vacancies with tenants that will be sustainable for the long-term.
— Chuck Taylor is senior vice president of portfolio management with Madison Marquette Retail Services. He is based in the company's Fort Lauderdale, Fla., office and can be reached at email@example.com.