Chicago — The food and beverage industry dominated much of the programming and sessions at this year’s Chicago Deal Making, hosted by the International Council of Shopping Centers (ICSC). In fact, the keynote speaker was Fabio Viviani, a celebrity chef and hospitality developer. Examples of other food-oriented workshops and panels included “How to Craft Restaurant Deals,” “From Automation to Ghost Kitchens, Understanding the Trends Reshaping F&B” and “Small Bites: New Restaurant Concepts.”
The two-day ICSC event took place at Navy Pier on Wednesday and Thursday, Oct. 16-17. The show kicked off with an hour-long session in which retailers pitched their expansion plans in the Midwest. An overwhelming number of participants were restaurants.
“Chicago is recognized for being a gastronomical center, not one or two really good chefs and restaurant tours but many,” said Steven Weinstock, first vice president and regional manager of Marcus & Millichap’s Chicago Oak Brook office. “We win as residents of Chicago because they keep trying new concepts.”
Weinstock cited the influx of residents in Chicago’s River North, Streeterville and West Loop neighborhoods for helping grow the food industry within the city. This younger, affluent crowd views restaurants as a source of enjoyment and entertainment, he argued.
What’s more, Weinstock isn’t worried about oversaturation of restaurants in the market. “I’m not seeing them cannibalize each other or competing with each other. Each one has its own niche,” he said.
One example of the evolution of retail food is the 50,000-square-foot food hall from media group Time Out that is opening in Chicago this year, according to Weinstock. “It’s an experience, it satisfies a basic human need and 10 years ago it never would have worked.”
The evolving nature of retail is an important discussion point for industry professionals like Weinstock, who believes that the cries that “retail is dead” are overstated and unfounded. “Some people are nervous. I’m actually excited,” he said. “We’re in the middle of a transformation of a major industry. It’s not happening overnight; it’s subtle.”
A blended strategy
Another way the retail real estate market is evolving is through a greater blend of uses. In a workshop at Deal Making entitled “Strategies for Emerging Mixed-Use Developments,” architectural firm Perkins & Will discussed how new developments should no longer be mixed-use, but rather “blended use” with a planned combination of different operations. Each use should benefit the others and give residents or employees a reason to stay, said Sarah Wicker Kimes, principal of retail strategy with Chicago-based Perkins & Will.
Some companies like Equity Commercial Real Estate have homed in on blending retail with healthcare tenants. Deal Making attendee Bob Matias, senior vice president with Hilliard, Ohio-based Equity, said that a current emphasis on wellness has made the integration of healthcare within retail more palatable. Examples include chiropractic care, physical therapy, sports medicine and preventative-type businesses. Chains such as The Joint have expanded throughout the country.
Traditional retailers, on the other hand, are in less of an expansion mode. “Because of e-commerce, retail is a shrinking industry to a point,” said Matias. “But there’s an intersection point between brick-and-mortar and online. There will be stabilizing at some point; we’re just not there yet.”
Besides a push for restaurants and entertainment, Matias said that the future of retail revolves around reuse. He noted that about one-third of the nation’s shopping malls will likely go away. Weinstock of Marcus & Millichap echoed this sentiment and emphasized the importance of finding creative uses for vacant big box space. For example, developers have turned shuttered Kmart stores into churches, government facilities or self-storage properties.
“There’s a fascinating thing occurring in many markets where homeowners or renters are actually taking smaller spaces, knowing that they can go to a storage facility once a week,” said Weinstock. “That’s a change in mindset.”
Adapting to changes in mindset or behavior is exactly what retailers need to do in order to survive in today’s market, concluded Weinstock. They must evolve to meet the needs of today’s population.
“The world is changing around us,” said Weinstock. “We have a choice — either run from it or embrace it and ask, ‘What comes next and how do I get my piece?’”
— Kristin Hiller