Sandy Sigal, president and CEO of NewMark Merrill in Calabasas, Calif., thinks it’s about time we update the real estate adage, “If you build it, they will come.” In a market grappling with online shopping, inflation, high interest rates and more, Sigal believes the real advice today is, “If you communicate, they will come.”
This sort of high-level communication shouldn’t just apply to the public but also to a retail landlord’s merchants and company employees. An elevated approach to sharing information means a wealth of accessible data to help NewMark Merrill team members innovate, grow and improve ideas with those who work with their shopping centers, merchants and communities.
“Communication has been a big initiative for us this year,” Sigal says. “We want to set an environment where we have more collaboration. Where we can be more creative in what we do. Where we can demonstrate our leadership and have our entire team engaged. This mindset has been a big benefit to us.”
That it has. Despite a 5 percent inflation rate, customers are continuing to shop. Traffic at NewMark Merrill’s shopping centers has increased over 11 percent over the last year. The company both owns and operates over 11 million square feet of retail assets, hosting almost 50 million visitors last year.
Sigal attributes these sales figures in part to the messaging his centers send to the public. These messages are both direct communications fed to consumers, as well as indirect messages that convey the role the shopping center plays in the community.
“We want to make sure our customers feel better connected to neighborhoods because we’re part of their ecosystems,” he says. “Our centers need to physically and emotionally stand out in a way that makes people feel proud of their community.”
The biggest mistake shopping center owners can make, Sigal believes, is relying on the convenience factor. Assuming your center will draw business because it’s the closest proximity-wise, has the most daily needs operators or touts the latest in-demand merchant may have worked in the past, but it doesn’t work today. Not with online shopping.
“You don’t want to be commoditized,” Sigal advises. “One of the biggest issues is that, with all the shopping channels today, customers have so many different ways to shop, dine or fulfill a service. It’s all a commodity. You can just buy online.”
This is where Sigal believes inflation can actually work in favor of the physical retail environment — if the message the center sends resonates with consumers.
“Between inflation and the general disruption in the market, shopping centers feel stable to people,” he says. “That shopping trip, coffee shop, place where you go to meet other people — that is an enjoyable, reliable event — and we’re seeing plenty of foot traffic.”
Community Meets Information
Sigal prefers to take a localized approach when communicating with his customers. Though NewMark Merrill utilizes all the traditional and digital marketing channels you would expect, the content is what sets it apart, he believes.
“We’re sending out hundreds and thousands of communications every single week,” Sigal says. “Those pieces are talking specifically about the center in that neighborhood. This gives customers a good view of what you’re about and what your value system is.”
A November 2022 newsletter for Anaheim Town Square in Anaheim, Calif., for example, congratulated the new mayor on her election success and promoted a meet and greet at the center, while highlighting the names and stories of the people who worked at various stores. NewMark Merrill also created the “Fostering the American Dream” series, which showcases the stories of local merchants. This is an important element for Sigal, as about 65 percent of the company’s merchants are local entrepreneurs or small business owners.
Of course, a shopping center can’t just talk the talk. If it wants to be part of a community, then it literally…has to be part of the community. This is more than just Easter egg hunts and tree lightings — though those events are also important, Sigal notes.
“We do food banks, we take donations for shelters, we do a meet-the-police event and events that support our teachers and schools,” he says. “We want to be known as a town square.”
Sigal utilizes the same strategy for hiring employees as he does when he’s running his shopping centers.
“Adaptability,” he says. “It’s what’s going to set people apart from the norm. The world’s not normal and the people who work for you have to be able to adapt and evolve. No one had a roadmap for COVID, for example.”
Knowing that you need to adapt is the first step, but it won’t get you anywhere if you don’t know how to do that. This answer varies based on a few factors.
One factor is data.
“We’re data junkies,” Sigal says. “We’ve been that way for a long time. When you start running through a ton of data, you start recognizing patterns that can inform your decisions.”
Another factor is a localized approach.
“Everything happens locally for us,” he continues. “That’s why we rely on the people on the ground — our property managers, marketing directors and our senior teams live in the communities they serve. The goal is to have as much local knowledge as we can. We don’t want to look at broad trends across multiple regions. We want to hear, ‘We have this issue in town.’ And we want to talk with that team about how we address it and how we personalize that experience for the customer.”
Sigal takes the same approach with merchants. He likes to discuss the precise successes and failures they’re having, and how the merchant experience can be enhanced at each particular center. He believes a hyper-local strategy makes it easier to create an actionable plan, rather than pontificating on larger issues that may not have a direct impact on that business.
Sigal uses strategy and persistence to combat impacts on business.
“What’s changed for us is the difference between the return we expect from our investments versus the increasing risk-free return,” he says. “That means overall returns need to go up. A lack of liquidity on the lender side is also problematic, so it makes getting deals done more difficult. The number of deals I’m going after that got pulled from the market has been really significant. I’ve never seen that amount of assets pulled off the market.”
The strategy here, Sigal contends, is patience and diversification.
“Since we manage, build and buy, if one avenue goes down, we can keep ourselves busy elsewhere,” he says. “So, we’ll remain patient.”
Right now, NewMark Merrill is busy building Rialto Village, a 96,000-square-foot shopping center in Rialto, Calif. The center reached its pre-leasing capacity in April when Everytable leased a 1,400-square-foot space. The grab-and-go meal provider will be joined by Sprouts, Burlington, Ulta, Five Below, Mattress Firm, Arrowhead Credit Union, Quick Quack Car Wash, In-N-Out Burger, Cold Stone Creamery, The Joint Chiropractic, Nekter Juice Bar, Coffee Bean & Tea Leaf and West Coast Dental when the center opens later this year.
The company is also gearing up to renovate Corbin & Parthenia, an 83,668-square-foot retail center in Northridge that NewMark Merrill worked to acquire. NewMark Merrill plans to invest in maintenance and upgrades to the property, whose current merchants include Office Depot, Corbin Wash & Dry, Brent’s Deli, Smart Choice Dental Lab and more.
Though the exact plans for Corbin & Parthenia haven’t been revealed, Sigal knows they’ll be influenced by a mix of data- and locally driven information.
“We always want to integrate the virtual world with our world,” he says. “We tell our team, ‘You have to have a unique reason for being.’ Are we just another one of 10 shopping centers in town? We want to make customers feel excited we’re here, and we want to reinforce the pride they have in their community.”
— By Nellie Day This post is posted as part of Shopping Center Business’ Retail Insight series. Click here to subscribe to the Retail Insight newsletter, a four-part newsletter series, followed by video interviews delivered to your inbox in May/June.