Trend Report For 2018: A Pivotal Time for Brick and Mortar Retail

Possibly not since the first enclosed mall opened in 1956 in Edina, Minnesota, has brick and mortar retail experienced such a pivotal point in its history. Most would attribute the changing retail environment to the effects of e-commerce and the Goliath that is Amazon; however, we believe there are more powerful factors at work.

In-store brick and mortar retail sales accounted for more than 89% of total retail sales in 2016, and early indications seem to point to 2017 being the best holiday shopping season in 4 years. So, if people are still shopping at brick and mortar stores, why do we hear the term “retail apocalypse” every time we turn on CNBC or pick up a Wall Street Journal?

The End Of The Department Store Era—Not Brick And Mortar

What we are seeing is not the demise of brick and mortar retail, but more the end of the department store era. Department-store-anchored malls that sold everything from apparel and electronics to furniture and home appliances dominated the 60’s, 70’s, and 80’s. But specialized big-box retailers have steadily eroded the department store model over the last three decades.

Eventually, we were left with malls anchored by department stores that focused on just a few categories centered on apparel. Does this mean that we will soon see the end of department stores and enclosed malls? Yes and no.

We will continue to see enclosed malls struggle to compete with convenience/grocery-anchored centers, experience-based shopping destinations, open-air lifestyle centers like Bridge Street Town Centre, and local specialty destinations such as The Garage at Clinton Row. Many malls will be able to adapt and survive with the addition of entertainment venues, hotels, and even office space. Others will simply disappear from the landscape to be replaced by a more modern retail and entertainment experience as we are seeing take place at the site of the old Madison Square Mall.

As far as the old department store is concerned, we are already seeing the same type of adaption into a more mixed offering of services and experiences. Many department stores are starting to reduce the size of the sales floor to make room for cafés, salons, pop-up shops, and even fitness concepts. Not all department stores will survive, but the ones that do will be more focused on the high-end specialty categories and customer experience. Instead of existing for exclusively for retail sales, they will provide a total experience and numerous services in one convenient location.

What Does The Future Look Like?

What can consumers expect the retail environment to look like in the future? Currently, the trend is what is called omni-channel retail. This is a combination of brick and mortar stores with online and mobile sales. As evidenced by Amazon’s acquisition of Whole Foods, e-commerce retailers are getting into the physical storefront game. It appears they understand the value of physical storefronts and their impact on the bottom-line. Sure, online shopping is convenient, but does it result in sales?

Research has shown that over 40% of items purchased online are returned. Furthermore, consumers make a purchase at a rate of 20% of the time when they walk into an actual store. That rate drops to 3% when visiting a website. The successful retailer of the future will be able to combine online, mobile/social media, and physical locations to create a positive experience for the customer.

One issue that is flying under the radar is the new tax reform bill and its impact on retailers. A reduction in the corporate tax rate could have a significant influence on the ability of brick and mortar retailers to compete with e-commerce retailers. With the reduction of the corporate tax rate, the savings experienced by the retailers can be used for an investment into omni-channel/mobile platforms, upgrading stores, or simply lowering prices to compete with e-commerce.

A Theme Of Adaptation

In conclusion, we continue to believe that the future is bright for both retailers and landlords. Once again, the theme continues to be adaptation. Traditional retailers are building their online presence and e-commerce retailers are getting into the bricks and mortar game. This environment creates opportunities for landlords that have the vision to meet the changing demands of consumers and the needs of the omni-channel retailer. It’s certainly an interesting time in retail, but one that can bring exciting changes to the benefit of everyone.

 Have questions about the changing retail market? Wondering how you can adapt in 2018? You can contact Zac at zac@crunkletonassociates.com or by calling 256-536-8809.

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Originally from Tennessee, Zac studied business management at Samford University. After moving to Huntsville in 2001, Zac started out his career in banking, wealth management, and financial planning. In 2010 he joined Crunkleton and has since become the VP of Leasing for the commercial real estate group where he focuses on retail leasing and development.

Zac Buckley
VP of Leasing
Crunkleton Commercial Real Estate Group
ZAC@CRUNKLETONASSOCIATES.COM

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New “Williamsburg Plaza” Development Coming To Madison!

Crunkleton Commercial Real Estate Group is proud to announce that a new three-unit development is coming to the corner of Nance Road and Highway 72 near the city of Madison!

The 8,200 square foot “Williamsburg Plaza” is set to begin construction in early 2018 and already has two confirmed tenants—Bank Independent and Aspen Dental.

“We’re very happy to share the news about this location with our customers, neighbors, and friends in Madison County and beyond,” says Macke Mauldin, President of Bank Independent. “We’ve listened to our customers who travel Highway 72 to work or shop in the area and who have asked us to open a sales office here. Our 28th office will bring Bank Independent’s convenient and truly personalized customer service to the Madison community.”

Wesley Crunkleton and Zac Buckley handle the leasing of the project and say the state-of-the-art bank office will be the perfect anchor.

“Williamsburg Plaza will be a great addition to one of Madison’s busiest retail corridors,” said Wesley. “The site’s accessibility and strong visibility make it an ideal location for Bank Independent to serve its clientele with quality customer service. Aspen Dental will also be joining the development, and we look forward to releasing more information on the leasing of this project as it becomes available.”

Although the branch will feature Bank Independent’s signature Colonial Williamsburg exterior, the interior will offer customers modern technology and conveniences, including a tech bar for tablet banking, a deposit ATM, and cash recyclers for more efficient and faster transactions.

The branch will provide the bank’s full range of deposit and lending services with universal bankers, sales officers, and representatives from the business banking and mortgage teams.

Stay tuned as we release the information on the third and final tenant to join Williamsburg Plaza!

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HALEY CLEMONS
MARKETING COORDINATOR
CRUNKLETON COMMERCIAL REAL ESTATE GROUP
HALEY@CRUNKLETONASSOCIATES.COM

Broker Spotlight: Zac Buckley

How did you become interested in commercial real estate?

Before I began my career at Crunkleton, I was working as a banker/financial advisor. One day, Wesley called me—I’d known him for a few years—and he asked me if I’d be interested in joining his team. I met with Richard and Wesley both to discuss the business. After a few days of thinking it over I decided to dive in, and here I am today.

What do you enjoy about your job at Crunkleton?

The process of negotiation is something I’ve always enjoyed. Whether it’s a lease or sale, helping two parties come to a mutually beneficial agreement is very rewarding. It’s not about putting a tenant into a space and just moving on to the next deal. It’s about looking at all of the facts, knowing what’s ahead, and determining where my clients will find the most long-term success. Landlords and tenants have to be on the same page and working together for everyone to be successful.

Zac Buckley

What challenges do you face on the job?

Allocating my time and resources so that each client gets due attention is something that takes effort. I have to constantly make sure that I am working efficiently and understanding what leads are worth pursuing. I also have to make the lease or sale process as smooth as possible. It’s all about using your time effectively and not chasing deals when there are signs on the front end that it won’t be beneficial for your client.

You specialize in retail brokerage, what does that entail?

In the retail sector of commercial real estate, you are dealing directly with shopping, dining, grocery, and much more. I work with a lot of developments that are anchored by grocery store chains like Kroger and Publix. Even the service tenants within the development—like hair salons and insurance businesses—are considered retail real estate. It’s my job to put together a successful tenant mix that allows both the landlord and business owners to be profitable.

Crunkleton has brokers that focus on specific types of commercial real estate to ensure we are experts in a particular area. It keeps us hyper-focused on a specific market.

What do you do to stay on top of your game?

For retail brokerage on a regional and national level, staying active in the community is important. Taking part in events like the ICSC Conference in Las Vegas every year allows me to stay informed about what’s going on with the state of retail. I use that time to connect with brokers and businesses outside of the Huntsville market and bring that expertise back with me to Crunkleton.

What value do you hope to bring to your clients?

When I’m working as a tenant representative, I want to find a place where my client will find long-term success. By understanding terms from both the tenant and landlord side, reviewing the area’s demographics, and knowing their future clientele, I am able to put them in the best position to be around their customer base.

I continually work to know tenants’ specific markets and review current trends so my clients are paying a fair rate. When working for the landlord, I make sure they are getting market rates for their property as well.

It’s also valuable to look to the future when making a deal. A certain location may seem like a good fit for now, but if things are happening there that would negatively affect business it’s my job to steer my client in the right direction. You can’t just think about today, you have to be looking to the horizon—two or three years down the road.

Why is Huntsville an ideal place to work in commercial real estate?

Our city is a rapidly growing market. Huntsville is getting more and more national retail chains interested in the area. We have a good, solid economy that weathers downturn better than a lot of places, and we have a community and local government that is supportive of bringing in new businesses.

What advice would you give to someone who is considering a career in commercial real estate?

If you want to be successful as a broker, you have to be outgoing and remain confident even after you hear several rejections. If someone told me they wanted to enter into this career path, I’d tell them that it would be beneficial to work in property management first. Take a few years to understand the process from that side—learn what goes on after the lease is signed.

Being a property manager would help them understand what lease terms really mean and what’s important to the client moving forward. I also think it would help a future broker make the connections they need with tenants and landlords to build up their network and make positive relationships in the commercial real estate world.

I’d also suggest finding a team that you work well with once you get in the business. The success we have as individual brokers at Crunkleton stems from our work as a team. We are constantly bouncing ideas off each other and helping one another with a deal. We work at it together.

What do you enjoy doing outside of the office?

I enjoy any time I get to spend outdoors. I also love to read and spend time with my family. I’m very thankful for the time I get with my nieces and nephews.

You can contact Zac at zac@crunkletonassociates.com, or by calling 256-536-8809.

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HALEY CLEMONS
MARKETING COORDINATOR
CRUNKLETON COMMERCIAL REAL ESTATE GROUP
HALEY@CRUNKLETONASSOCIATES.COM

New “STOVEHOUSE” Development Coming Soon To West Huntsville!

Stovehouse Properties and Crunkleton Commercial Real Estate Group are proud to announce Huntsville’s newest development coming soon to west Huntsville. Introducing, STOVEHOUSE!

(Click here to view the official PRESS RELEASE.

The historic Martin Stove building, located at 3414 Governors Drive, will soon become the site of the city’s next large-scale food, office, events, and entertainment complex. A 200,000 square foot building situated on a 10-acre property, STOVEHOUSE will blur the line between modern and historical, work and play, and small-town culture and high-tech urban energy.

Owners of STOVEHOUSE, Danny and Patti Yancey, purchased the building in 2016 and plan to preserve its rich history while creating a new thriving mixed-use center in Westside Huntsville.

“STOVEHOUSE will fill the vacancy for an all-in-one entertainment, dining, and business hub in west Huntsville’s burgeoning arts, brewery, and cottage-living district,” said Danny. “We’re intentionally building this development to be a destination that nourishes the community.”

An example of office space at STOVEHOUSE.

STOVEHOUSE will be the home of Huntsville’s first permanent urban food garden. Along with chef-driven dining options, there will be a gourmet wine bar, specialty coffee bars, and ample flexible event spaces.

With multiple entertainment stages that will adjust to fit audiences of 100 for more intimate shows, and crowds of up to 2,000 for well-known acts in its multi-purpose hall, STOVEHOUSE will be suitable for business meetings, conferences, weddings, and similar uses.

“We will be bringing regular, curated concerts to a city that appreciates world-class culture,” said Danny. “As the project moves forward we will continue to release details on the entertainment and event aspects of STOVEHOUSE.”

But Huntsville won’t have to wait long to see this development’s progress.

“We’re excited to help bring this vision to life,” said Wesley Crunkleton, co-developer of STOVEHOUSE. “Its close proximity to downtown, I-565, and Redstone Arsenal will make it the ideal hub for businesses, first-to-Alabama restaurant concepts, new entertainment, and events. The project is already underway and Crunkleton will announce the first confirmed tenant very soon.”

Construction is underway at STOVEHOUSE!

The History of STOVEHOUSE

The Martin Stove building dates back to the 1920s and was home to both Rome and Martin stove companies. At the time, it employed thousands of people in the surrounding neighborhoods.

The building, whose original address was 901 Fifth Avenue West, was completed in 1929 as home to Rome Electric Range Company which billed itself as “The Only Electric Range Factory in the South.” Rome produced the successful “Electric Belle” stove before the building was purchased by Martin Stove in 1939.

Huntsville’s Martin Stamping and Stove grew to produce the most complete line of gas heaters on the American market, as well as in Canada and Mexico. During World War II, the plant manufactured bomb crates, grenade fuse cans, and reclaiming drums for the Ordnance Department. Martin closed its doors in 2001 and the location has been home to several businesses before the Yanceys purchased it for redevelopment in 2016.

Preserving the past was important to the team of experts and collaborators executing the development, so many of the property’s original features will be maintained and highlighted throughout STOVEHOUSE.

“When you’re here in the bones of the building, you see the marks of hard-working Westside Huntsville folks who sweated it out producing tangible goods, from stoves to materials for World War II,” said Danny. “I imagine they would have enjoyed having a place in the community to unwind. STOVEHOUSE is being designed to honor that kind of hard work and the leisure it earns.”

Stay tuned!

As the project moves forward we will continue to update you here on construction and what’s coming to STOVEHOUSE. You can also sign up for updates on the development’s official website at www.stovehouse.com.

For more information on leasing, visit the property page on our website.

Is there a concept you’d like to see at STOVEHOUSE? Comment below and let us know.

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HALEY CLEMONS
MARKETING COORDINATOR
CRUNKLETON COMMERCIAL REAL ESTATE GROUP
HALEY@CRUNKLETONASSOCIATES.COM