Trend Report: The Future of Retail in 2017 – A Changing Environment

As a commercial real estate broker I am constantly asked: what is driving the future of retail and retail shopping centers? What changes, if any, can we expect to see in the coming years?  And how are property owners dealing with the effects of e-commerce on brick and mortar retail?

So today we are going to take a few moments to try and answer a few of those questions, take a look at the changing landscape of retail shopping and the effect it is having on commercial real estate right here in Huntsville, Alabama.

Let’s start by looking at e-commerce, its effect on physical retail, and the opportunities it is providing to those that are willing to adapt to a changing marketplace:

It is no secret that online shopping is influencing the traditional brick and mortar retailers. Black Friday and Cyber Monday 2016 were the largest online shopping days in history and that trend will likely continue. However, does this mean that we are seeing the beginning of the end for brick and mortar retail? Absolutely not. What we are seeing instead is a shift in the traditional shopping center layout and tenant mix. The typical retail store is getting smaller and retailers are focusing more and more on the experience of shopping.

Labeled “Experiential Retail”, retailers are shifting their focus to providing shoppers with a fun and exciting experience. Shoppers not only want to touch and feel the product they are buying, but want to be entertained in the process. This is something that e-commerce can never provide. And not only are the younger generations demanding that experience, they are also willing to pay more to get it.

So how does Experiential Retail and the changing layout of brick and mortar retail affect the commercial real estate market?

Well, this desire for a better experience doesn’t just start once a shopper walks through the door. Consumers want the entire experience to be better, which includes the physical layout of the shopping center and the overall destination. Urbanization and the revitalization of downtowns across the country are a perfect example of this. Even right here in Huntsville we are seeing consumers demand a different experience. The success of projects like Campus 805, Lowe Mill, and The Garage at Clinton Row are great examples of the adaptive reuse of properties to provide a better experience.

What does all this mean for existing shopping centers and landlords?

The term adaptive reuse that I mentioned previously is going to be critical for Landlords of traditional shopping centers. As retailers continue to shrink their footprints, Landlords are going to have to get creative in how to back fill the big box spaces left by shrinking retailers. We are already seeing examples of this across the country and even right here in Huntsville. Large box spaces left vacant are being backfilled by entertainment type uses such as indoor go-cart tracks and trampoline arenas. Medical and dental concepts are even starting to open up locations within retail environments, backfilling former retail stores. There are opportunities out there for Landlords that are willing to think outside the box and be creative.

Despite the ever-growing presence of e-commerce, we are far from the end of brick and mortar retail. Consumers are willing to pay for a better experience and the ability to touch and feel what they are buying. This is evidenced in the fact that online giant Amazon is getting into the brick and mortar game with physical retail stores and even a grocery store. There will always be a place for the traditional retail store, it just might look different and be located in different areas than what we have grown accustom. Retailers and Landlords that are willing to change their mindset and adapt to the new environment will have a competitive advantage going forward.

SplitLine
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.

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Zac Buckley
VP of leasing
CRUNKLETON Commercial real estate group
ZAC@CRUNKLETONASSOCIATES.COM
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The Top 5 Reasons To Secure Tenant Representation

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Looking for a new space for your business to call home?

We sat down and talked with Zac Buckely of Crunkleton & Associates and he gave us the full scoop on why it’s beneficial to have a commercial broker represent you on your search for space!

Here’s his list of the top 5 reasons to secure tenant representation:

1) A good broker will know the market

They’ll be able to inform you about the going Rental Rates for the area, make sure you receive sufficient TI amounts, and be aware of any recent vacancies you may be able to take advantage of.

2) They save you time

While you run your business, they will do the property searching for you. They will find all available spaces that fit your criteria, compile a report/package that explains all the options for you, and meet with you to discuss each one. This can take days to compile, which are days you can spend doing other things.  Your broker will also save you time by coordinating with other agents and scheduling site visits to assist you in visiting multiple properties all in one time saving tour.

3) They save you money

They know what rental rates in the market are and should be. They can advise whether this is a competitive deal or if the landlord is asking too much for their property.

4) They are familiar with all the players

It is likely they have already done a deal at that property or with that landlord. Knowing the landlord or other comparable deals at that property can help greatly in negotiating the best deal for you.

5) They know the competition

They know what other tenants or competition are moving in the market. This can help you get ahead of your competition or make a move on a space before it is filled by another tenant.

If you would like to secure tenant representation on your search to find the perfect space, give us a call at 256-536-8809 and we’ll connect you with an experienced broker who can help get you started!

SplitLine
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KADIE PANGBURN
MARKETING COORDINATOR
CRUNKLETON & ASSOCIATES
KADIE@CRUNKLETONASSOCIATES.COM