While big box retail as we’ve known it since the mid-20th century is dying, the market for commercial retail space is anything but dead. It’s just changing, and markets that are able to offer properties for adaptive reuse are attractive to developers and investors.
That’s among the takeaways from the regional meeting of the International Council of Shopping Centers, which was held earlier this month near Dallas and attended by several local commercial real estate brokers.
Unlike the national ISCS conference, which attracts some 30,000 attendees to Las Vegas each spring, the regional gathering is smaller and often more fruitful because brokers get more face time with tenants and potential tenants.
“You can sit down and really have a conversation, as opposed to speed dating,” says Justin Langlois of Stirling Properties, who was among those to attend.
Some of the takeaways from Langlois and others:
• Big data is bigger than ever, and the uses are never ending. Langlois met with a data company that collects consumer information, tracking their movements from one retailer to the next, how long they spend in the Starbucks line, and when they go to the gym, to give just a few examples. That information can then be sold to the retailers or to investors or brokers who want to market a property. “If I’m selling a shopping center, I can get the metrics to let potential buyers know this property has the number one PetSmart in Louisiana or something like that,” Langlois says.
• Logistics and shipping are the way of the future. E-retail giants like Amazon are repurposing former retail centers and redeveloping them into warehouses and fulfillment and distribution centers. In 2019, for instance, some 12 million square feet of inventory near the Dallas-Fort Worth Airport was absorbed for use as data centers, warehouses or distribution centers.
• Location is key—as always. The old adage remains true. Single-tenant net leases are still in demand, particularly in high-growth areas. There may be a lot of Walgreens storefronts, for instance, on the market, but Langlois says those with long-term leases in growing submarkets are generating a lot of interest from investors.
• “Medtail” is the new buzzword. Investors are increasingly eyeing vacant retail space for medical uses like walk-in clinics, dialysis clinics, and even specialty surgical centers. As the baby boomer generation continues to age–and need more medical care—the opportunities to develop new delivery platforms and models in new locations are limitless.
• Entertainment concepts are huge. If you think Top Golf is cool, check out what they’ve got going on in Dallas. Carmen Austin with Saurage Rotenberg Commercial Real Estate, who also attended the conference, says she saw new concepts in the Dallas-Fort Worth area that she’d never heard of before. “Driving around, the trend really seems to be toward entertainment/recreational type users,” she says.
• The streets are lined with gold in Texas. Commercial brokers tend to travel to see what’s going on around the rest of the country. The growth Langlois, Austin and others observed in the Dallas-Forth Worth area boggles the mind, they say. “The growth in retail and mixed-use developments in the submarkets is unbelievable,” Austin says. “I guess it’s always been like that but it’s amazing to see the opportunities and growth.”