Commercial Investment Real Estate May/June 2017 | Page 30

Average Annual Retail Sales Growth
grocery-anchored centers and vertical mixed-use
and infill development in urban and close-in sub-
2005–2010
2010–2014
2014–2016
urban neighborhoods.
Despite some soft spots in the market, con-
Electronic shopping and
struction has returned to some areas of Rochester.
mail-order houses
“There is more development than has taken place
in a long time,” Korn says.
Restaurants
A new REI store is proposed off I-390 that is
scheduled to open in fall 2018. New construc-
Autos and gasoline
tion also is occurring in the city’s College Town,
a mixed-use district near the University of Roch-
General merchandise, food, clothing,
ester and University of Rochester Medical Center.
health, and pharmaceutical stores
College Town features new student housing and a
Furniture, electronics, sporting goods,
hotel, along with retail and restaurant tenants such
building materials, and miscellaneous
as Barnes & Noble, Verizon, Jimmy John’s, and
-$20
$0
$20
$40
$60
$80
$100
Texas de Brazil steakhouse.
Source: Reis
Las Vegas also has seen retail development return
along with its accelerating recovery. Some of the
deliver that,” Graul says. “So that has become the real focus older big box developments that stalled out in the recession
for new development.”
are now getting brought back to life.
For example, Innovative Concepts Associates consulted
Two of the hottest submarkets in Las Vegas are South-
on the redevelopment of Springfield Town Center in the west and Summerlin. Both areas have seen existing spaces
Washington, D.C., metro that involved remerchandising fill in and new developments emerge. “Retailers are flocking
60,000 sf into new restaurant space. The new restaurant to these areas because of the healthy demographics,” says
component now serves as a new anchor for the project, with Chris Jackson, CCIM, CPM, a broker at North American
tenants that include Yard House, Nando’s Peri, Zinburger, Commercial in Las Vegas.
and Dave & Buster’s, among others.
However, some of the new projects coming to fruition
are different in nature. Some developers are replacing
Slowing New Development
traditional anchor tenants with an extra pad site that can
Retail development remains thin by historical standards. accommodate a single tenant, such as a daycare or auto
New construction in the U.S. specific to neighborhood center, or a building that can house two to five smaller
and community centers totaled just 9.6 msf in 2016, tenants.
according to Reis. However, development is returning on
“So, there are different types of footprints than we have
a select basis, with some bright spots for growth, including seen in the past,” according to Jackson. That neighborhood
center space is in demand from mobile phone pro-
viders, restaurants, and fitness centers, among
other tenants. “There is definitely still demand for
Trends in Retail Niches
space, even if it is not credit tenant based,” he says.
7.5%
Many retail markets have weathered the Great
Power Center
Recession
and have stabilized, but they are still
Big Box
7.0%
battling
headwinds
from e-commerce, changing
Grocery
consumer
behavior,
and shifting demographics.
6.5%
Retail
experts
also
are keeping a close eye on
Single Tenant
Malls
retailers
that
may
not
be able to execute on new
6.0%
Drug Store
strategies that will help solidify their position in
Lifestyle Center
the new retail marketplace.
5.5%
“I think there is some volatility ahead of us, and
I think the retail landscape as a whole is going
5.0%
Urban/Store Front
to change due to what’s happening with online
4.5%
sales,” Jackson says.
Nominal, in millions
-60%
-50%
-40%
-30%
-20%
-10%
0%
YOY Growth, 12 Months to Feb 2017
Source: Real Capital Analytics
28
May | June 2017
10%
20%
30%
Beth Mattson-Teig is a business writer based in
Minneapolis.
COMMERCIAL INVESTMENT REAL ESTATE