Addressing the evolving retail real estate market: Given today’s challenges, we need effective strategies by Jeffrey Pliskin
Given the challenges brick and mortar retailers face, property owners and managers need to deploy effective strategies for the shopping centers they own and manage. E-commerce, for instance, is having a measurable impact on sales. In May 2016, HRC Advisory, a leading retail advisory firm, reported that retailers’ efforts to increase online sales, and the associated costs relating to order fulfillment and free shipping offers, were chipping away at physical store sales and also eroding profitability. The findings were based on HRC’s study of the financial data of department stores, luxury, specialty apparel, beauty, and off-price retailers and input from 15 high level retail executives. Given this finding, and that 2017 is right around the corner, now is the time to start implementing new measures that will serve the best interests of tenants and property owners alike.
All retail property managers should be using multiple channels to market theirshopping centers. In addition to traditional signage, display advertising and direct marketing, the power of social media should not be ignored. Facebook, LinkedIn, Instagram and Twitter should be part of the marketing media mix. Attending key trade shows and conferences such as ICSC, and networking with other real estate professionals is a tried and true practice forkeeping properties relevant and well-positioned in the marketplace.
Tenant synergy is also paramount to a successful center. A strong anchor will attract other prospects, either those that serve a similar target market or those that serve a similar demographic market. The center with a gym, yoga studio or CrossFit facility, would more than likely attract a specialty retailer of athletic wear, a day spa, hair salon, healthy food or juice bar, and vitamin store, and other tenants catering to the demographic of the customers of the foregoing.
These days, many of the tenant prospects are focused on the service market where they do not compete with online retailers. Such tenants include many of the above cited plus food sales, urgent care facilities, other medical uses, restaurants, and dry cleaners. These service types create their own synergies. They attract other tenants that trade on frequent customer visits
As a buyer, we look for high quality properties in good locations. Tenant credit worthiness is important, but, considering the impact of ecommerce and the nature of the tenant prospects, as described above, we want locations that will attract that type of service tenant. Typically, that means convenience, easy access and a lot of parking.
For those owners that do not also manage their properties, another fundamental is to carefully vet a property management firm to make sure it has a proven track record maintaining properties in peak condition. Retail property owners should only consider trusting their asset to a firm that can provide a full suite of services covering all areas of operations, from tenant rent billing and collections, to account management and documentation, budgeting, capital improvements, subcontractor coordination and supervision, maintenance, insurance oversight, regulatory compliance, real estate tax management and, of course, property marketing, leasing and sales. In short, the firm should have all of these capabilities in-house to maximize the property owner’s income, minimize expenses, and retain and attract the best tenants.
Jeffrey Pliskin is president and CEO of Pliskin Realty & Development, Garden City,