By Garrick Brown, Vice President of Retail Research, Americas
First off, my apologies, the Newsline is usually a weekly compendium of the nation’s top retail stories as they pertain to commercial real estate… but for the last few weeks we have been on an every other week release schedule. That’s simply because it’s Spring Event Season. I’ve been racking up the frequent flier miles and been hitting a lot of events lately.
Two weeks ago I was at ICSC Monterey, last week I was at the ICSC Mid-Atlantic Idea Exchange in the DC suburbs and in between I had the privilege of speaking at the California Bankers Association annual meeting in Palm Desert, California and in being able to speak at a few private client events on the state of retail commercial real estate along the way. I basically just got home after a two-week stretch and am hard at work creating a whole bunch of new reports and presentations looking at the marketplace.
All that being said, here is what I found most interesting… at both the ICSC Monterey and Mid-Atlantic events, attendance was up over last year and most of our brokers reported more client meets than in the past few years… but that’s not to say that the latest round of retail closures doesn’t have more than just a few market players and market watchers concerned. From a deal perspective, I can’t see I saw much of a difference over the past couple of years at either of these events… it’s all about food and services for the most part, but both meetings seemed to have a few new players looking for space. Fast casual remains white hot (though I am increasingly having concerns in many markets about saturation and sustainable growth levels). But grocery players are out there… even ones that a lot of us didn’t expect to be in the market this year. Safeway, for example, says they want to open 25 new stores nationally this year. What’s probably more interesting than that tidbit is the fact that the old rule book as for what they were looking for in terms of site selection is pretty much out the window. They’ll consider a wide variety of size configurations for both urban and suburban space. And there are plenty of other grocery guys on the make from Aldi and Lidl to Fresh Market and beyond…
Now, keep in mind that both of these events tend to be suburban in focus… but the reality is that when it comes to urban retail we are still seeing the same growth patterns in terms of luxury growth (though some of the American players are slowing while many of the global brands are starting to step things up) and hot new innovative concepts (whether clicks to bricks newbies or millennial-focused start-ups) are heading towards the nation’s hipster havens.
Regardless, because I have been on the road, we are rolling with ten featured articles this week. But one of the most important pieces of news that I have come across in the past week is actually about a month old and comes from the Asbury Park Press in New Jersey. I apologize that it slipped through the cracks, but I find the article ROAD SAGE: Why Aren’t Teens Getting Driver’s Licenses to be fascinating on a couple of levels. Primarily because there have not been a lot of studies yet on Generation Z consumers. Who is Gen Z? It’s that group of 20 or under youths that is coming up behind those pesky millennials. And one of the great questions facing all of us when we look at the trend of urbanism that millennials have embraced is whether or not Gen Z is going to continue on the same path. The fact that this generation is putting off getting driver’s licenses would lend itself to supporting that the idea that even as older millennials increasingly embrace the suburbs, that there very well may be an entirely new generation rolling into the nation’s cities to take their place. At least, that is the theory.
This comes with some other big news this past week. National Real Estate Investor published a piece on millennials staying put in cities… however, I have to say that I certainly have never said that the migration of aging millennials to the suburbs would be an overnight phenomenon. Anyone looking for a midnight move from the skinny jean generation is going to be sorely disappointed. But one cannot look at the rising cost of living in urban areas and assume that family-minded millennials aren’t going to be squeezed by hefty rents and the drive to want to own their own homes.
Which brings me to another big story that might have gone under the radar for many… last week Google asked transportation officials for more legal clearances for the eventual launch of autonomous cars. Now we track active manufacturing requirements in the Bay Area and elsewhere and I have yet to see any major ones to hit the market that even theoretically could be traced back to Google. However, GM is spending over $1 billion on a driverless car startup that’s been testing vehicles on the streets of San Francisco. Is there a partnership in the making here? Who knows… but one thing I do know is that driverless cars are coming… What does this have to do with retail, you may ask? I would have to answer that the answer to that question will be more than self-evident come five to ten years down the road when the autonomous car starts to impact city planning in ways that we cannot even imagine.
This week’s news was certainly filled with garden variety closure information (Men’s Wearhouse and affiliated brands closing 50 stores, for example). It was also filled with more M&A activity as we had forecast (Fresh Market being bought for nearly $1.4B). And it was also filled with news of more growth outside of those categories that are e-commerce right-sizing (RBC’s Chain Store Growth Report showing expansion, not contraction). But in the lesser read headlines, this week’s news was all about future disruptors. And perhaps the biggest news there was news of Amazon leasing 20 cargo jets for their own air cargo network. Is Amazon looking to compete with UPS? Will we eventually see major retailers utilizing Amazon (!?) for their own e-commerce fulfillment network? We have some answers… stay tuned. Over the next few weeks we have a couple of major, groundbreaking publications on the next wave of E-Commerce, E-Commerce 2.0 that will be coming out and that will be addressing topics like this, final mile delivery, e-groceries and everything you need to know from both the distribution and bricks and mortar retail sides of the equations. I’ll keep you posted! In the meantime, thanks and have a great week!
This post is commentary from the latest weekly edition of our Cushman & Wakefield Retail Newsline, which you can subscribe to for free by e-mailing email@example.com.
Garrick serves as Vice President of Retail Research for the Americas. He speaks frequently at industry events and has been a keynote speaker at symposiums, conferences and market forecasting events for groups like the Appraisal Institute, Urban Land Institute, CREW, ICSC and PRSM. He is also a member of Lambda Alpha International, an invitation-only land use society for those who are involved in the ownership, management, regulation and conservation of land, but also those who are involved in its development, redevelopment and preservation.