By Savannah Durban, Communications Specialist
Retail isn’t dying. There isn’t an apocalypse, and physical brick-and-mortar stores will remain an important part of commercial real estate. What is happening, however, is a shift to an experience-based shopping environment, within both the store and the property where it’s located.
These were the thoughts of a panel of retail professionals Cushman & Wakefield recently hosted at our Atlanta office. The panelists included Joel Murphy of New Market Properties, Mark Toro of North American Properties and Jeff Garrison of S.J. Collins Enterprises.
In 2017, there were more new retailers than in 2005, 2006 and 2007, Toro said. Many retailers who are succeeding online have found a need for brick-and-mortar locations. For example, Warby Parker originally only planned five physical stores, but now has 65 throughout the United States and Canada. “It’s shifting consumer preference – they prefer an experience over a thing,” Toro said.
Now more than ever, retailers are relying on landlords to create an environment that is enticing to consumers. “We are not in the real estate or retail business, we are in the business of building community,” Toro said. North American Properties applied lessons learned from its turnaround of Atlantic Station’s retail to Avalon, and some of those same lessons apply to Colony Square.
Toro said Atlantic Station became a “living lab” for cultivating ideas that they were then able to build from the ground-up at Avalon. The redevelopment of Colony Square, where the first building was completed in 1969, has just started, but Toro said office leasing is already on the rise thanks to North American Properties’ commitment to “building community before we build community,” meaning the company begins to engage the local community before starting the development or redevelopment process.
On the flip side, traditional brick-and-mortar retailers are shifting capital to update interiors to offer a better consumer experience and are investing in their online presence. Several grocers for example are investing in partnerships to allow for online shopping and in-store pick-up or delivery options. Kroger offers ClickList, and Publix is aligned with Instacart. “They are doing what they need to do to make it easy and convenient for the customer,” Murphy said.
One online/in-store partnership everyone is keeping an eye on is Whole Foods since its acquisition by Amazon. Since the announcement, in-store pedestrian traffic has grown by 12 percent, Garrison said. S.J. Collins is planning to include a Whole Foods concept in several projects it has in the works in Class A+ locations. “Whole Foods has become a third place people gather,” he said. “People are there doing homework, eating, reading the newspaper. That’s what retail is trending toward.”
The experience shift has caused companies like North American Properties to approach tenant mix from a new perspective. “We identify which retailers are about the future and which identify with experiential retail deployment and seek to serve that market,” Toro said. “The challenge we face is that many don’t get it, and that’s okay. We identify retailers that will thrive and survive and who believe what we believe.”
Retail isn’t dying. It’s just changing. And Atlanta is at the forefront of that change.