By Garrick Brown, Vice President of Retail Research, Americas
We define and classify things in order to make sense of them. In the world of commercial real estate, retail has traditionally been viewed along certain fault-lines; High Street vs. Main Street, shopping center vs. freestanding, urban vs. suburban, personal needs vs. hard goods… the list goes on. Within many of those classifications we have even more sub-classifications (for example, Class C unanchored strip centers couldn’t be more different than Class A super regional malls).
Retail is a sprawling sector with dozens of categories (remember that consumer spending still accounts for roughly 70% of U.S. GDP). And so it makes sense that we have had so many different ways to categorize and define it.
With the rise of e-commerce over the past 15 years (and its increasing acceleration over the past six) many of these definitions have become more fluid. Power centers were once thought of exclusively as large, suburban centers reserved for big box retailers with a regional draw—it typically wasn’t where you would go to buy groceries. But as big box space users like Circuit City and Borders disappeared, this product type survived (and thrived) by plugging in players like Whole Foods, Sprouts and a whole slew of food users. Meanwhile, a number of Class B malls have recovered from the loss of department store anchors by plugging in anything from superstores or warehouse stores to food halls or satellite college campuses.
In the face of e-commerce’s disruptive wake, both tenants and landlords are reacting with creativity and thinking outside of old boxes. The retail real estate world is evolving at its fastest pace ever. No doubt that these changes are occurring due to multiple challenges in the marketplace; the emergence of omni-channel, the dual consumer embrace of frugality and experiential retail and rapidly shifting demographics are just a few of these factors. Against this backdrop many categories of retail are flailing; bankruptcies are up, retail closures are increasing and weaker properties are struggling. Yet, the old axiom of challenge = opportunity could never have been more true. In what has become an “evolve or die” landscape, there is a wave of new retailers that are thriving and that are doing so in surprising places.
These are the Cool Streets.
In our new Cool Streets of North America report we explore this trend.
Driven initially by the Millennial embrace of urban living, the rise of Cool Streets is about the rise of alternative retail in exciting, new alternative markets. Cool Street retail districts are sprouting across virtually every major U.S. city; they differ from traditional urban retail hot spots in that these trendy new spots aren’t popping up in the pristine commercial districts of old but in up-and-coming neighborhoods where rents (though rising quickly) are a fraction of what one would find in High Street urban retail districts and where Millennial consumers increasingly want to live, work and play.
The Cool Streets are at the nexus of a number of major demographic trends; it’s not just about Millennials being the largest single age demographic now… it’s about their lifestyle tastes. While all of the data suggests that Millennial consumers are more likely to spend money on experiences than things and that they are generally more frugal than Gen-Xers or Baby Boomers, Cool Street-oriented chains like Shinola, Warby Parker, Bonobos, Marine Layer and hundreds of independent retailers are connecting with Millennials and are doing so on their own terms, and generally at the seemingly endangered mid-level price point. They’re doing it by offering Millennial consumers what they want; truly experiential retail that is generally driven by simply being interesting in what they sell and how they merchandise their stores and by returning to the stronger customer service ethic of the pre-big box period.
The story of the Cool Streets is equally driven by food and drink concepts with many of these neighborhoods now emerging as culinary or nightlife hotspots. These markets are attracting everything from food halls to fast casual; they are increasingly the preferred launching spots for food truck concepts looking to go bricks-and-mortar as well as white tablecloth high-end chef concepts.
At the heart of it all is the idea that these new Cool Streets have become the incubators of American retail. The greatest challenge facing many retail sectors today is connecting with the Millennial consumer beyond the downward spiral of race to the bottom discounting. It is on the Cool Streets where we are increasingly seeing what actually works and how to connect with Millennial consumers.
In this report we cover the macro trends that are driving this movement. We also present the Top 100 Cool Street markets in the United States and Canada and share deep dives on 15 of the hottest markets out there. Our report covers places as diverse as the Funk Zone in Santa Barbara (yes, that is an actual neighborhood name!) to Jamaica Plain in Boston. We go to West Queen West in Toronto and to the Warehouse District in New Orleans and from the Blue Dome District in Tulsa to Detroit’s hip Corktown neighborhood and everywhere in between.
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.