8A — October 25 - November 7, 2019 — Shopping Centers — M id A tlantic
Real Estate Journal
www.marej.com
S hopping C enters By Brandon Anapol, Metro Commercial Four predictions for how retail will fare in a down market
i mme d i a t e h o r i z o n , I would be ly- ing if I said it hasn’t crossed m y m i n d . Watching the news on any given day, we see familiar W
hile I am not sug- gesting that another recession is on the
expanding like they once were. If a recession were to hit in the next 12 to 24 months, here are my predictions for how the retail industry will be affected. Reimagining the retail space As the existing pool of big-box retailers narrows, the stock of vacancies is expanding which is forcing owners and businesses to get creative. So many big-box retailers have shuttered in the last few years and their spaces remain vacant for lack of suit- able replacements. I believe we will see more self-storage services retrofitting old Kmart,
Sears, and Toys ‘R’ Us boxes to meet their specific needs. Medi- cal and wellness facilities are another plausible option to fill these vast spaces. Even indus- trial uses such as fulfillment centers could take advantage of boxes situated near interstates and major highways. We have all witnessed the trend of retail power centers filling vacant anchor positions with enter- tainment concepts like Urban Air and Dave and Busters. However, once they land that category, there may be a larger looming need to redevelop the asset by reducing overall retail
square footage and incorpo- rating vertical multi-family, coworking/office space, and smaller pad users that provide food or services in lieu of the traditional 20,000-40,000 s/f users that once lined up two to three deep to backfill vacant an- chor and junior anchor spaces . The traditional mall set up is also seeing a transformation. As a result of the Great Reces- sion, malls have been turned inside out, no longer enclosed and incorporating office space and multifamily residences to create a new formula for suc- cess. Granite Run Mall, now
The Promenade at Granite Run, and Cheltenham Square Mall, now Greenleaf at Chel- tenham, are two local examples of malls that just weren’t work- ing anymore but have since adapted through tremendous successful revitalization. Not only is the mall format chang- ing with the times, but the tenants are also. When failing retailers create vacant spaces it paves the way for start-up entrepreneurs, digital brands, and disruptive new-to-market categories to get into the brick- and-mortar game. One retailer getting ahead of the game in this respect is Target, which has reduced its physical footprint, enabling it to conveniently serve more ur- ban areas and college campus- es. This will serve the company well should we see an economic downturn. Large-format fitness will flourish Large fitness facilities, such as The EDGE Fitness Clubs, will continue to thrive as con- sumers aren’t going to give up on their health and fitness goals over a $10-30 monthly spend. The vulnerability lies, however, in boutique studio memberships such as spin, yoga or pilates classes, which can total in the $100-200 per month range. In an economic downturn, consumers may part ways with smaller, specialized studios and make the switch to these more affordable large- format chains that offer similar group fitness classes at a much lower price point. Fast-casual vs. fast food Fast-casual restaurants may see a slow down in growth if discretionary spending slows. Consumers become mindful of unnecessary expenses such as buying lunch during the week and begin to cut back by prepar- ing meals in advance and bring- ing lunches from home. On the other hand, convenient options like Chick-Fil-A and Chipotle will continue to expand and perform well as inexpensive dining-out alternatives. Loyalists will boost iconic brands Discount retailers such as TJX brands and Dollar Tree will con- tinue to perform well in a down economy, as they are able to capitalize on people’s tendency to tighten the belt and “shop down”. However, loyalists will continue to support the iconic brands they know and love. Take continued on page 11A
Brandon Anapol
patterns emerging, which is why we should always be pre- pared. Reminiscent of the 2008 recession many major catego- ries, such as apparel, are not
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