6A — January 25 - February 7, 2019 — Shopping Centers — M id A tlantic
Real Estate Journal
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S hopping C enters By Brandon Anapol, Metro Commercial How retailers can overcome restrictive covenants in shopping centers: Part 1
retail apoca- l y p s e i s a myth, there i s , in fac t , an evolution taking place. This evolu- tion extends beyond the headlines and W
e all know that the retail landscape is changing. While the
enants, are now finding them- selves located next to empty boxes but are often hesitant to grant waivers. Meanwhile, landlords, who are typically caught in the middle, are find- ing their bottom line taking a hit as their boxes remain va- cant while their largest tenants hold out. While the situation may seem complex, there is one way for prospective retail- ers to simplify it…demonstrate what’s in it for them. All roads lead back to, “What’s in it for me?” While it may seem that land- lords have the most to lose, the truth is, all parties will miss out on mutually beneficial opportunities. So, what is the solution? Surprisingly, it’s you, the prospective tenant, and your leasing representative who may be the key to getting the deal done. You know something that the other two parties don’t--what not having you as a tenant in their center may cost them. While you may not have exact revenue numbers, if the center’s target demographics align with yours, it’s likely a match and there will be op- portunities for cross-shopping, traffic growth, and greater stability. Don’t let your perfect site and growth opportunity be blocked. Make sure your leasing broker is taking the following proactive measures to secure your space. Educate the landlord on what you bring to the table ● Create a customer profile ─ Develop a detailed profile of your customers. Are your
customers soccer moms with an average of two kids or are they affluent professionals spending $180 a month in boutique fit- ness services? ─ Demonstrate how your customers are a match and can benefit the center and its anchor tenants. ● Dive into traffic numbers ─ Show how the incremen- tal traffic you will bring to the center could be a boost for them by providing projected numbers, flow, and patterns. For example, fitness centers should be sure to specify that their peak hours of operation don’t typically conflict with the busiest times for prototypi- cal retailers. In fact, in many cases, they bring off-peak, incremental traffic. ● Spell-out the opportunity ─ Identify potential for cross- shopping, incremental traffic, and revenue. While the oppor- tunity may be clear for you, it’s essential to show the landlord, the center, and the existing tenants the potential benefits -- what’s in it for them. ─ Demonstrate how your presence will benefit their bot- tom line, growth prospects, and stability. New challenges will continue to rise for retailers, but main- taining a physical presence is still key to thriving in today’s market. Check back in the February 22 issue for more on how you can help conquer restrictive covenants at shop- ping centers. Brandon Anapol is se- nior vice president of bro- kerage services, Metro Commercial.
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Brandon Anapol
is having a real impact on the ground. Multi-tenant property owners, national operators, and emerging non-traditional businesses are facing new challenges in their day-to-day operations. Big-box retailers are closing, leaving empty spaces behind. New consumer trends are taking shape, catching many off-guard. Live-work-play is a popular trend among con- sumers and spaces are shape- shifting to meet that demand. New non-traditional operators with high growth potential are emerging but are facing challenges in securing space within shopping centers. One of the biggest challenges many landlords are facing is the restrictive covenants present in retail centers that exclude “non-traditional” tenants such as fitness and family entertain- ment centers. These covenants are now restricting opportuni- ties for emerging non-tradition- al operators to occupy ”big-box” space left vacant by anchor and junior anchor retailers. This presents roadblocks in their quest to secure the right space. Many national opera- tors, accustomed to these cov-
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