The Transformation of Retail Real Estate

By Thomas J. Bisacquino

Where and how we buy are rapidly changing, and retail real estate is keeping pace. Whether creating attractive centers with a variety of options, enriching a store visit with hands-on activities and new technologies, or shortening the last mile of delivery by stocking inventory near consumers, retail real estate is changing in remarkable ways.

Enjoyable spaces

Closed-in, windowless malls are being converted to open-air, walkable shopping areas that offer a wider range of services, from big anchor retailers to health clubs to specialty grocers. Flexible, open spaces create places to gather for entertainment or leisure. Convenient health care options are available in stores like CVS and Walgreens. Beyond retail, offices, hotels, condos and apartments are incorporated to populate centers as active, 24/7 community hubs.

Experience matters

Brick-and-mortar retailers are focused on providing consumers what e-commerce cannot: interactive experiences that appeal to all five senses by creating environments where shoppers can touch, feel or taste items before buying them. Tech-enabled, streamlined sales strategies let shoppers “click and collect” by browsing store inventories and ordering online, then picking up in-store.

Delivery is king

E-commerce sales in the U.S. surpassed $341 billion in 2015, driving retailers to create delivery strategies that can quickly fulfill orders, sometimes partnering with personal shoppers and companies like Uber and Lyft to reach the customer. Even groceries are available with a tap of the screen. Online grocery sales are forecast to reach $42 billion this year. And the key factor, as always, for real estate is “location, location, location.” Keeping goods as close to consumers as possible from the start is crucial to satisfying delivery expectations.

The future of retail

These swift shifts in consumer preferences and demand have resulted in recent retail construction growth in renovations rather than new development, as malls and stores get a makeover to meet consumers’ ever-growing expectations. Shoppers have more spending power thanks to rising incomes, low interest rates and declining oil prices. Merchants and commercial real estate developers are responding with retail spaces, fulfillment facilities and strategies that are designed, built and configured to both simplify and enhance the retail experience.

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