If your community is trying to attract new retail development or retain existing retailers, it’s important to understand the challenges and opportunities facing these businesses. That’s not always easy given the industry’s rapid rate of change, which often affects site location decisions.
Each year, Buxton—an analytics firm that advises both the private and public sectors on-site location decisions—publishes an annual Retail Real Estate Outlook. The report provides updates on the state of the retail real estate market, important trends that are affecting real estate strategy, and markets that are attracting a lot of new development. While this report is written from a retailer’s perspective, it offers helpful insights for communities that want to leverage the latest retail real estate trends to help shape their economic development strategies.
Below are three facts from Buxton’s Retail Real Estate Outlook with tips on how your community can respond.
1. Real Estate Prices Are Rising
With demand for retail real estate outpacing supply, prices are rising and retailers are having to spend more on each new site.
How to Respond: It’s more important than ever for communities to prove that their proposed site is a good investment for a retailer. Selecting new sites is an important financial decision, so retailers need to be confident that a site has the right types of customers, area draw, and proximity to competitors. Do your research and be ready to present prospective retailers with data-backed proof of your site’s potential.
2. Small Box Retail = Big Opportunities
In today’s market, small box retail space is a hot commodity. Big box retail is a tougher sell.
How to Respond: Do you have vacant big-box retail space in your community? Consider working with real estate owners to divide it into smaller, more marketable spaces. If you are preparing new sites for development, be sure to include smaller parcels that give retailers the chance to enter the market without as much risk.
3. It’s All About the Experience
Retailers want to be in locations that foster an inviting customer experience. This enables them to offer something their online competitors cannot—a reason to visit and linger—and taps into the trend of consumers spending more on experiences.
How to Respond: Consider pursuing mixed-use development opportunities that emphasize community gathering places. For communities with older buildings, redevelopment programs may attract retailers seeking a unique aesthetic.