Due to the sheer size of the Texas commercial real estate market, many of the trends taking place in the Lone Star State are indicative of what’s happening in the industry at large. Here’s my perspective from the Dallas office of GRS | Title.
1. Multi-Use/Mixed-Use Properties – Firms realize that they need to build where the consumer lives. A great example of what I’ve seen is apartments on top of retail-entertainment uses. Restaurants, movies with in-theater dining, live music, art galleries, and other experiential-retail, are a serious trend. The focus is on connecting people to their area. It’s a return to the past, where the sense of community prevails, and the developers build what the people want – a modern-day development with walkability and access to urban needs. Live/Work/Play is the main goal. We have had several redeveloped areas here in the Dallas area, many of which I visit regularly for their shops and restaurants. Some worth noting are: the Bishop Arts District, Uptown/West Village, Addison Circle, and Mockingbird Station. Uptown/West Village and Mockingbird Square are also on or near the Dallas Area Rapid Transit (DART) line, which helps promote the pedestrian-friendly aspect of these areas.
2. Retailers’ store-redevelopment/improvement of strong locations, and selected real estate dispositions (Macy’s, Kmart, Sears, Walmart are examples): So, we’ve all read about Macy’s, Kmart, Sears, and Walmart are looking to downsize their brick-and-mortar stores that are underperforming. These companies will also be taking a look at their existing core stores to maximize the opportunities for customer service in the evolving retail environment (in the store, via e-commerce and at home). Retailers are making the changes to become more efficient, and productive, in their overall operations. But the empty stores will have a lot of possibilities for re-development into other business models and/or pop-up retail opportunities. And how about this: Neiman Marcus stores are adding a new customer experience to its already spectacular fashion offerings. It’s called the “Memory Mirror.” Now this is high-tech as it’s finest! The Memory Mirror is a full-length digital mirror that allows a shopper to try on different clothes and record them as eight-second videos. As Stacy Girard described it on the Neiman Marcus blog, “For better or worse, this is how I look from all angles – no stretching, slimming, or PhotoShopping. No more of that ‘what’s going on back there?’ mystery.”
3. Small/Independent businesses thriving: With the advent of Small Business Saturday by American Express, many mom-and-pop and local businesses have been given a second chance at life through this one event. The concept of Small Business Saturday was to encourage people across the country to support the small, local businesses in their area. The business owners are provided with free marketing materials and ads to promote their businesses. The day is recognized almost like a “holiday,” and American Express estimated that about $14.3 billion was spent at small, independent businesses in 2014. As an example, there are numerous small business owners located in the Inwood Village shopping center in Dallas, including Susan Saffron Jewelry Boutique, Wolo Boutique, Gigi’s Cupcakes, Collector’s Covey, and the Inwood Theater, to name a few. This shopping center promotes a pedestrian-friendly atmosphere, where visitors will walk by numerous businesses in a single visit.
4. Off-price retail stores: Neiman Marcus Last Call; Macy’s Backstage, Ross, Stein Mart, DSW, Big Lots!, T.J, Maxx, Marshalls, and others, are all expanding. Consumer-shopping behaviors have changed. And I love these stores! Fashion trends are NOT the key for consumers that shop at off-price retail stores. In fact, off-price retail is such a boutique industry that it requires a sophisticated structure to obtain inventory, maximize productivity and provide low priced products to the customer. Customers that are looking for value-shopping options will continue to make this market sector grow in the future. And this market also gains strength during any down turns in the economy. It’s a Win-Win.
5. Smartphone shopping vs. Internet resistant businesses (eateries, service and entertainment businesses): Smartphone shopping is here to stay. I don’t think my kids would even use a computer if it weren’t required for school. I believe I read somewhere that the average time spent by a person per day on their smartphone is 2.8 hours. It’s a mini computer. It’s fast. It also empowers people to make a purchase faster that in person at a store. But does it replace the need for fun, entertainment and getting together with your friends? Fast-casual restaurants, fitness centers and entertainment are big draws for an entertainment and mixed-use center, which I will refer to as the “Internet-resistant businesses.” In the DFW area, we have quick access to urban “retail hubs” that allow a one-stop location for dining, shopping, arts, culture and entertainment options all in one location. My personal favorites to spend some free time are Top Golf, Studio Movie Grill, Nebraska Furniture Mart, Ikea, Klyde Warren Park, Dallas Museum of Art, Perot Museum of Nature and Science, Dealy Plaza, and Reunion Tower.
6. Re-emergers (Circuit City): Circuit City will open a new store in Dallas in June 2016. The plan is for the new stores to be smaller, and located in densely populated real estate markets. The store’s focus will be on smartphones, tablets, laptops and techie items, such as 3D printers and drones.
7. Repurposing sites (i.e., big-box stores in strip centers turned into an indoor-trampoline park, theater, health center, dental offices, veterinary practices) and pop-up stores/pop-up retail: I have a client that operates a movie theater that provides in theater dining – Studio Movie Grill. This client has been in an expansion mode throughout the U.S. Originally, they would go into existing theater sites and retro fit the space to their model. In the past year or so, though, they have also been going into vacant retail locations in strip centers or outdoor malls (think Best Buy, Circuit City, grocery stores, etc.), as well as vacant stand-alone pad sites.