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— Retail Properties Quarterly — May 2016
L
ike many of you, I have been
inundated with media reports
proclaiming e-commerce will
take over the retail industry
and that the traditional brick-
and-mortar stores are becoming
obsolete. They say large-scale shop-
ping centers are dinosaurs, and that
the younger generations will not visit
malls but, instead, make all their pur-
chases online. If this is, or was, the
goal of e-commerce, then I am confi-
dent e-commerce will fail.
The truth is e-commerce needs
brick and mortar to survive. Consum-
ers crave the ability to hold their prod-
ucts and experience in person many
of their important purchases. Online
shopping, even virtual reality, will
never replace the tangible nature of
in-store shopping. This experience is
the single greatest differentiator that
will lead to the continued success and
viability of retail shopping centers.
While e-commerce will not take
the place of shopping centers, it is
challenging the traditional formula of
designing, developing, constructing
and managing those shopping cen-
ters. To remain competitive, today’s
retail shopping center stakeholders
must understand and adapt to the
current trends, which are heavily
influenced by e-commerce shopping.
An immediate change is a reduc-
tion in space needed for traditional
big-box retailers. As those tenants
further understand consumer pur-
chasing habits in store versus online,
the square footage needs are reduced
significantly. The challenge presented
is what to do with existing large foot-
print stores when those tenants exit
or desire smaller footprints?
One solution is renovating existing
large footprint retail
space to repurpose
for multiple smaller
modern prototypes.
This option uses
existing infrastruc-
ture and building
space and only
requires renovat-
ing the building
systems and main
entrance facade to
accommodate the
new tenant mix.
Performed correctly,
this can be signifi-
cantly less expen-
sive and delivered
to market in half
the time of a typical new-build proj-
ect. An example of this is the Streets
of SouthGlenn in Centennial.We are
under construction to convert a large
sporting goods retail box into two
smaller soft goods national retailers.
The retail experience, as previ-
ously stated, is the single greatest
advantage shopping centers have in
competing with online purchasing.
Younger generations may value this
experience more than any previous
generation.
Additionally, workplace dynamics
are changing. Technological advances
make it possible to work from any-
where at any time. During the work-
day, table space is becoming a premi-
um at coffee shops, restaurants and
outdoor spaces for people looking to
work outside of the office. Fast-casual
restaurant tenants cater to this day-
time traffic and the increased pres-
ence of this type of tenant is evident
in new shopping centers.
The increased foot traffic from fast-
casual combined with spaces that
encourage extended stays is good
news for existing shopping centers. It
is redefining what peak times are for
shopping and allowing the consumer
to spend more time at the shopping
center, which retailers know is a good
thing. The challenge for existing shop-
ping centers is incorporating this ten-
ant diversity in existing traditional
shopping centers and creating addi-
tional desirable spaces for consumers
to linger or work remotely.
One solution is utilizing expansive
existing parking lots to incorporate
additional pad development. Many
municipalities have reduced, or are
willing to reduce, parking require-
ments from the standards imposed 10
to 20 years ago. This can create addi-
tional real estate and development
options in existing shopping centers
and improve the tenant diversity
needed to increase traffic and allow
consumers to stay longer.
Additionally, the typically dead
spaces between big-box retail stores
can be filled with courtyards and
outdoor dining areas. Fast-casual ten-
ants can occupy the leasable square
footage no longer needed by many of
the tenants who still want and need a
storefront presence. Renovating these
spaces to accommodate new tenants
can be challenging to pull off, but the
result can be a more vibrant shopping
center providing the exceptional expe-
rience many consumers are craving.
Existing retail shopping centers cer-
tainly are challenged in today’s com-
petitive marketplace to compete with
e-commerce. The formula for success
is changing, and e-commerce will
continue to change the landscape of
new and existing retail centers. Those
who embrace the change, understand
the impacts to existing and future
developments and how to capitalize
on these trends will undoubtedly out-
perform their competition.
s
Mike Hockett
Vice president
business
development and
marketing, W.E.
O’Neil Construction
Co. of Colorado,
Denver
Retail Trends
Photo courtesy W.E. O’Neil Construction Co.
A former big-box retailer, Dick’s Sporting Goods, is being subdivided into separate spaces
for two new tenants, Ross and Marshalls, at the Streets of SouthGlenn in Centennial.
