CREJ

Where have all the boxes gone? INSIDE I n recent years, the retail indus- try has been abuzz with feverish talk of the Amazon effect, the retail apocalypse, and the end of brick and mortar. Despite the hype, small-shop leasing has stayed on pace year over year, while costs have continued to increase for land- lords and tenants alike.Tenant mixes are shifting in centers to service and experience-based business, but one thing remains constant: Businesses continue to desire good real estate with visibility, access and parking so they can attract customers.The fun- damentals of our business hold true over time and tenants consistently seek sound real estate choices to sep- arate themselves from their competi- tors. However, we cannot fully escape the doom and gloom surrounding the dynamic land- scape of the box world. From 2016 to 2018, the negativ- ity in the retail world at times was crushing. Every day another retailer was filing for bank- ruptcy, closing over 100 locations, or falling prey to Amazon’s insatiable appetite to acquire additional retail- ers. It was easy to grow pessimistic about the situation.This period was an equally scary time for power center owners; many were losing the bulk, or all, of their net-operat- ing income with the loss of their anchor(s), a number of whom have been unsuccessful in finding replace- ment tenants.The retail industry had just jogged off its hangover from 2007-2008, and now the pic- ture looked worse than before. After facilitating multiple medical deals, I remember telling my wife, “I should have been a damn dentist,” unwit- tingly acknowledging the very beauty underlying in the marketplace.Ten- ant types change and good landlords are creative problem solvers. Altogether, the market has been fraught with challenges, but change is on the horizon. At the end of 2018, my team had a meeting with one of the top five largest real estate invest- ment trusts.The feedback was a bit surprising: box leasing was steady. While growth was slow, with inno- vative approaches to addressing vacant units and expanding market segments, this REIT was finding ten- ants and backfilling space.What was more surprising to hear was that it was helping online retailers establish brick-and-mortar locations through- Urban placemaking boosts opportunities for retail, community, commerce and culture. Retail trends Design suggestions to make a space easily leasable to a wide range of future tenants Construction update PAGE 18 Pop-up stores can be a great way to fill vacant space as long as you select the right brand. Pop up or opt out PAGE 16 Please see Page 21 May 2019 Eric Diesch Senior adviser, Pinnacle Real Estate Advisors PAGE 12 Pinnacle Real Estate Advisors The outlook for the box market may be changing. Following several years of doom and gloom, box leasing appears to be steady.