CREJ - Retail Properties Quarterly - February 2015
As more and more retail and restaurants attempt to be as close to residential areas as possible through mixed-use developments, there is still a desire for shoppers to get out, explore and visit different areas and neighborhoods. These developments are creating a type of destination outing. “Consumers want an experience whether they are shopping or dining,” said Molly Bayer, associate broker with Zall Co. “Often these customers will travel to shop or dine at a unique place.” These destinations offer several experiences without having to drive to multiple locations. Trying to decide between going shopping and working out? Stores like Athleta, which recently opened another location in Park Meadows Mall, allow customers to do both by offering free fitness classes right in the store. Other retail stores have also jumped on this trend of offering an experience while you shop. Common Threads is a consignment clothing shop that contains a creative lab where the customer can take sewing and knitting classes. Large retailers like H&M attempt to keep shoppers repeatedly coming back to the store by moving goods quickly and rapidly addressing the latest trends and styles. Major brand-name stores can sometimes even move into an area and become part of the community, making it a destination that attracts people from other neighborhoods. For example, Lululemon, a yogafocused athletic apparel retailer, offers free yoga classes in the Cherry Creek North and Park Meadows Mall stores. However, there are specific areas where the small shops are still thriving. “Millennials have spurred creative, independent stores that are doing really well, especially in the Lower Highlands, River North and Highlands areas,” said Bayer. “Now national stores are taking a hard look at what makes these successful.” While malls remain one of the staples of the retail industry, there are several growing problems with them. One of the biggest is the fact that many malls and shopping centers are so similar in look and feel, said Stuart Zall, president of Zall Co. “I’ve been asked, what’s my favorite mall and I don’t have an answer because I can’t differentiate that much between them,” he said. “The big shopping centers don’t have the creativity, and retail stores in malls lose their authenticity and ‘real feel’.” Even though the traditional enclosed malls are not dying and won’t be going away any time soon, Zall believes that some retailers in malls may start closing or downsizing. “Business models are changing and retailers are looking at other options for their stores,” he said. “Putting a storefront along an active street is becoming more appealing than being in the middle of a large mall.” According to Zall, an issue that needs to be addressed is that Denver historically has not had great small-shop retail. Ari Stutz, a local developer and partner with Ken Wolf of Downtown Property Services, has properties in the RiNo neighborhood that are attempting to change that. Instead of a single store creating its own destination, Stutz and Wolf are redeveloping several buildings in RiNo with the hope of creating a central core for the community. “We listened to the neighborhood and what they wanted was small retail spaces where creative, local businesses could thrive,” said Stutz. “The difficulty we have here is trying to divide and break down large industrial buildings into small retail spaces.” Stutz said once they get over that hurdle and have the spaces ready to show, it is easy to encourage tenants to move in. Jeff Osaka is one tenant who was easily convinced to move to the area and will be opening Sushi-Rama at the 2601 Larimer building, which was redeveloped by Downtown Property Services. “It’s like we’re creating our own destination,” said Osaka. “There’s not really any competition here; instead each retailer helps out the other by bringing business to this area.” Osaka is not alone when it comes to opening retail in the RiNo area. Because there are many people who work and live in this area, with even more multifamily being developed, the neighborhood is transitioning and retail is trying to keep up with the growing amount of traffic. “It is an area that has been underserved for a while and it is great to see so much activity as retail tries to catch up,” said Stutz. For another retailer, Matthew Morris, owner of Matthew Morris Salon and Skincare, opening a store in the area was more about being original and groundbreaking. Morris is a renowned stylist, whose success with his first store, a 6,200-square-foot salon on South Broadway, encouraged him to look in similar locations to open another salon. “We’re known for having a luxurious place where it doesn’t seem like it should be,” said Morris. “So naturally, for store No. 2 we wanted to be in another area that needs pioneering.” These retailers believe there’s a mindset that customers want to go somewhere unique and gritty. “The retailers moving into the area could drive some consumers away from areas like Cherry Creek North or the malls, and maybe even get them out of their comfort zone a little bit and create a new experience,” said Stutz. The previous two examples demonstrate that retail, no matter where it is located, is driven by what can’t be done online – restaurants and services. This is also the reason why restaurants are paying the most rent. Whether it’s casual dining or highend, the restaurant industry is driving the retail rental market. And restaurants, like retail stores, are focusing on the consumer experience and bringing them to a destination, with breweries serving craft beer, farmto-table locally influenced food and authentic designs intended to combine the food with the experience. Whether it is an individual store creating a destination or a community of shops, retail is constantly evolving and inventing new ways to lure customers out from behind their computers and the world of online shopping, and into their stores. There is more thought put into where and when a store should be developed by using the increasing access to better data that provides breakdowns of who is shopping, at what time and what they are buying or consuming.