Green Street Advisors

 

 

Shopping Centers Today: Getting Ahead of the Nomenclature

According to ICSC's Shopping Centers Today:

The speed at which the retail real estate field keeps evolving has pressed more and more developers to ask a basic question about the projects they build: What do we call this thing?

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“Changes are occurring in retailing and retail real estate at a very rapid pace,” said Jim Sullivan, president of advisory and consulting at Green Street Advisors. “And so the distinct lines between those different categories are much blurrier than they’ve ever been.”

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It is certainly true that traditional malls are welcoming all sorts of tenants better known for opening stores at other property types, says Sullivan. “We are seeing traditional tenants of power centers and grocery-anchored shopping centers – whether that is Dick’s Sporting Goods or Whole Foods – show up at the mall,” Sullivan said. “Struggling malls are also looking for replacement tenants in places where they haven’t looked before, like the strip center across the street.”

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A growing focus on the so-called “last mile” challenge – by which retailers strive to move goods from the fulfillment center to the final destination as quickly as possible – could further accelerate these changes, according to Sullivan. Over the next three to five years, Amazon.com and others could easily begin using vacant boxes at shopping centers for that last-mile fulfillment function, potentially changing, in turn, the function of these properties, Sullivan says. “Looking ahead, things will get even more opaque,” he said, “because of the intersection of e-commerce and retail real estate.”

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Sullivan concurs with regard to careful categorization. “It matters, because we need to have some sort of distinction or characterization of properties,” he said. “It is important to have categories and for a trade organization like ICSC to create those definitions. Just be careful when you use those terms, because what they mean today is different from what they meant just five or 10 years ago.”

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To view the full article from Shopping Centers Today, April 2017, click here.