In past Insights, we have talked about how retail space is evolving, and as commercial real estate brokers, we are always exploring new ways of how we approach and lease retail space. There are many reasons why retail space is changing, including e-commerce, the Covid effect, and rising labor costs, etc. Though in this Insights we are going to highlight some of the exciting and creative new ways that retail space is being reimagined.
For retail leasing, it is vitally important to have a grassroots approach. Having local brokers, who are well-connected to the local business community and who are emersed and have a deep understanding of the local climate and the local consumers is key.
One strategy and trend that we are seeing is temporary space activation. This can be in the form of ‘pop-ups’ or providing incubator space to new, startup businesses. The idea behind this is to give a business a chance to see if their concept proves to be successful without either party (landlord or tenant) avoiding risk with minimal financial investment, or upfront expense. An example of a ‘pop-up’ concept store would be Lululemon, who opened a ‘pop-up’ store in Fairhaven. While they did not commit to a long lease term upfront, they were able to test this location and have seen success. As a result, they have remained a tenant for more than three years. Activating a vacant retail location has many benefits including generate foot traffic, which is good for neighboring retail tenants, and it also mitigates crime, vandalism and loitering. Additionally, having a temporary tenant is visually appealing and brings attention to a space, which often generates interest from potential tenants.
Another new trend being employed in vacancies is automated retail, or elevated vending machines. While places like Japan have adopted a myriad of different vending machines that go beyond your standard candy bars and soft drinks, we are now seeing more sophisticated vending machines that offer things like cotton candy, makeup or electronics here in the United States. This provides customers with interactive experiences, helps to draw traffic, and does not require large labor cost, and can be an amenity for other neighboring tenants.
As with any investment, it is important to be engaged, forward thinking, creative, and dynamic.
Source: Turning Unused Spaces Into Experiences That Drive Traffic and Sales | ICSC
