2016 retail real estate outlook
TRANSCRIPT
2016
RETAIL REAL ESTATE OUTLOOK
The retail industry’s evolution has accelerated at an unparalleled pace over the last few years.
And nowhere are these changes more apparent than in retailers’
real estate strategies.
So what does that mean for the retail real estate
industry in 2016?
Buxton turned to leading industry experts to find out.
State of the Retail Real Estate Market
The U.S. market will continue to offer retailers
significant opportunities to grow their business due to:
The strength of the U.S. economy
Increases in consumer spending
But, consumer demand and easier access to
capital has resulted in:
• Vacancy compression
• Rising rents across most major markets
Competition for Retail Space
Unlike last year, our panel of experts expressed a unanimous
opinion about what the level of competition for retail real estate will look like in 2016.
While retail space isn’t necessarily hard to find, quality retail space is absolutely competitive and only going to get more so.
Buxton Senior Vice President
Paul Schlesinger
Clay Smith, managing director of retail brokerage at JLL,
agrees, noting that it will be
“harder and harder to find
new real estate opportunities. In most major markets
retail development is still constrained.”
The intense competition for real estate has led retail and restaurant executives to consider alternatives, driving
many of the trends highlighted in the next section.
Real Estate Trends
Many of last year’s trends will continue into 2016. However, these are the four trends we believe will intensify in 2016:
Secondary and Tertiary Markets
Omnichannel Retail
Clicks to Bricks
Food’s Importance
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Secondary and Tertiary Markets
2016 is the year of the secondary and tertiary markets.
But why would retailers abandon the security of
proven primary markets?
Several factors are driving the trend:
Oversupply of Capital
Migration Patterns
Lower Prices
Data Provides Confidence
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Omnichannel Retail
As retailers move from planning to implementing omnichannel
strategies, patterns have emerged that have a significant
impact on retail real estate:
• Reevaluating and optimizing real estate portfolios
• Shrinking store footprints
Clicks to Bricks
Online retailers are increasingly announcing plans to open
physical stores, proving Scott Galloway’s bold claim that
“pure play retail is dead”and that online retailers must
open physical locations in order to survive correct.
Food’s Importance
Food is one thing that online providers have yet to master,
leading restaurants and grocers to play a key role in
driving traffic to retail centers.
Hot Markets
In the end, the question that retail decision makers care most about is
Where should I invest in 2016?
In order to predict hot markets for retail growth in 2016, Buxton
examined site scores run between December 2014 and December 2015 by a sample
of current Buxton clients in the retail and restaurant industries.
Some of the markets that seem to be drawing the most attention from retailers are:
AtlantaChicago
Dallas/Fort WorthHouston
Minneapolis/St. Paul
To view our entire list of hot markets and to read the full report, download it now.
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