How the West will be won
The tenant mix is neighborhood shopping centers is western states is transforming as centers looking to remain relevant to shoppers and more effectively compete with other types of centers.
That according to top executives with Newport Beach, California-based RiverRock Real Estate Group. Steve Core, president of RiverRock and Jim Lynch, the firm’s director of retail management, offered the following insights based on the firm’s experience in the key states of California and Arizona. For starters, “change” is the byword for neighborhood shopping centers in the Western U.S, as they innovate and work hard to compete with regional malls, entertainment centers, and other convenience and neighborhood services. A change in the tenant mix reflects larger changes in our society and in consumer preferences, for example:
Different Tenants for Different Times
§ Goodbye, dry cleaners: Service tenants are dwindling. The traditional mailboxes and dry cleaners are no longer essential components of neighborhood shopping centers, as the internet makes services easier to find. One service provider can fulfill the needs for an entire community.
§ Foodie Havens: To attract Millennials, “the foodie generation,” food-oriented space is growing in neighborhood shopping centers to reflect changing consumer preferences. Restaurants, pizzerias, burger places and other fast-casual eateries, and popular breweries serving craft-brewed beers.
§ Little Big Box: Big-box chains and supermarkets like Walmart ALDI, Target Express and Whole Foods 365, are opening smaller stores — about 25,000-sq.-ft. as opposed to 100,000-sq.-ft. that allow them to penetrate smaller neighborhoods more deeply. Smaller stores can help brick-and-mortar retail businesses survive by serving as showrooms rather than stores. People still like to see, touch and try out products, then buy online for convenient home delivery.
§ Fitness and Gyms: Smaller, neighborhood gyms are proliferating in neighborhood shopping centers, as Americans become increasingly interested in health and wellness, personal training, yoga, Pilates, and massage. Chains like Orange Theory and Planet Fitness are opening hundreds of small, efficient, 3,000-sq.-ft. “studios” that are highly visible in the neighborhood center. “Bigger is not always better.”
Adapt and Survive
Owners today must invest in improved infrastructure and common-area amenities, for example:
§ Energy: Restaurants consume a lot more power than stores, and utility costs are higher. Owners have to increase capacity, and developers of new centers are building in infrastructure early on, as they anticipate a sustained boom in restaurant tenancy.
§ Parking: Restaurants have different parking ratios, and some owners are “giving up” space when necessary to accommodate an increase in parking spaces. If not, they are adding valet parking services, an emerging amenity in the West. People will leave and not come back if parking is a hassle.
§ Common areas: Owners of neighborhood shopping centers must increase common-area amenities to create more interesting and appealing environments that encourage people to stay longer. Improvements include abundant, comfortable seating and shady canopies, plants and misters, water features, fire pits, and, of course, the indispensable Wi-Fi, along with increased cleaning and security costs.
§ Getting Greener: Reflecting cultural change, neighborhood shopping centers need to be more environmentally aware, for example, by using energy-efficient lighting. Many neighborhood shopping centers offer more recycling options, with receptacles for recycling paper, plastic, cans and bottles. Some neighborhood centers are already offering conveniently located electric car fueling stations.