Five retail concepts urban developers are clamoring for

Multifamily live-work-play projects continue to pump new life into American downtowns, but their eventual success is dependent on developers curating the right retail for the right place. Their driving consideration is to identify candidates that suit the tone and tenor of the neighborhood and, most importantly, the residential space. A fast-food brand, for instance, is unlikely to be a good fit for a luxury apartment building.

First and foremost, developers strive to enlist retail concepts that people like. National retail chains, likewise, would do well to stay in touch with what retail concepts are resonating with multifamily tenants. We at Broder & Sachse are involved in the genesis of many such projects and we’ve developed a short list of the retail concepts most desired by multifamily developers in 2018:

Coffee’s still hot. You can’t have a discussion about retail and multifamily without mentioning coffee shops. Starbucks still rules, but coffee consumption continues to rise and millennials continue to thirst for new (and pricier) coffee concepts. Chains like Blue Bottle Coffee, for instance, provide a trendy boutique feel but retain the advantage of being a chain. People know what to expect at any location, and so do developers. The proliferation of coffee concepts is a trend that is evident across the retail spectrum, with plenty of local, regional, and national names involved.

Authenticity wanted! Local, non-chain retail concepts are a growing phenomenon, especially in the restaurant sector. Developers are clamoring for hometown and home-grown eateries and many established national chains are taking a backseat. Nationals looking to compete in urban trend centers need to recalibrate their brands with an authentic feel or fresh approach. Casual dining concepts are getting the most love from developers at the moment. Bakersfield, inspired by authentic Mexican street fare, is one concept currently expanding across the Midwest and the Ohio Valley.

Snacks and service. Aside from dining, service retail such as laundromats, convenience stores, and banks remain among the strongest performing categories for multifamily. Urban population growth drives a corresponding need for more service retail. At a time when there is continuing uncertainty about the relationship between online retailers and traditional brick-and-mortar brands, service retail will never go out of style.

Right-sized regulars. In the early stages of downtown turnarounds — like the one in Detroit — civic leaders and developers tend to be focused on interesting and innovative retail and dining concepts. But as Detroit develops and more retail space opens up, we’ll likely see more familiar national concepts entering the market. To succeed, however, they must be willing to accommodate older building stock and abandon their cookie-cutter store sizes and layouts. This will challenge national brands for years to come. Look at how long it has taken Target to refine and settle on a workable urban concept.

This is not to say that retailers aren’t discovering creative new ways to differentiate themselves. Sometimes it’s a high-end concept — The Carter Snell Skin Center at The Scott at Brush Park in Detroit, is one. Other times it’s a standout product offering like the artfully crafted bikes from Detroit Bikes at The Albert in Capitol Park. Retail center developers are striving to create dynamic, diverse, and engaging urban environments. That’s not easy, and they welcome all the help that innovative retail chains are willing to bring them.

Richard Broder is CEO of Broder & Sachse Real Estate, Inc., a Detroit-based real estate development company. Contact Richard directly at [email protected]