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Retail goes to extremes; experience is 'in,” realty experts say

Post-recession recovery is hitting upscale stores and value stores but missing the middle. Long term, clicks and bricks creating experience are the future of shopping centers, experts told the National Association of Real Estate Editors.
by Richard Mize Published: June 28, 2014

HOUSTON — Retail sales have always had ups and downs, but not usually all at once.

But polarization describes the post-recession recovery so far at the nation’s shopping centers. Luxury shops are doing well and value stores are doing well. The middle — groceries, apparel, sporting goods — not so much.

Consumer spending is still sagging in the middle and so are stores that rely on it, said Houston-based Naveen Jaggi, senior managing director, retail service, for CBRE in the United States, Canada and Mexico. Jaggi was on a panel on the future of shopping centers at the recent National Association of Real Estate Editors annual meeting.

On the top end, he said, fashion, food and furniture are doing well.

Fashion is fickle, though, with the biggest ups and downs and the most potential to disrupt neighborhood shopping centers. Furniture stores, which are fairly safe from e-commerce, are expanding. Restaurants are becoming more common as anchors for 50,000- to 100,000-square-foot centers.

On the hurting end, Jaggi said, closure, contraction and consolidation are driving.

Struggling chains want to close underperforming stores, but labor, financial and landlord issues are slowing closures, he said. He said he expected no big announcements this year because most retailers have to let their lenders know their holiday inventory plans by now.

Emphasize experience

Looking further ahead, stores that emphasize customer experience will be most successful, said Christopher Volk, president and CEO of Scottsdale, Ariz.-based STORE Capital, provider of net lease financing for middle-market companies. (STORE stands for Single Tenant Operational Real Estate.)

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by Richard Mize
Real Estate Editor
Real estate editor Richard Mize has edited The Oklahoman's weekly residential real estate section and covered housing, commercial real estate, construction, development, finance and related business since 1999. From 1989 to 1999, he worked...
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