Retail development is back, but it's different than it was before the recession. We're seeing some changes in how deals are getting done and where development is occurring. With that in mind, here are two major differences in retail development now versus before the recession:
Development is focusing on different markets
The focus for development has shifted, with retailers concentrating on infill locations. Forget the idea that you're going to develop a shopping center where there is projected residential growth in the future. Now, retailers are attracted to infill locations presenting redevelopment opportunities, taking underutilized real estate and putting it to better use.
This repurposing of retail has allowed developers to create more mixed-use centers, because shopping centers aren't just focused on retail anymore. Developers are interested in creating an environment that is walkable and provides a variety of amenities.
A great example: We continue to see more medical users coming into centers. They drive traffic and provide customers with access to a wider range of services.
For both centers and stores, bigger usually isn't better anymore
Since the recession, shopping center and store sizes have changed, while new development of power centers and malls has all but disappeared. Traditional grocery-anchored centers are smaller than before, with fewer shops and outparcels.
For example, before the recession, office retail stores often ranged from 18,000 to 25,000 square feet. Now, these same stores are reducing to 12,000-square-foot spaces. The Internet has hit office retailers particularly hard, with many in the industry consolidating, such as Office Depot and OfficeMax.
Along the same lines, pet retail stores have also seen a reduction in size, going from an average of more than 20,000 square feet to now as low as 6,000 to 8,000 square feet. In this case, it's not so much due to the impact of online shopping but rather a strategy designed to enable these retailers to penetrate more markets..
— Bill Brown is president of Atlanta-based Halpern Enterprises, which owns and manages 33 retail properties in Georgia, South Carolina and Florida. Halpern is continually expanding its retail portfolio, both through acquisitions and new development.