11 Feb 2019

WREB: Closed Doors, Open Opportunities?

By Nellie Day

As published on Western Real Estate Business on February 1, 2019

WREB recently sat down with Matt Hammond, partner and senior vice president of retail brokerage at Coreland Companies in Tustin, Calif., to discuss the latest round of retail closures and the opportunities they can present for owners, as well as co-tenants.

Why do you think the shopping center landscape is experiencing the volume of closures that it is?

Consumer shopping habits are shifting and traditional retailers that aren’t able to find their own niche or capitalize on the omnichannel marketplace will likely close. This is not a surprise to anyone in the retail industry. For example, the Sears end of a mall has suffered from little synergy or excitement for some time.

Are these closures a good thing or a bad thing for most shopping center players?

Closures can be a good thing, though, for both landlords and co-tenants. Landlords are able to regain control and reposition tired portions of malls and shopping centers. It’s an opportunity to introduce small-format retail, restaurants, entertainment, multifamily, fitness or even hotels. While smaller co-tenants might feel some pain in the short-term, potential changes will have long-term benefits.

Are there other big box or department stores landlords should keep their eyes on in terms of potential closures and vacancies?

Everyone has had their eyes on JCPenny and Macy’s for some time now, but neither are close to where Sears has been. Expect shifts – including the closures or downsizings of underperforming stores – but as long as these retailers continue to refine their branding and positioning, they should continue to attract consumers.

What advice would you give to a shopping center owner who is worried one of his/her anchor tenants may vacate?

The outlook of every shopping center or mall is different based on size, location, market, etc. However, all require creativity and capital to continue to thrive. If you aren’t willing to be creative, or don’t have the capital, then it might be in the best interest to sell. There are ample ways to reinvent a shopping center, but it does not come easy.

What do the Sears closures tell you about this current retail market environment? Are there any lessons we, as an industry, can gain from these closures, along with other closures that have occurred over the past few years?

Everyone has seen the Sears closures coming for years. The fact that retail is a constantly evolving industry is what makes it such an exciting industry to be a part of.

Nearly 60 years ago, it was all about small Main Street shops in Small Town USA.  Then, 40 years ago, it was about malls. About 20 years ago, the big box power centers took over. Today, restaurants, entertainment and specialty retail reign. Through all of these cycles, it still comes down to one thing: location, location, location. The fundamentals of retail don’t change. Continue to look ahead, study other retail markets, and work with experienced teams – brokerage, architects, real estate mangers, etc. – who have been down these roads before.

 

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