Shopping Center Business is the leading monthly business magazine for the retail real estate industry.
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INSTITUTIONAL INVESTORS 126 • SHOPPING CENTER BUSINESS • December 2016 likely in the early stages of our evolution. We have our first major mixed-use project, where we are self-developing a residential tower above retail. This is in Arlington, Virginia. We have been approached by several developers who want to build mixed-use and who want us to be the retail partner. Now that we have the skill set to build mixed-use, we think this could be an opportunity for us in the future. It needs to be a decision that is driven by retail for us, but we are excited about the oppor- tunity to add some element of non-retail space to our portfolio. SCB: Are there other trends in retail that are affecting your decisions? Ragland: I think there is going to be a shift in retail within the next five to 10 years. The intersection between e-com- merce and physical retail is going to get more blurred. If you are dealing with fash- ion, whether that is in lifestyle centers or malls, it is imperative to have asset manag- ers and operating partners that have good tenant relationships and who understand tenant strategies. You have tenants now who are using their physical space as on- line fulfillment or as showrooms. You also have tenants like Apple who are doubling their store sizes to accommodate custom- er service. It all plays in this intersection of e-commerce and physical retail. Vittorio: Food and dining is really chang- ing the industry. The amount of space that restaurants now consume in a regional center has multiplied dramatically. That is partly because the behavior of the U.S. consumer has changed. People are dining out more; that trend may or may not con- tinue. As millennials start forming house- holds and families, will they continue to dine out as much? Will baby boomers who are retiring pick up the slack? It will be in- teresting to see how this plays out because it has had a large impact on the tenant mix over the past 10 years. Wheeler: One issue we are no longer dealing with is the Walmart effect. Our lenders used to always want to know where the nearest Walmart to our center was located. I don't hear that conversa- tion anymore. More of a factor for us is Wegman's marching south, Publix march- ing north, and the expansion of Kroger, Aldi and Lidl. Murphy: It is interesting to me that Am- azon recently announced that they are moving into the bricks and mortar gro- cery business by introducing convenience stores with curbside delivery. I think it's a recognition by Amazon that the pure play delivery of food, particularly so fresh food and produce, to customers, think Web- van, is a challenging economic model. I believe that the ultimate winners in the on- line growth of grocery sales, which will grow significantly over the next decade, will be the market share leading grocery stores themselves bc they already have the bricks and mortar distribution facilities in place within two to three miles of their customer's homes. Virtually all of our gro- cery anchors — Publix, Kroger, HEB, Har- ris Teeter, Tom Thumb — all offer some sort of online program whether its click- and-collect where you order and pick up in store, or partnering with a concierge delivery service such as Instacart. We've been modifying the common areas in our centers to allow this pick up in designated close in spaces and then the customer also O f f i c e O r r e t a i l Whatever your business goals, you can achieve them in the New Downtown shopping districts of Washington Town Center and Plainsboro Village Center. • Strategic Central New Jersey locations • Built-in Customer Traffic • Flexible Floor Plans • Competitive Rates • Conveniently Accessible from Major Roads and Arteries: NJ Tpke, Rtes 1 and 130, and 195 • Broker Co-op OFFICE AND RETAIL SPACE IMMEDIATELY AVAILABLE 609.918.2400 ext. 38 Your dream BUSINESS deserves a DREAM LOCATION sharbell.com