Shopping Center Business

MAY 2017

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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UNIVERSITY RETAIL 326 • SHOPPING CENTER BUSINESS • May 2017 SCB : What are the misconceptions of re- tail on college campuses? STEIN : The buying power is a major mis- conception. Students have a tremendous amount of disposable income that is spent on goods, services, food and bev- erage, and apparel. College students are typically not putting money away in their 401(k)s. They do a disproportionate amount of spending in retail environ- ments. Because of that, when you start to look at spaces that have critical mass — institutions with 25,000 to 40,000 un- dergraduate students — you are looking at a huge opportunity for retailers. Layer on top of that, the faculty and staff that are directly correlated to the number of stu- dents enrolled in the institutions, visitors, as well as guests, and there is a large organ- ism that has tremendous buying power. SCB : What types of retailers are you see- ing most interested in space on or near college campuses? STEIN : When we take a look at the group within retail who is best positioned to take advantage of this audience, it is food and beverage. F&B is occupying the biggest part of the pie for those seeking sites near college campuses. We are seeing a lot of competition within that space. Behind food and beverage, there is a push from innovative retailers to right-size their con- cepts for the college market. Target has a flexible footprint concept, called Target Express, that it is strategically placing near college campuses. It includes grocery, pharmacy, goods and sundries, as well as some apparel and food-to-go. You can go in for lunch and buy everything you need, including vacuums, linens and household goods. I think you will start to see more retail users get smart about tailoring their merchandise to students. You will also see more retailers who are rolling out brick- and-mortar concepts targeted to select audiences. SCB : Mixed-use has made its way to col- lege environments. Is this retail below residential causing any issues? STEIN : There are very few retailers who have ever been sustained solely by the residential units above them. One of the things that makes food and bever- age great is that it creates a destination because consumers have an opportunity to go somewhere with a group of people and spend time. Everyone can experience something differently but walk away with the same end product. Retail works best with strong co-tenancy. There are several on-campus projects now that are trying to capitalize on this — USC Village, the University of Southern California's new mixed-use project, and Storrs Center near the University of Connecticut are great ex- amples. Both of those are mixed-use proj- ects that act as shopping centers for the surrounding community while providing student housing. With our clients, we try and look at what the market needs. In a lot of cases, retail needs are not driving that decision-making. Instead, decisions to add retail in a university environment are driven by placemaking and goals for activation. When universities or planners get outside the goal of what is needed, things can go awry. You have to take a look at practical matters like parking avail- ability and the competition within the im- mediate and larger trade area. The more complicated and larger scale the project, the more practical it is to talk about this earlier. SCB : Are there retailers and restaurants seeking locations on or near universities as part of a larger initiative to capture consumers early in their spending habits? STEIN : By and large, college aged consum- ers are making decisions on what they buy are doing so in an independent way for the first time on their own. The idea of introducing a brand to a customer early on, whether it be a bicycle, clothing line, or coffee, has value. It is difficult to quan- tify that because so much of that deci- sion-making is based on the convenience factor of what is available to them. I be- lieve that there is a tremendous amount of synergy in introducing brands to buyers and consumers early in their cycle of buy- ing. If I buy a Trek bicycle when I'm in col- lege, does that make me a Trek buyer for life? I am not sure. One of the things more than the actual product is the lifestyle that is associated with the brands. A lot of that is communicated through the physical placement and placemaking of the stores. We are seeing a lot of concepts rolling out that are getting away from the cookie-cut- ter model where every store looks and feels the same. Retailers are getting into unique design components that create an authentic feel for that particular location while communicating the brand. From an operational standpoint, the managers need to know that store number seven is the same as store number seven hundred. Placemaking and authenticity communi- cate the lifestyle of a brand, and that res- onates with consumers. We see this with legacy retail locations and alumni when they come back to campus as much as we do with students. Memories are created from our experiences of being in physi- cal spaces. One of the most fun aspects of my job is figuring out what resonates with students and residents in these hyper local markets — what they find to be au- thentic. The college consumer today is as sophisticated as anyone. They've grown up with the internet and by and large have had smart phones their entire lives. SCB : How do rental rates compare at col- lege campuses? STEIN : We often see incredible value — outside of the urban core — in these college markets. A lot of the value that is found is, candidly, not in the new con- struction, mixed-use projects. It is usually found in the older real estate owned by locals. Retailers want unique locations and are oftentimes only going to open one location. Some retailers and restau- rants have incredible sales numbers in comparison to chain average in smaller university markets. SCB : What are the intricacies of operating in a college environment? STEIN : Some retailers and restaurants have been very successful at figuring that out. The best, in my opinion, are the regional retailers and restaurants who are in the 10 to 15-unit range. They understand that they have to staff up when students come back to campus in the fall. They have to add supplemental staff during football and alumni weekends. That is something that good operators only learn with time spent in college environments. SCB

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