Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/64804
AVERAGE RETAIL CAPITALIZATION RATE 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 As such, retailers are looking at inno- T e good news for brokers and investors is that brick-and-mortar retail stores are not going the way of the dinosaur. But retailers do recognize the importance of adapting store strategies to meet the demands of a changing retail environment. "T e forward- thinking retailers and merchandisers are partnering and fi guring out how to get more efficiency out of the existing bricks and mortar," Englehardt says. Many retail executives believe that the role of the physical space is shiſt ing from a transactional model to an experiential one, in which customers have a per- sonalized experience with the brand. In fact, 85 per- cent of retail executives polled in the Deloitte retail study indicated that providing cus- tomers with a compel- ling brand experience will become a store's primary role in fi ve years. vative changes to draw more people into stores, such as expanding on the store- within-a-store concept, notes Englehardt. Although this concept has been around for years, retailers hope that partnering with the right brand will create more buzz and help draw added customer traffi c. Sears is leasing 43,000 sf inside its high-performing Costa Mesa, Calif., store to teen clothing brand Forever 21, a prototype arrangement that, if success- ful, could be repeated in other markets. Target is partnering with Radio Shack to house 1,500 mobile phone stores, and is reportedly working on a deal with Apple for in-store kiosks. Signs of Life Other retailers have remained active throughout the recession, notably dis- counters such as Family Dollar, Dollar General, and Ross Dress for Less. T e wire- less stores fueled by AT&T;, Verizon, and Sprint have also continued to aggressively roll out new stores. "T ere are a number of small shop retailers that are actively look- ing and transacting deals. T e challenge is that they are all chasing the best sites," says Jonathan E. Lindsey, CCIM, a broker with T e Shopping Center Group in Bir- mingham, Ala. Fast-casual restaurants are another active segment of the market. For exam- ple, Lindsey represents Smashburger, which recently executed the brand's fi rst lease in Alabama with a location in Madi- RETAIL VOLUME (IN $BILLIONS) Source, all charts: Real Capital Analytics 28 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $- '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 May | June | 2012 Commercial Investment Real Estate Photosindia/Getty Images