I went to NAOIP’s excellent breakfast series yesterday morning entitled “The Regional Retail Market: What’s Next?” that had several nuggets and take aways. On the panel was Fred Bruning, CEO of CenterCal, Mark New, of New and Neville Real Estate Services, and Cori Jacobs, with the Downtown Portland Clean and Safe District and moderated by John Benazzi of Davis Wright Tremaine. The panelists all shared similar stories for the future of retail in the metropolitan area.
First, according to Mr. Bruning, the City of Portland is essentially the lowest served retail market behind Manhattan and that it had a long way to go before it was overbuilt. This was also echoed by Ms. Jacobs indicating a lot of demand for retail space downtown. I found this to be an interesting fact. If this is accurate, the Portland retail outlook should be very promising over the next several years. Albeit prefaced with the additional pearls of wisdom.
All of the panelists agreed that the future of retail would be the creation of place and experience for the consumer. By this they suggested that the retail game changed decades ago when individuals spent hours at a mall during the week and only went out to dinner every couple of months. People are eating out more, spending less time shopping and when they do shop would like to achieve multiple varied objectives during a shopping outing, such as dinner, shopping, and possibly entertainment. It is that building of place that will attract community (and consumers) to a development.
Mr. Benazzi raised a good question about the impact of the internet on the brick and mortar world. Mr. Bruning had a great anecdote to explain what may be happening. He had a career with Sears in a prior life and indicated that while putting himself through law school he worked selling water heaters. People would come in to look at the water heaters, but order them from the catalogue to save a few dollars. At one point he stated that Sears had about 55% of their sales from catalogues. He intimated that these consumers have simply migrated from the catalogue to the internet. The take away here is that there has always been a segment of the population that shopped this way, it simply has migrated. Mr. New followed-up by indicating that his daughter for instance would buy a dress only after the tactile experience at a brick and mortar. Therefore brick and mortar have always competed with alternative methods for the consumer. It is the creation of the place and experience that will allow brick and mortar retailers to thrive.
Another issue that got raised revolved around the conversion of lower quality B and C retail centers into other uses. One indication of this was an anecdote about a Circuit City off of Halsey being converted to medical offices. Mr. New quite cleverly referred to these as “Docs in Boxes.” Downtown redevelopment of existing retail centers might take tact with underutilized places being assumed by traditional big box retailers such as Target moving into the Galleria. Again, this seemed to indicate that the creation of place and experience could be the death knell to strip commercial.
Again, this was a very informative event. I am interested in other perspectives on this topic as there have not been many retail centers built during the recession with the exception of some CenterCal projects. I’ll leave you with Mr. Bruning’s quote that “When 95% of the hunters have left the forest it is easy to bag some game.”