What Will 2016 Hold For Retail

January 4, 2016

As 2015 comes to a close, the consumer confidence index shows that Americans are feeling good about the current economic state. They’re feeling optimistic about the job market, spending more and carrying credit card debt — all good news for retailers hopeful for increased sales and investors banking on greater demand.

Commercial real estate trends are showing slow but steady upticks in national occupancy, supported in part by continued levels of low supply and lagging retail construction. However, developers who have relied on location to attract consumers will have to adjust their strategy in 2016. As online retailers like Amazon capitalize on convenience, brick-and-mortar stores that can offer both value and entertainment have the greatest chance of success moving forward.

One of the most prevalent ways to do this? Include restaurant space within the retail complex. According to Colliers International, up to 30 percent of a mall’s gross leasable area is now allocated to restaurants, market hall concepts and other food-related retail. What’s more, businesses with less online competition such as grocers, fitness centers and service-related ventures can help foster growth. By providing a wider variety of opportunities for shoppers, developers can deliver fun for shoppers while serving sales functions.

Developers wanting to make the most of trend shifts may be best served in redeveloping existing centers. By expanding wherever possible and repositioning properties to attract new formats, investors can build community buzz, create a positive ambiance and increase return on portfolio properties.

That said, the “right-sizing” movement should adjust expectations for the size and scope of shopping centers delivered next year. Plus, as  the demand for retail space will increase over most retail categories, mergers and consolidation will also yield a fair number of store closures. As a result, net occupancy growth may remain flat over the course of 2016.

Want to position your retail properties for success in 2016? Contact Intelica. We can help you evaluate the strengths and opportunities your portfolio holds, so you’ll be positioned to profit from commercial real estate trends.