Some Things Change: Location, Location, Location… Doesn’t
April 21, 2021
For some, the thought of retail real estate conjures up images of vacant big box stores, for lease signs, and the remnants of once prosperous shopping malls. While the COVID-19 pandemic did not do any favors to lessen this narrative, it was the catalyst that permanently shifted the future of retail real estate. Altering how, when and where sites are selected as well as proving to us all just how true the adage “innovate or perish” is today.
The pandemic brought about an accelerated shift in the retail landscape as consumers now put a premium on convenience. Once on the horizon, curbside pickup and deliveries became a necessity at the onset of the lockdowns. Many successful retailers who were already in the process of integrating these strategies into their business, were forced to act quickly in order to reach a contactless consumer. As an example, Target had a three-year strategy to implement curbside pickup; the pandemic hit, and they executed this plan in three weeks. We have seen quick service restaurants that historically have not required a drive-through calling for all new locations to not only have a drive-through but designated curbside pickup stalls. These quick service restaurants are also adding kitchen space to accommodate the increase in their online orders. One example of this is the new “Chipotlane” where the drive-through is for the pick-up of online orders only.
Many brick and mortar retailers still see their physical presence as a critical means to reaching traditional customers but have also been able to use these locations to serve as pickup destinations for e-commerce orders. Whole Foods is a prime example as they recently incorporated Amazon Hub pickup locations within their stores and in turn have seen tremendous success and customer engagement. As this omni-channel trend grows, so too will the need for strategically placed distribution centers to service the increased demand in online sales. Data from the U.S. Department of Commerce shows e-commerce sales during the 2020 pandemic year hit $791.70 billion in 2020, a 32.40% increase from the prior year. However, e-commerce sales represented just 14.00% of total retail sales in 2020, and although this percentage will continue to increase as retailers streamline their omni-channel strategies, it exemplifies the need for brick and mortar retail.
Locally the development has not slowed down during this pandemic. In Omaha we are starting to see several new landmark developments such as Heartwood Preserve, Riverfront, Avenue One, and Gene Leahy Mall begin to materialize, as well as the long-awaited demolition and redevelopment of outdated shopping malls such as Crossroads and Mall of The Bluffs. The takeaway is those that are able to pivot and adjust appropriately to a changing world and consumer will continue to prosper, those that do not will need a value proposition that is still compelling. Throughout this new cycle The Lerner Company will continue to anticipate, strategize, and innovate in order to meet the needs of our clients in this ever-changing retail real estate landscape.
Adam Maurer | Associate Broker, The Lerner Company