May 30th, 2017
By Natalie Dolce
LAS VEGAS—CREC VP Rafael Romero tells GlobeSt.com about how chef-driven restaurants are driving heavy traffic to shopping centers and why regional malls will not go quietly into the night in this EXCLUSIVE article on the hottest retail topics from this year’s big event.
CREC Vice President Rafael Romero
LAS VEGAS—GlobeSt.com recently caught up with Rafael Romero, vice president of CREC, a leading independently-owned commercial real estate firm in Florida, to hear his top five takeaways from the 2017 ICSC RECon conference in Las Vegas.
Below are Romero’s notes the “hottest” retail topics that were top of mind this year for industry pros:
Chef-driven restaurants drive heavy traffic to shopping centers
“We are seeing a new wave of innovative restaurants driving critical mass and showing landlords/brokers that the chef really matters. The concept and value of chef-driven restaurants, often by notorious and prized culinary masters, are serving as a successful formula to significantly draw demand to lifestyle centers in need of a new retail ‘palate’ and steady foot traffic,” he says. “However, although your area’s hottest chef may be a culinary genius, that doesn’t always ensure financial success. It’s important to note that when digging into a restaurant deal, there are several economic and business fundamentals to consider.”
Regional malls will not go quietly into the night
Not all malls are created equal, says Romero. “Analysts continue to blame the internet as the driving factor contributing to the decline of malls but we are still seeing ‘Class-A’ assets thrive as a result of a premier selection of retail and restaurant tenants successfully targeting the affluent communities they serve. Conversely, ‘Class-B’ and ‘C’ malls are struggling to find customers and keep tenants, as anchor department stores such as Sears and Macy’s continue to shutter,” he says. At this year’s conference, GGP, Simon, Westfield and other major mall developers and operators showcased their tenacity to keep regional malls thriving, he explains. “The sentiment is that mall owners remain heavily active to generate exciting deals, while fostering new levels of creativity to backfill impending vacancies.”
The sky is not falling
Although the recent wave of big-box store troubles continues to make headlines and there has been a slew of recent retail closures, the fact that national vacancy is at approximately 5%, according to Romero, is a strong indication that we are still experiencing a healthy retail market. “While sector readjustments will naturally be made to combat big-box retail challenges and the age of online shopping, the sky is definitely not falling,” he says. “The future looks bright for the retail community.”
Discounters are growing and absorbing square footage
Within this changing retail landscape, fueled by the closure of iconic big-box retailers, the squeeze from the internet is not the only pressure felt in the industry, says Romero. “The off-price retail sector is actively thriving. Consumers are increasingly gravitating to discounters, such as T.J. Maxx, Marshalls and Nordstrom Rack, that can offer many benefits not seen at department stores—discount prices, changing product mix and that thrill of hunting to find the perfect item. We cannot ‘discount’ these retailers from the conversation.”
Grocery stores will take a larger piece of the neighborhood center pie
“We are definitely seeing more demand from grocery store giants, with their desire to continue rapid expansion in centers across the country. With new big-name grocers coming to the market and other giants, such as Whole Foods and Fresh Market, further developing prepared foods and unique offerings, margins are anticipated to widen and heighten the threat to other neighboring, local supermarkets and restaurants. We will definitely see the supermarket and grocery store industry remain a hot topic, one that is closely watched in the coming quarter.”