Western Real Estate Business

SEP 2018

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

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52 • September 2018 • Western Real Estate Business www.REBusinessOnline.com beyond, thanks to a few key regions that make access and implementation easier here than in other parts of the country. "Given all of the venture capital funding in Silicon Valley and other markets, there's no shortage of click- to-bricks concepts with advanced, customer-centric models," he says. "Retail landlords can do a lot on the technology and data side as well, and owners like Westfield have certainly been working hard to assist their ten- ants in ways not traditionally done in the past." The fear that technology and online shopping will bring about the demise of brick and mortar is unfounded, however, according to industry ex- perts and stats. "The Internet was long looked at as the enemy of brick-and-mortar re- tail, yet we have found so-called om- nichanneling is actually helping to drive more transactions to traditional stores," Moore asserts. "This is a trend that will only gain momentum." Randall Lewis, executive vice presi- dent of marketing for Lewis Group of Companies in Upland, has seen the positive effect of e-commerce and om- nichannel firsthand at its centers. "E-commerce is growing, of course, yet that growth has not negatively impacted our centers," he notes. "The larger retailers with whom we work are definitely quickly adopting technology and smoothly offering an omnichannel experience, be that ac- cepting returns from online purchases in-store, or offering grocery delivery if customers prefer that option and part- nering with Uber Eats or others for restaurant food delivery service." A 2017 Harvard Business Review Study showed retailers who created more than one shopping channel for customers increased the average time spent on each shopping occasion in a brick-and-mortar store by 4 percent and on an e-commerce platform by 10 percent. This has led Lefko to surmise that a stronger marriage between on- line and brick and mortar will result in a happier family for all. "There is a direct correlation be- tween the number of omnichannels a retailer implements and the increase in sales," he says. "During the 2017 holiday season, desktop computer shopping outpaced mobile device shopping by almost three times, but the significant statistic is that retail- ers who had a shopping platform for desktop computers, smartphones, and brick-and-mortar saw a 3 percent increase in the volume of sales per transaction." This marriage has also, naturally, brought e-commerce-only retailers into today's hottest shopping centers. "Tenants that lack an online presence and those that are slow to adapt ef- fective e-commerce strategies will contin- ue to see their sales decline in the near future," says Bryan Ley, managing direc- tor in HFF's Los An- geles office. "On the flip side, e-commerce retailers have to have an offline presence, because shipping costs and e-commerce ad- vertising make it expensive, and a brick-and-mortar presence is an easier and more cost-effective customer con- nection." Ley cites Amazon Bookstores, Ama- zon Go, Warby Parker and a variety of cosmetics brands as prime examples of the allure brick-and-mortar can have on web-based companies. Technology is not all sunshine and roses, however. The downside to these innovations is that many retailers now require less merchandise and, there- fore, space in shopping centers. The barrage of start-ups and e-commerce companies now rolling out their first few stores have also made lease nego- tiations tricky at best. "Landlords are having to figure out challenges, such as how to approach percentage rent when people are showing up at stores simply to show- room or make returns," Thompson says. "As yet, there are no easy an- swers to these issues." One seemingly "easy answer" that Lewis has found is this: embrace change, give people what they want and design for tomorrow today. "Our new centers are focused on the experiential tenants most sought after today," he explains. "Because Lewis Retail Centers develops community centers without department store an- chors, we don't anticipate having any of our major tenants leaving en masse in the near term. Rather, we antici- pate having the luxury of finding the best cinema operators, the best fitness companies and the best-matched din- ing experiences to bring into our new centers, as well as to refresh our exist- ing centers." He points to Renaissance at Rialto as one example of the firm's portfolio- wide strategy. The 430,000-square- foot shopping, dining and entertain- ment center in Rialto is anchored by Cinemark XD (Extreme Digital Cin- ema) and 24 Hour Fitness. The cen- ter also has a large variety of healthy, fresh quick-service restaurant op- tions, including the Habit, California Fish Grill, Ahi Poke Bowl, Pho '77 and Panera Bread, and discount shopping options, including Five Below, Ross and Grocery Outlet. "This is the kind of center that Cali- fornians seek today," Lewis contends. "Our newest centers emphasize clean, modern architecture, and the inclu- sion of gathering spaces with benches and fireplaces to give our customers a fresh environment each time they visit. We anticipate that the centers we are building now will be copied around the nation over the next five- plus years." Retail lines the base of Civita, a new ground-up multifamily community in San Diego, creating a dynamic day-to-evening environment designed by KTGY Architecture + Planning. Renaissance at Rialto is a 430,000-square-foot shopping, dining and entertainment center in Rialto that is anchored by Cinemark XD and 24 Hour Fitness. The property is owned by Lewis Group of Companies. Ley

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