Western Real Estate Business

OCT 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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46 • October 2018 • Western Real Estate Business www.REBusinessOnline.com I t's no secret brick-and-mor- tar stores are being challenged; however, this doesn't mean retail is doomed. In fact, quite the opposite. There are still plen- ty of storefronts and shopping cen- ters that are thriv- ing, despite the changing industry landscape. Consider two shopping centers in a similar beachside location and with similar demographics. One location is highly successful, while the other struggles to stay open. Why is this? It's become apparent the success of a property is based heavily on the own- er's long-term judgement and deci- sion-making. Tread Lightly With Trends To start, successful shopping centers generally avoid short-term tactics like pop-up shops. Despite their popular- ity, these kinds of tenants are detri- mental in the grand scheme. Typically, pop-up tenants only stay open for a few months and pay a percentage of sales to the owner. This translates into irregular tenancy and makes it ap- pear as though stores are constantly opening and closing—a bad signal to send to shoppers. Pop-up shops can not only damage a property's reputa- tion, but owners often make very little rent from them. It is better to focus on finding strong, long-term tenants that regularly draw in foot traffic. Consumer trends don't always translate into retail success. For exam- ple, athleisure is trending in the fash- ion world right now, but that doesn't necessarily mean you should rush to add athleisure to your offerings. If the shoppers in your area are less fashion conscious or aren't willing to pay a po- tentially higher price tag, an athleisure brand will struggle no matter how popular it is in other places. Ultimate- ly, trends come and go, so do your due diligence before trying to infuse new life into your property with a fashion- forward retailer. Tenant Curation Is Key Store selection should be carefully tailored to the demographics of the area. For instance, tenants in a shop- ping center in Downtown San Fran- cisco should look quite different than a center in the suburbs of Colorado Springs, Colo. For example, there is a healthy food and beverage chain with several locations in high-traffic Cali- fornia malls, as well as one in Malibu. The Malibu location achieves the high- est per-square-foot sales because shop- pers are more health conscious. When you align your tenants and offerings with the interests of your shoppers, everyone wins. Shopping centers need to be espe- cially intentional about providing an array of interesting choices for their customers. This prevents stores from cannibalizing each other's business. If you lease to two women's couture stores, but they target very different shoppers — bohemian versus conser- vative — both stores can succeed. Exciting and one-of-a-kind stores also make the shopping experience more enjoyable. Customers should ideally be able to find something a little different in every store they enter. This means "different" not only from stores on the property, but also different from other nearby centers and storefronts. Unique stores have the added bonus of drawing shoppers from other areas who may not be able to find what you offer in their local neighborhoods. 'Experiencing' All You Have To Offer Today, many shopping center own- ers are turning their properties into entertainment destinations that at- tract people irrespective of stores. Movie theaters, comfortable lounge areas and beautiful grounds with art installations are all popular upgrades that encourage people to spend time at a center (and hopefully shop, too). Even freestanding storefronts can take a cue from this trend. Can you take advantage of your geographic location or make the shopping ex- perience more immersive? Hosting community events is another excel- lent way to increase visibility, connect to shoppers and build goodwill. Find ways to get people to your shopping center, even if shopping isn't their first priority. Finally, remember that your prop- erty is a business and it needs to be treated as such. Invest in marketing, advertising and branding like any oth- er company would. Above all, make sure your tenants reflect the message you want to convey. You want them to help you reach your long-term busi- ness goals. You do not simply want to lease to the first tenant with good credit that comes your way. Hold your properties to a high standard, and you will achieve better results. Michael Koss is CEO and Chairman of Koss Real Estate Investments in Los Angeles. Koss is also the owner and operator of Malibu Country Mart in Malibu, Calif. BRICK-AND-MORTAR RETAIL CAN SURVIVE… AND HERE'S HOW Real-world strategies to ensure your property's survival. By Michael Koss, CEO and Chairman, Koss Real Estate Investments Many shopping center owners are turning their properties into entertainment destinations. Movie theaters, comfortable lounge areas and beautiful grounds with art installations are all popular upgrades that encourage people to spend time at a center. Exciting and one-of-a-kind stores also make the shopping experience more enjoyable. Customers should ideally be able to find something different in every store they enter. Dining is another way to bring traffic into a center, such is the case with Tra di Noi at Malibu Country Mart in Malibu, Calif. Michael Koss Koss Real Estate Investments

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