Chain Store Age - May/June 2019

May/June 2019

RECon Report New Store Concepts SPECS Wrap-Up

PropTech Brick and mortar’s answer to Amazon?

OneMarket’s Joe Polverari

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100

from the editor’s desk

26

tech viewpoint: a retail tech column

a real estate column

Contents VOL. 95 MAY/JUNE NO. 3

COVER STORY

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New PropTech ventures are bringing data analytics and digital transformation to brick and mortar.

CHAIN STORE AGE

C H A N N E L S > C Ochainstoreage.com MMERCE > CUSTOMERS

RECON

SHOW SCOOP Four ways food will change retail centers 10 Under 40 rising stars of retail real estate

FEATURES

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Cannabis-related retailing is taking off.

CSA honors winners of annual Breakout Retailers Awards.

Cover photo: Cody York

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Commentary: Women are out of sight, out of mind of senior executives.

Grocery’s surge continues RPAI’s take on Texas

THE GREAT CENTERS OF

OHIO

Hudson Yards’ big debut

ALSO • Top developers by aisle • Key property profiles • Booth highlights Bob Stark at Eton Chagrin Boulevard in Woodmere, Ohio 21

REAL ESTATE

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CSC 2019 Show Scoop Get ready for the big retail real estate event of the year with booth previews, a guide to top developers and intelligence and commentary from industry leaders and top researchers.

CSA (USPS 054-410; ISSN 0193-1199), is published bimonthly by EnsembleIQ, 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631, on a controlled basis to qualified retailer titles and architects. Real estate and shopping center owners and developers $75 per year. All other nonqualified $119 per year. $129 per year for Canadian subscribers; $225 per year for foreign subscribers, air-mail only. Single-copy price: $18. Periodicals postage paid at Chicago, IL and additional mailing offices. ­POSTMASTER: Please send address changes to CSA, Circulation Fulfillment Director, P.O. Box 3200, Northbrook, IL 60065-3200. Subscription changes may also be emailed to chainstoreage@omeda.com, or call 847-564-1468. CANADA POST: Publications Mail Agreement # 40612608. Canada returns to be sent to Bleuchip International, P.O. Box 25542, London, ON N6C 6B2. Vol. 95, No. 3, May/June 2019. Copyright ©2019 by EnsembleIQ. All rights reserved.

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Contents VOL. 95 MAY/JUNE NO. 3

92

STORE SPACES

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SPECS 2019 Recap Wrap-up section on Chain Store Age’s 55th annual SPECS conference, which is devoted to physical retail.

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Irish retail giant Primark pulls out all the stops with its massive new flagship, which comes complete with a Disneythemed café.

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Retailers deploying virtual reality and augmented reality solutions to enhance store experience.

Trending Topics: Target’s LED initiative, Walmart’s robotic floor scrubbers, Whole Foods energy storage program and Starbucks’ new solar investment in the spotlight.

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H&M gives fast-fashion a revamp with upscale, lifestyle-focused store

GNC is applying data analytics and lessons from online retailing to its extensive brick-and-mortar operation.

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Shop Talk: Showfields bills itself as “the most interesting store in the world.”

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TECH

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FROM THE EDITOR’S DESK

The Future Is Now What will the stores of the future be like?

Will there even be stores? As shopping centers evolve, what types of new tenants will they be looking for to build traffic?

These are just a few of the questions that are sure to be top of mind for the shopping center owners and brokers who gather at the end of May for RECon, the annual retail retail estate confab.

While no one can predict the future, I’m feeling optimistic about brick-and-mortar retail these days. And I say that well aware that the industry has seen major store closings this year amid bankruptcies and a couple of big liquidations — mostly by chains that failed to keep pace with industry trends and/or were burdened with debt. Even more jolting to many industry folks was the report by UBS projecting that retailers will need to close about 75,000 stores (excluding food) by 2026 due to increased e-commerce penetration (the report predicts online will account for 25% of total sales by then).

The report sent shockwaves throughout the industry. But veteran retail analyst Greg Buzek, founder and president of IHL Group, took a deep dive and found it came up wanting in that “it relies on math almost exclusively at the exclusion of existing retail trends, with an inherent bias towards online trends as the primary and preferred future of retail.”

Buzek’s biggest concern about the UBS report is that the math assumes all e-commerce sales and growth will be for delivery of goods only.

“It excludes buy online pickup in store and click and collect, which are the two areas of e-commerce that are growing the most by far (five times the speed of overall e-commerce),” he said. “To do these, a retailer needs stores. Excluding this trend

in the analysis is a huge problem for me when the conclusions are so sensational.”

(IHL Group predicts that online will be 25% percent of the total retail market by 2021, but 80% of all retail will have a store fulfillment component.)

While much attention is focused on the retailers closing stores, less is given to those doing the opposite. A recent report by NRF and Forrester Research found 54% of surveyed retailers plan to open new stores in 2019, and 36% of those surveyed will have a higher store count than in 2018.

Only 7% of respondents said their net store count would decrease.

Among the retailers opening stores this year are such familiar brands as Five Below; Levi Strauss & Co.; Lands’ End; Ulta Beauty; TJX Cos.; Ross Stores; Dollar Tree; Dollar General; Aerie; and Ollie’s Bargain Outlet to name just a few. The grocery sector is on fire, fueled by growth from German discount giants and homegrown players as well. Meanwhile, many digital native retailers — think Indochino, Untuckit, Fabletics — are growing their already considerable physical footprints and newbies are taking the plunge.

At the same time, savvy retailers continue to adapt to the transformed retail landscape and consumer trends. Some are making big investments in remodeling.

Others are rolling out new formats. Ikea debuted a downsized model for urban locations; Stage Stores is converting many sites to its off-price Gordmans’ banner; 7-Eleven unveiled a “lab” store with a host of innovations; and Godiva recently unveiled its first-ever Café Godiva in the U.S. (with lots more to come).

And then there are new players that are upending the retail model. Concepts like Neighborhood Goods and Showfields are reinventing the department store by offering brands quick-to-market storefronts, flexible leases, design fabrication, staffing and technology.

All of this is just the tip of the iceberg.

I can’t think of a more exciting — or innovative — time in retail.

An EnsembleIQ Publication

Corporate Office: 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631

Vice President, Brand Director (CSA) SPECS Chairman Gary Esposito (212) 756-5118, gesposito@chainstoreage.com

Editor Marianne Wilson

(212) 756-5261, mwilson@chainstoreage.com

Technology Editor Dan Berthiaume

(978) 994-1881, dberthiaume@chainstoreage.com

Real Estate Editor and Manager Al Urbanski (646) 957-5224, aurbanski@chainstoreage.com

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Publishers of Chain Store Age, Hardware + Building Supply Dealer and Drug Store News.

Subscriptions/Customer Service: For subscription problems, call (847) 564-1468, email chainstoreage@omeda.com or mail us full details, including the mailing label from the last copy you received, along with your telephone number. Write to CSA, Subscription Department, P.O. Box 3200, Northbrook, IL 60076-3200. Address changes can be made online at chainstoreage.com/subscribe. Single-copy price: $18. Circulation List Manager: Elizabeth Jackson, MeritDirect (847) 492-1350 x318.

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Marianne Wilson mwilson@chainstoreage.com

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CHANNELS chainstoreage.com > COMMERCE > CUSTOMERS

Executive Chairmain Alan Glass Chief Executive Officer David Shanker Chief Financial Officer Dan McCarthy Chief Digital Officer Joel Hughes Chief Innovation Officer Tanner Van Dusen Chief Human Resources Officer Ann Jadown Executive Vice President, Events & Conference Ed Several

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COVER STORY

The Promise of PropTech Retail real estate developers and third-party managers bring data analytics to brick and mortar.

BY DEBBY GARBATO

I

t’s a familiar experience. A customer needs an item that’s either difficult to locate or not worth the time it takes to buy in a store.

Could be a red-tinted furniture stain to match a chair in her home. She drives to the nearest home improvement store and spends five minutes hunting aisles for the product, only to find the retailer doesn’t carry it. But there is an alternative solution, which is rapidly becoming universal. The customer goes to Amazon. com, where she is immediately recognized and greeted. She types in “red wood stain” and is quickly presented with two options. She makes her selection, with the knowledge that two days later the stain will be on her doorstep. A total of 47 seconds has elapsed.

Because nearly all Amazon’s sales volume is digital, it knows everything about the purchase history and habits of all of its customers. Yet e-commerce powerhouse that it is, Amazon and other internet sellers are able to track less than two out of 10 retail purchases. That’s because store sales still far outnumber online sales. According to the Commerce Department, the 2018 score was Brick & Mortar, $3.6 trillion, e-coms, $517 billion.

So how does brick and mortar collect all the ones and zeros of consumer data intelligence in a mall or shopping center setting?

Serious headway is being made in answering that multi-billion-dollar question by so-called PropTech ventures. Best known, perhaps, is OneMarket, the former Westfield Labs unit that spun off from the big mall owner in 2017. CBL Properties took Westfield’s cue and formed an innovation division that is employing in-center technology to home in on the habits and characteristics of mall shoppers. And CBRE is employing massive mobile data to help both its retail and center-owner customers determine optimum locations and store sizes.

Through OneMarket’s Hadley customer engagement program, retailers can give opted-in shoppers a Live Receipt following an in-store

or online purchase. Delivered via the shopper’s preferred channel (email, Facebook Messenger, etc.), it lets customers engage with the retailer in real time to receive order updates, track packages and initiate returns.

Retailers can access collected data about online and offline shopping patterns, use of branded credit cards, loyalty programs, services and more. Data can be crunched to reveal general customer trends online and off. Depending on the services a retailer buys, Live Receipt can also track what customers viewed online and purchased in-store. When retailers join forces, it can track behaviors across multiple stores.

“You begin to understand how they develop as a customer through time,” said OneMarket CEO Joe Polverari. “A week ago, I had three Susans— online, offline and a loyalty card member. Now I have all the history united and one Susan. Once you close the loop, the retailer better understands who customers are and can do more for them. It removes friction.”

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Customers who choose Live Receipts tend to engage with each transaction 4.5 times, said Polverari. For example, they bought shoes and then purchased socks or wanted pants tailored. They also transact 24% more frequently than others and spend 29% more in subsequent purchases.

Another initiative, OneMarket’s Shopper Exchange Service, uses proprietary shopper data to help retail clients build detailed customer profiles that drive highly targeted advertising campaigns, a service it created while still part of Westfield (now Unibail Rodamco Westfield).

DEVELOPERS WITH DATA

In 2017, URW introduced Insights Portal to its malls, eye-level ad displays that allow brands to track minute-by-minute campaign performance measurement, dwell time and user

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WHERE’S HOOTERS GONNA BE?

By Debby Garbato

demographics. The portal’s real-time analytics allow advertisers to choose which execution is served to individuals based on their preferences or demographics, according to Ghadi Hobeika, URW’s chief marketing officer and director of digital & data.

Digital wayfinders in URW malls help shoppers locate specific stores or product categories.

“We’re asking Google and Apple to map our mall locations as accurately as possible and have them available in their apps,” Hobeika said.

CBL is embarked on a renovation campaign at some of the 62 malls it owns and operates nationwide. A high-priority of its initiative is to install all-new fiber optics networks, allowing it to conduct dynamic heat mapping and to track dwell time, traffic patterns, and overall customer journey. “We want to put in systems that with enough scalability and flexibility to cover our bandwidth needs for the next 15 years,” said Jim Ward, VP of innovation and new business ventures at the company.

Late last year, CBL Properties began a pilot program with a few national retailers which it powered with common-area data and in-store data from a Wi-Fi platform and optical sensors. “There was a lack of meaningful, actionable data at the real estate level. If you want to enhance store performance, it’s a question of how you’re going to partner with tenants to help them leverage data and make better decisions,” said Ward.

A fourth-quarter pilot program was conducted with two national retailers. Optical sensors monitored traffic and captured age and gender data, but not personally identifiable information.

There were surprises. One store skewed older and much more male than previously thought.

The data, which was both unique and actionable, led to numerous discussions with the retailer on how to best adjust its product mix and window displays.

CBL has also purchased massive amounts of mobile data that indicates where shoppers are traveling from, ensuring that marketing initiatives align with what the data is revealing.

”The game’s on,” says the Hooters waitress in a recent TV commercial. “Where you gonna be?”

Where Hooters is going to be is in a lot more locations. Since Mark Whittle became chief development officer of Hooters six years ago, the restaurant brand has opened 32 new locations. In the six years preceding Whittle’s arrival, it opened just about half a dozen.

Location analytics was the accelerant in this growth spurt at the 300-store chain.

Whittle was an early adopter of the data provided by CBRE’s Forum Analytics unit, having used its services to guide expansion at Focus Brands and Huddle House going back more than a decade.

“We made a conscious decision to open new stores and this has been an important instrument,” Whittle said. “It helps determine if certain things would be better or worse for you, considering things like being close to Walmart, average household income, or if a community is a certain percentage Hispanic.”

Hooters uses the intelligence to troubleshoot existing stores and share the findings with franchisees and managers. “We get a model report we run against existing stores. You can look at underperforming locations based on what the model says and talk intelligently to operators about how they can increase sales,” Whittle said.

Location analytics helps Hooters ensure that pricing and labor rates are in line with its store rental rates and average household incomes. It can even be used to tailor menu items by location and increase profits. “If we launch a margarita drink, we can see how it did in urban, suburban, or small-town markets. We may find that a new Buffalo chicken dip did better with Anglos than with Hispanics,” Whittle noted.

The system is not perfect, but it sure beats the old way, according to Whittle.

Yet be forewarned, the more expansive the store network, the more data there is for determining patterns, and the better the results.

“You need hundreds of thousands of data points,” said Paul Sill, global retail analytics practice leader at CBRE and founder of Forum Analytics. “You want to tell the client they have a 70% chance of doing $2 million in a certain location. It’s not for a company with a few locations.”

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COVER STORY

SMART STORE SELECTION The availability of massive mobile data is going a long way toward helping retailers determine where they should put their new stores, what rent they should pay for them, how big they should be and how much revenue they can expect to see from them.

“For every retail chain, there’s a big empty box somewhere and that retailer wants to know if it could work for them,” mused Paul Sill, senior managing director and global retail analytics practice leader at CBRE. Sill arrived at CBRE four years ago when the global real estate giant acquired Forum Analytics, a company Sill founded in 2001 to provide mapping solutions driven by data and analytics. Using machine learning and massive mobile data, Sill is one of a growing number of real estate professionals providing retailers with unprecedented levels of actionable data on malls, tenants and shoppers. Information that Sill and Forum can provide ranges from the demographics of passing foot traffic to facts regarding competitive businesses to neighborhoods where shoppers live and the origins of shopper traffic into the mall. Today’s PropTech masters can even predict a retailer’s chances for success and the reasons for those predictions.

“Understanding trade areas used to be an art form,” said Todd Caruso, senior managing director, CBRE, harking back to a time when store location decisions were made by tapping Department of Transportation records and housing data and drawing trade area circles around malls on maps. But retailers and developers are finally augmenting their art with science, he said.

“Technology illustrates who’s shopping a center today, something that was never a part of the art form.

It has transformed how we define the customer base on the ownerinvestor-retailer side,” Caruso added.

The growth of WiFi, the Internet of Things and 4G networks have made many newer mall technologies possible and feasible. Over the next year, data’s influence on the marketing of physical retail will become even more powerful when 5G applications begin to take over. Twenty-five years after the founding of Amazon, brick and mortar sellers are harnessing artificial intelligence and machine learning to track consumer habits, make merchandise suggestions, and efficiently process and apply big data.

Sill has been using machine learning for more than 20 years, but availability of massive mobile data — collected from smart phones in geo-fenced areas surrounding shopping centers — has given an added boost to PropTech’s capabilities. Now Forum can examine the demographics of the neighborhoods from which most shoppers are visiting a given store or center to determine that customer base’s average age, income, household makeup and other factors.

Machine learning can serve as a crystal ball for a retail real estate manager. If a rapidly expanding retailer has 500 stores and wants to open 500 more, big data can determine why some stores will generate $10 million and others only $1 million. That real estate manager can then determine how much revenue an additional store should generate in a given market. He or she can also offer projections about proper assortment staffing mixes, sizes of boxes and complementary tenants.

MACHINE LEARNING VS. ARTIFICIAL INTELLIGENCE These two terms are often used interchangeably, but they are not the same thing.

Using customer data, artificial intelligence calls on previous patterns to predict next actions and help marketers understand shoppers’ desires and motivations.

Machine learning is a subset of AI that applies rule-based algorithms to large amounts of data to “learn” patterns and trends. It swallows big data whole, in some instances crunching more than 100,000 data points from scores of millions of customers to winnow out common habits.

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Under its ShopoGraphics banner, Forum segments markets into 37 geographic zones of retail activity with names like “Gas N’ Grub,” “Soccer Mom Pit Stop,” or “Hoagies & Hipsters.”

Using machine learning, ShopoGraphics relies on more than 1.4 million data points that include factors like “urbanicity” level and presence of big box retailers. By studying repetitive geographic patterns, ShopoGraphics can help estimate performance, identify ideal co-tenant mixes and provide cross-shopping insights for a retail chain.

“You want to be able to tell the client they have a 70% chance of doing $2 million at a location,” said Sill.

CBRE also applies massive mobile data in Dimension, a three-year-old proprietary mapping tool. Dimension combines information from public sources like the U.S. Census Bureau and the DOT with data like grocery sales, aggregate credit card spending, and proprietary information from CBRE’s brokers and researchers. Data combinations are presented in a digital map format.

Dimension helps real estate professionals find lucrative locations and opportunities at a nationwide or local level via their smart phone or iPad, according to David Gervais, a retail location manager at CBRE. “You can drive around and have it at your fingertips rather than carry a big binder,” he said.

The service has helped retailers learn when a center is not attracting customers from where they thought it was. Hill Country Galleria in Austin, for example, used the information it learned through Dimension to tweak customer communications, moving average dwell time from 97 to 135 minutes in a year-over-year analysis. “We thought we were capturing from X miles away, but it was a larger area,” said CBRE’s Caruso.

Chances are that brick-and-mortar retail’s capacity for data analysis will never top Amazon’s.

But one thing’s for sure, at least for the near future. E-commerce won’t match physical retail for the volume of sales to be analyzed.

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NEW CONCEPTS

A New High Cannabis-related retailing takes off

By Marianne Wilson Barneys New York is giving the luxe treatment to cannabis. Tapping into the growing mainstream acceptance of marijuana, the luxury retailer debuted an upscale “cannabis lifestyle and wellness” in-store shop at its Beverly Hills flagship. Barneys plans to expand the concept to additional store locations in the future.

Dubbed “The High End,” the space has a sleek, high-end look (and high prices) that fit right in with the tony surroundings.

It sells a wide range of cannabis-themed products, including custom-blown glass pipes, luxury rolling papers, vintage ashtrays, fine jewelry and other accessories, along with an assortment of CBD-infused beauty and wellness products. (Short for cannabidiol, CBD is the non-psychoactive compound from the cannabis plant.

Advocates say it delivers the calming and therapeutic benefits of marijuana without the high.)

Barneys doesn’t have a license to sell marijuana. But it has entered into exclusive partnership with upscale cannabis company Beboe. Shoppers at the High End can consult with Beboe representatives to order “white glove” home delivery of marijuana. (California is one of 10 U.S. states with legalized recreational marijuana sales.)

“Many of our customers are incorporating cannabis into their lifestyle, and The High End meets this new need in a way that only Barneys New York can,” said Daniella Vitale, CEO and president, Barneys New York. “We are thrilled for customers to visit The High End and its extraordinary selection of products.”

CBD: Barneys has taken its dive into the cannabis-related space a bit deeper than most other retailers who are concentrating on skyrocketing interest in the nonpsychoactive segment of the market — specifically, CBD-infused personal care/ beauty products. In fact, cannabis beauty has become so prevalent that Wall Street

analysts are beginning to treat it as its own category.

Estimates of the CBD market vary (and include more than just beauty). Analysts at Brightfield Group estimate the global CBD market will hit $22 billion by 2022.

Beauty giant Sephora has added a curated section featuring CBD products in select stores. And Neiman Marcus has added CBD products, including balms, lotions, soaps, oils, serums and masks, to its beauty assortment online and in five stores as part of its “trending beauty” initiative.

“Cannabis beauty brands are becoming increasingly popular, and CBD products are the next big thing in beauty,” said Kim D’Angelo, beauty buyer, Neiman Marcus, in announcing the rollout out.

The nation’s two largest drug store chains, CVS Pharmacy and Walgreens, are now selling select CBD-related items, including creams, patches and sprays, as part of their wellness offerings. And GNC is now offering topical cream products with CBD in select stores.

Green Growth Brands: Players new to the retail scene are also stepping up.

Among the most notable is cannabis company Green Growth Brands, which is headed up by veteran retailer Peter Horvath, who previously served in leadership positions at American Eagle Outfitters, DSW and Victoria’s Secret.

Green Growth is moving into the nation’s shopping centers under its Seventh Sense brand, whose CBD-infused personal care and beauty products lineup ranges from body wash and sugar scrubs to muscle balms and foot creams. Price points range from $7.50 to $39.50.

In January, following a successful

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The High End shop, at Barneys’ Beverly Hills flagship, is dedicated to the cannabis lifestyle.

10-store test, the company signed an agreement with footwear and accessories retailer DSW to sell Seventh Sense products in nearly 100 DSW locations.

Green Growth is also opening its own stores. In February, it inked a deal with mall giant Simon Property Group that gives it access to opening Seventh Sense shops in approximately 108 locations in Simon centers nationwide.

“We are constantly on the lookout for cutting-edge new concepts,” John Rulli, president of Simon Malls, stated in a release. “We are committed to adding new and dynamic retailers and uses to our shopping destinations, and the GGB shopping experience is exactly the type of innovation our customers want and expect from us.”

Green Growth isn’t stopping with Simon. At a time when malls are increasingly turning to non-traditional tenants to help fill space at their properties, the company is also looking to partner with other developers as part of its quest to open “hundreds” of locations across America.

“We are pleased with the initial performance of our shops and our e-commerce site, ShopSeventhSense.com,” said Horvath. “The investments we are making in securing premium leases and in designing beautiful shop fixtures not only create amazing consumer experiences but are fantastic marketing mechanisms for our brand. With our eventual footprint of hundreds of shops in high foot traffic locations, we will be gaining exposure to millions of potential customers.”

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AWARDS

Left to right: Mike Mettler, Orangetheory Fitness; John Kennelly, b8ta; Steve Heeley, Veggie Grill; Alexandra Diaz, Adore Me; and Chen Sapirstein, Lolli & Pops

Breakout Retailers: Five Brands On The Rise

By Marianne Wilson

Five dynamic retail, restaurant and specialty brands took home top honors as the winners of Chain Store Age’s annual Breakout Retailers Awards, which were presented at CSA’s SPECS Show in Dallas. The winning lineup for 2019 included Adore Me, b8ta, Lolli & Pops, Orangetheory Fitness and Veggie Grill.

Selected by CSA’s editorial board, the Breakout Retailers Awards recognize brands that are redefining their industry segment and are on their way up — brands that have crossed the “newbie” line and are on track for growth. This year’s awards were sponsored this year by HFA architects and engineers.

Executives from the winning brands were on hand at SPECS to accept the awards and share insights into their companies during a panel discussion.

Representing their companies were: • Alexandra Diaz, UX and design lead, Adore Me; • John Kennelly, general manager of partnerships, b8ta; • Steve Heeley, CEO, Veggie Grill; • Mike Mettler, senior VP of franchise development, Orangetheory Fitness; and • Chen Sapirstein, store development lead, Lolli & Pops.

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Here is an overview of the winners: Adore Me: The digitally native brand specializes in stylish and affordable lingerie for a wide range of body types. Launched in 2012, Adore Me has a growing customer base — currently 11 million strong — and an expanded product mix that includes sleepware and more.

It recently acquired Belabumbum, which specializes in intimate apparel for expecting and new moms.

Adore Me jumped into brick and mortar: last year with an inviting store that combines MAY/JUNE 2019 CHAINSTOREAGE.COM

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the best of digital and physical retailing. With some five stores open, the company sees the potential for 300 locations. b8ta: Disrupting retail comes naturally to b8ta, which is revolutionizing the industry with its store-as-a-service model. b8ta stores give shoppers hands-on accessibility to the very latest tech devices, mostly from start-ups that lack the resources to enter brick and mortar.

The company leases space in its stores to the product makers, who in turn pay a monthly subscription fee to b8Ta. In addition to expanding its own store footprint, the company has launched “built by b8ta,” a turnkey program for direct-to-consumer brands. B8ta essentially gives the brand a set-up store, complete with fixtures, cuttingedge technology, staff and other services.

To date, b8ta has opened 16 freestanding stores, and more are in the works.

Lolli & Pops: Lolli & Pops targets the sweet spot of adults

and kids alike with an assortment of unique candies from around the world. The assortment, sourced from well-known producers as well as local artisans, ranges from specialty chocolates and caramels to cotton candy and marzipan fruits.

As much as the product, the store environment helps set the brand apart. Lolli & Pops shops have an old-fashioned, sweet shoppe aesthetic, and the employees — outfitted with bow ties, striped aprons and straw boater hats — are part of the show.

Targeting regional malls and lifestyle centers, Lolli & Pops is on track to open 20 to 30 locations in 2019.

Orangetheory Fitness: Orangetheory Fitness is not your typical fitness studio. The company offers a heart rate-driven, full-body workout that provides a customized session within the framework of a highly motivated — and motivating — group class.

With an emphasis on coaching, science and the latest in technology, Orangetheory stands out in a competitive market. In just under nine

years, it has grown to over 1,000 U.S. locations, with another 145 in foreign markets. It will open a total of 260-plus locations in 2019.

Technology lies at the core of the Orangetheory experience. The company continues to roll out tech innovations and products in its studios that provide even more personalized data for members.

Veggie Grill: Vegetables are the main attraction at Veggie Grill, which makes healthy eating affordable — and delicious. The fast-casual eatery puts plant-based foods at the center of the plate, serving meals that are completely free of meat, dairy, eggs and other animal products. The focus is on fresh, seasonal ingredients and innovative flavors with a menu that is regularly updated.

Veggie Grill operates 32 restaurants, and more are on the way as the company gears up for its East Coast debut this year. And a new partnership with Sodexo Inc. will bring Veggie Grill to select college and university locations, starting in time for the 2019-2020 school year.

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COMMENTARY

The Invisible Woman Women are out of sight, out of mind of senior executives

By Sarah Alter With the growing realization that flexible work arrangements — a shift in work hours, working remotely or job sharing — are key to attracting, keeping and advancing talented women at all points in their careers, discussion around the relative importance of face time in the office vs. results is heating up.

Many managers are hanging on to outdated views about face time as a full measure of an employee’s value to an organization and are losing outstanding employees as a result.

Still, one type of face time is key to advancing a career — face time with senior leaders.

Employees who interact regularly with their company’s senior leaders are more likely to ask for and receive promotions, according to McKinsey & Co.’s “Women in the Workplace 2018” report. They’re also more likely to stay with their companies and aim to be leaders themselves.

Can you hear me now?

Makes sense. The problem is 33% of the women surveyed for Women in the Workplace said they’d never had a significant discussion with a senior leader about their work (compared to 27% of men surveyed). For some women of color, access is even more limited. Forty percent of black women reported never having a substantive work-related conversation with a senior leader.

Women are also less likely than men to socialize with their managers or other executives outside the workplace. Nearly half of women surveyed said they have never had an informal interaction with a senior leader, compared to 40% of men. Again, many women of color have even less face time with the men and women who create opportunities and open doors. Fifty-four percent of Latinas and nearly 60% of black women said they’ve never had an informal interaction with a senior leader.

At all points in their careers, women have

fewer opportunities to demonstrate their skills, show off their work results or make strategic connections with their company’s career-opportunity gatekeepers. The result: When managers are considering candidates for stretch assignments, leadership development or promotions, they’re more likely to choose a man, because it’s more likely a man is on their radar. A known employee always has an advantage over an unknown employee.

“Women have fewer opportunities to make strategic connections.”

Seeking sponsors One way to level the playing field is to encourage senior leaders to sponsor women. A full 70% of the 70 organizations named 2019 Top Companies for Executive Women by the National Association for Female Executives have sponsorship initiatives.

Companies can support more sponsorship with these five actions put forth by Working Mother magazine: • Expose senior leaders to high-potential talents from different groups, especially underrepresented populations; • Link sponsorship to senior executives’ goals, performance reviews and compensation; • Have clear objectives for sponsorship and communicate to everyone involved • Use employee resource groups to find high-potential women worthy of sponsorship; and • Measure promotion and retention rates of those who are sponsored versus people not sponsored in similar roles.

The NEW Blueprint for Gender Equality, which Network of Executive Women is sharing now with our corporate partners,

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lays out best practices for companies that are working to create a gender diverse and inclusive workplace. While developing this action plan, we found a number of forwardthinking companies that are disrupting the status quo with other practices that promote women’s visibility with senior leaders.

One of our corporate partners, for example, is piloting a program that pairs individuals who are ready to move up to the next role with members of its leadership team for development discussions.

“It’s very straightforward,” the company’s vice president of human resources told us. “Women who may not have a sponsor already are getting that attention.”

J.P. Morgan’s Women on the Move initiative’s 30-5-1 campaign brings women and men together for 36 minutes each week to support women’s growth and development. Participants commit to spending 30 minutes having coffee with a talented up-and-coming woman, five minutes congratulating a female colleague on a win or success and one minute talking up the woman who had that win with other colleagues.

“At JPMorgan Chase, we have a truly amazing group of female colleagues,” J.P. Morgan’s Asset and Wealth Management CEO Mary Erdoes, co-sponsor of Women on the Move, said. “It’s up to each one of us — men and women alike — to ensure they have the support mechanisms they need to succeed, and this campaign is one of the most important ways we can do that.”

Formal, structured development programs that support face time with senior leaders benefit talented women and men, but especially those who may otherwise be unseen — or overlooked.

— Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing 12,400 members in 22 regional groups in the United States and Canada.

Learn more at newonline.org.

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SafePoint®

Comprehensive cash management solutions

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Loomis knows that cash-intensive retail businesses face unique challenges, especially in an industry that seems to modernize and shift by the minute. That’s why we’ve expanded our industry-leading SafePoint solution to be more robust than ever, with powerful and intuitive technology that simplifies the cashhandling process for a new generation of retail.

Titan • Under-counter smart safe solutions for low-to-highcash deposits • Peripheral add-ons available for customization • A great fit for QSR, convenience, and retail operations

• Cash recycler solution for highervolume businesses • End-to-end solution with multiple configurations available • Under-counter cash recycler solution • Ideal for multi-till businesses with medium cash volumes

• A great fit for grocery, retail, gaming, hospitality, leisure, and sports and entertainment

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See our full suite of products at loomis.us/SafePoint. © 2019 Loomis Armored US, LLC. All rights reserved.

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SPECS brings together leaders from the nation’s top retailers and suppliers to learn, share ideas, develop business partnerships and solve problems across the physical retail space.

Discover innovations and ideas to stay ahead of the competition. Form meaningful relationships to elevate your business.

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RECON

SHOW SCOOP Four ways food will change retail centers 10 Under 40 rising stars of retail real estate Grocery’s surge continues RPAI’s take on Texas

THE GREAT CENTERS OF

OHIO

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Hudson Yards’ big debut

ALSO

• Top developers by aisle • Key property profiles • Booth highlights Bob Stark at Eton Chagrin Boulevard in Woodmere, Ohio 21

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Table of Contents 26 28 30 40 42 44

ON THE LEVEL: A REAL ESTATE COLUMN Boomers, Gen Xers rediscovered AISLE GUIDE Quickly locate top developers and managers on the show floor.

BOOTHS NOT TO MISS What you’ll find in the most interesting booths at RECon THE RISE OF COMPETITIVE SOCIALIZING Punchbowl Social, Beercade, and PLAYlive Nation jumpstart retail centers.

5QS FOR STEPHEN LEBOVITZ CBL’S chief executive discusses the redevelopment of his entire mall portfolio.

5QS FOR JEFF EDISON How tech is shaping neighborhood centers, according to the CEO of Phillips-Edison

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OH, OHIO! CSA criss-crosses the Buckeye State on Interstate-71, in search of retail innovation.

GROCERY RETAIL REMAINS A SAFE BET Supermarket openings were up nearly 30% in 2018, thanks to a couple of German grocers. JLL researcher Taylor Coyne on grocery’s continued surge FOUR WAYS FOOD WILL CHANGE RETAIL REAL ESTATE CBRE research head Melina Cordero tells why suburbs will emerge as the hottest areas for food and beverage brands, among other things.

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TOPS OF THE PROPS Properties retailers will want to learn more about at RECon

NEW TENANT TYPES INVIGORATE RETAIL SECTOR More and more, retail locations will ride on the rising tide of mixed-use developments, maintains Marcus & Millichap retail division director Scott Holmes.

WHEN ANCHORS GO AWAY Retail is rife with contradictions. Department stores fall and digitally native brands rise in shopping centers.

International consultant Alan Treadgold brings the muddied picture into focus.

10 UNDER 40 RISING STARS They are star deal-makers, financial wizards, developers par excellence, and tech pioneers, and they’re all young and going places.

A CONVERSATION WITH RPAI’S JASON KASAL Everything you need to know about Texas’s hottest markets from the perspective of a man who oversees 37 centers in Dallas, Houston, San Antonio, and Austin

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HISTORY ON THE HUDSON Hudson Yards, an instant neighborhood, debuts in Manhattan.

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ON THE LEVEL

Boomers, Gen Xers Rediscovered

O

n a recent trip to Ohio to visit some of the innovative shopping centers the state has given us, I made a discovery. Despite everything I’d heard and read about how the retail real estate industry is reshaping centers for digitally inclined millennials and GenZers, I saw a lot of something in these centers that surprised me. I saw a lot of people like me.

Baby Boomers were residents at Pinecrest, were diners at Easton, were office workers at Crocker Park. I’ve covered consumer marketing since before the first millennial was born, and I’ve always wondered why advertisers directed most of their dollars to “highly desired demographics” under 35. That especially confounded me when I passed that age and had three kids, a house, and two cars.

I was spending more money than I ever had and ever did since.

As I make the booth rounds at RECon this year, I know I will hear developers boast about how they are designing projects for new generations, as well they should. They should also, however, be thinking about the needs of the two “lost” generations that make up the biggest portion of their sales.

A recent study from top 10 marketing agency Epsilon pegged baby boomers as the biggest spenders in the U.S. at $548 billion per annum. Next came Generation X — a segment smeared from view, it seems, by the arrival of millennials — with $357 billion. The largest generational

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segment by sheer numbers, millennials, came in third with $322 billion.

Those numbers hold true in CBRE’s fascinating new study on dining-anddrinking’s heightened presence in retail centers (see “Four Ways Food Will Change Retail Real Estate” on page 54). It presents the evidence that Gen Xers account for 34% of food purchased outside of home, Baby Boomers 33%, and millennials just 24%. A rise in single person households, regardless of age, is the biggest determinant of spending at food and beverage establishments, CBRE found.

I hope you will check out some of the other fascinating studies found in this Show Scoop, along with in-depth looks at groundbreaking properties where you are likely to find a home — if you haven’t already.

Happy 70th, Cafaro! The biggest regret of our Ohio trip was being unable to make it to Youngstown and visit the fine folks at Cafaro. With all the talk of pros and cons of enclosed malls, one pro rarely gets mentioned, and that’s the essential role many malls play in their communities. The Cafaro family has donated millions to schools, civic groups, and charities in towns like Alliance, Clarksville, Paducah, and Puyallup.

Founded in 1949 by brothers William and John Cafaro, the company grew to prominence under the leadership of William’s son Anthony and is now led by his sons Anthony, Jr. and William. The two co-presidents were inserted into those communities as teenagers, picking up trash and painting parking lot curbs with maintenance crews. They continue to keep close to the people they serve today, and that’s a big reason Cafaro is thriving after seven decades.

Al Urbanski aurbanski@chainstoreage.com @AlUrbanski (Twitter)

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AISLE GUIDE

RECon 2019

Top Real Estate Developers & Managers By Aisle Cushman & Wakefield C1339

CAESAR’S PALACE CONFERENCE CENTER

The Outlet Resource Group C1351

PREIT

New England Development C1359

see booth highlight

UNIBAIL-RODAMCOWESTFIELD

CENTRAL HALL CAFARO C069SOU VEREIT CO71SOU Brixmor C1006 JLL C1001

Edens C1420 Winick Realty C140F

Bayer Properties N2322V

Casto S267R

Tanger Factory Outlets C145J

WS Development N2201V

Fuqua Development S2735

Vornado Realty C1507

RPAI N2431W

X Team Retail Advisors S276R

Triple Five C152F

Retail Brokers Network C111UNI

Caruso c153J Irvine CompanyOL C1548 Newmark Knight Frank C155L

see booth highlight

Donahue Schriber C163F

LAKE NONA C1124

Shopcore C166L

Woodmont C1212 Weitzman C1264 Vestar C1309

The Feil Organization S249Q

Passco Companies C143L

AVISON YOUNG C152G

see booth highlight

Marcus & Millichap S244Q

Katz & Associates S2634

see booth highlight

STEINER + ASSOCIATES C1124

Levin Management S243S

Centennial N2332V

Madison Marquette C1522

see booth highlight

see booth highlight

Stan Johnson Company S241S

Acadia Realty Trust C143J

CBRE C1024

NATIONAL REALTY & DEVELOPMENT CORP C117G

INVENTRUST PROPERTIES N1920T

see booth highlight

Pyramid Management C1425

Bialow Real Esate C151M

INLAND C1027

NORTH HALL

PHILLIPS EDISON & COMPANY S233Q

Red Mountain Retail Group N2008U

see booth highlight see booth highlight

BUTLER ENTERPRISES C2012

see booth highlight

see booth highlight

Washington Prime Group N2401W STARK ENTERPRISES N2746W

A&G Realty Partners S245S

SDI Realty S293R TRI-LAND REAL ESTATE S293S see booth highlight

see booth highlight

Glazer Properties S308Q

CBL PROPERTIES N2702W

The Sembler Company S320Q

see booth highlight

Triple Five N2872W Taubman N2873X Seritage Growth Properties N3202Y

Ripco C1728

Regis Corporation S323Q CULLINAN PROPERTIES S341Q

see booth highlight

Edge Realty Partners S348N Paster Properties S350Q

Kimco C1739

SOUTH HALL

Cedar Realty Trust S3767

Howard Hughes Corp. C181K

DLC MANAGEMENT S2235

NewMark Merrill Companies S3867

Regency Centers C1849 North American Properties C2066

see booth highlight

Colliers International S236Q

Transwestern C132F SHOW SCOOP 28

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JOIN ICONIC BRANDS AT WOODLAND MALL, GRAND RAPIDS, MI GRAND REOPENING FALL 2019

VON MAUR

®

#1 HOTTEST REAL ESTATE MARKET — Trulia.com 2018

TOP MARKET FOR MILLENNIALS — Business Insider 2018

WOODLAND MALL NATURALLY A PREIT® Property

#1 FASTEST GROWING ECONOMY IN THE US — Forbes 2017

#1 EMERGING US DESTINATION — Groupon 2015

For more information and to schedule a property tour, please contact Meghan O’Connor at 267.713.0856 meghan.o’connor@preit.com

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WHO’S IN THE AISLE

Booth Briefs PREIT

Caesar’s Palace Conference Center With quality malls in compelling markets, PREIT continues to evolve the shopping experience — incorporating unique entertainment destinations, fresh dining options and new and differentiated anchor offerings. With major projects underway in the Philadelphia and Washington D.C. markets, now is the best time to see how your brands can join these top retail centers. Visit PREIT at Caesar’s Palace during ICSCS Las Vegas RECon to learn about our dynamic portfolio and transformative redevelopments.

RPAI

Booth N2431W Meet with our high-class team on the main aisle in the North Hall at ICSC RECon in Booth N2431W to discuss our RE/Development projects and available leasing opportunities within our diverse portfolio of quality assets. We are sure we can match your needs with the right retail center.

Inland Real Estate Group C1027G

The Inland Real Estate Group of Companies, Inc., headquartered in Oak Brook, Ill., sponsors more than 745 investment programs, serves more than 490,000 investors and is one of the nation’s largest commercial real estate and finance groups, representing more than 50 years of expertise and integrity in the industry. Since its founding, Inland has purchased more than $47 billion in commercial real estate across 49 states and continues to be a business incubator, specializing in creating, developing, and supporting member companies that provide real estate-related investment funds, including limited partnerships, institutional funds and nonlisted and listed REITs, and real estate services for both third parties and Inland member companies.

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WHO’S IN THE AISLE

CBRE C1024

As the number one real estate advisory and transaction services firm in the world, CBRE has the reach and capability to serve retailers, restaurateurs, investors, owners and developers across all retail environments.

We operate at the intersection of data and the consumer experience, where information and analytics come together to reveal market trends, and where a deep understanding of consumer behavior informs the physical experience. We call it Retail Science. At CBRE we are passionate retail experts and our mission is to build advantage for every client we serve. Visit booth C1024 and let us help you build a future-proofed plan for success in today’s experience economy.

CBL Properties

N2702W

Recognizing that today’s consumer has numerous options, CBL is adapting its tenant mix to meet the demands of changing preferences and offer a wide array of experiences. Whether through transformational redevelopments, turnkey solutions for e-tailers looking to expand into the physical channel, or investments in new technology — CBL is constantly pursuing opportunities to enhance its core assets and enhance the customer experience. Join us and visit a CBL representative in the North Hall, booth N2702W.

Steiner + Associates C1124

Columbus-based Steiner + Associates is an internationally recognized real estate developer and master planner providing development, leasing, management and advisory services.

The company has designed, developed and activated 9 million sq. ft. of visionary and performing real estate comprising retail, residential and mixed-use spaces, places and communities.

Since its founding in 1993, Steiner + Associates projects have raised more than $15 million for local charities, not-for-profit organizations and community engagement programs. Visit our booth at C1124 to learn more.

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See us at RECon Booth Number #N1666

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WHO’S IN THE AISLE

Lake Nona Town Center

C1124

Orlando’s Lake Nona Town Center is the most progressive mixed-use project under development in the country. Located adjacent to Orlando International Airport, the 100-acre centerpiece of the 17-square-mile Lake Nona community has established itself as a transformational development with a market-defining 4 million sq. ft. of retail, dining and entertainment. Lake Nona Town Center developer Tavistock Development Company — together with its retail planning, leasing, and development services partner Steiner + Associates — is showcasing the Lake Nona Town Center model in Steiner + Associates’ booth at C1124

Cullinan Properties S341Q

Cullinan Properties is a leading developer of real estate specializing in commercial and mixed-use developments and acquisitions. Cullinan is known and respected throughout the United States for developing distinctive projects while crafting winning relationships with both our business partners and the communities in which we work. We have many exciting opportunities within our growing portfolio, including new mixed-use developments in Southwest Suburban Chicago (Rock Run Crossings) and Midtown St. Louis (Iron Hill). Stop by our booth S341 on Q Street to learn how we can turn your real estate ideas into reality. Visit CullinanProperties.com.

InvenTrust Properties

N1920T

InvenTrust has Essential Retail with Smart Locations. As a retail REIT, we own, acquire, lease, manage and redevelop open air grocery-anchored and necessity-based shopping centers.

Our properties are anchored by the top grocers in primarily Sunbelt markets with favorable wage and population growth.

Whether you are looking for a lease in a destination location, or you have a grocery-anchored center in our target markets to sell, stop by to meet with our dynamic team during RECon. www.inventrustproperties.com

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800-718-2255

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WHO’S IN THE AISLE

Butler Enterprises

C2102

What began as a small produce stand in 1939 has grown into the largest retail development in the greater Gainesville, Fla., 14-county region — The Shops of Butler include Butler Plaza, Butler North and the newest expansion Butler Town Center. The Butler family’s twomillion-sq.-ft.-plus of retail span the 267-acre site in Gainesville, a city growing at 2x the national average, anchored by top 10 public University of Florida, and adjacent to 11 state and nationally ranked hospitals. We are now leasing our first mixed-use project — the 450,000-sq.-ft. Butler Town Center — anchored by the area’s first Whole Foods, luxury Regal Cinema, P.F. Chang’s and The Cheesecake Factory. Also at Town Center: luxury retail, new-to-market restaurants, residential, and the region’s first chef-driven Food Hall as anchor for the “eatertainment” district.

DLC

S233R At this year’s ICSC RECon in Las Vegas meet with a team of real estate professionals dedicated to innovative solutions, continuous improvement and successful outcomes for everyone involved. With a portfolio of approximately 19 million sq. ft. of attractive retail space in 24 states, DLC Management Corp. has proven to be one of the premier owner/operators of shopping centers in the U.S. Visit booth S233R in the South Hall to learn about all the exciting opportunities we have in store

National Realty & Development Corp.

C117G

For over 50 years, National Realty & Development Corp. (NRDC) has been building dependable mainstays that favor choice and convenience within each community they serve. Our robust profile consists of retail power centers, grocery-anchored shopping centers, residential communities and corporate/industrial business parks throughout the Northeast. We approach each project with the same level of detail, focus, industry expertise and careful planning to provide top quality experiences for our tenants and their customers. Visit with our Leasing Team at ICSC RECon to learn more about our newest development, The Shoppes at Middletown and other exciting opportunities within our portfolio. 1.800.932 RENT (7368) www.nrdc.com

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Intelligent Retail Solutions That Get Results In an ever-changing retail environment, Avison Young’s specialists understand the unique challenges of your retail asset type. We provide a full range of leasing, management, consulting and investment sales solutions to give every client a competitive edge. Our principal-led structure paves the path for a unique level of collaboration – an alternative perspective of boutique-firm market knowledge, combined with a full-service company platform.

Trust the Avison Young Difference.

Please visit us in booth #C152G in Central Hall at the corner of 15 Ave and G Street to learn more about the Avison Young difference.

avisonyoung.com

Avison Young is the world’s fastest-growing commercial real estate services firm with 120 offices around the world providing value-added services to owners and occupiers of office, retail, industrial, multifamily and hospitality properties.

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WHO’S IN THE AISLE

Phillips Edison & Company

S233Q

Phillips Edison & Company is one of the nation’s largest owners and operators of market-leading, grocery-anchored shopping centers. With a diversified portfolio of more than 340 properties, our leasing team has a variety of spaces to suit any retailer’s needs. We take pride in cultivating long-term relationships with our retailers and working together to find the right location. Visit us at booth S233 on Q Street in the South Hall.

Tired feet? Pick up a pair of our signature flip flops.

Tri-Land Real Estate S293S

Chicago-based owner/operator Tri-Land Properties has been successfully repositioning undervalued and underperforming community retail centers in powerful urban/suburban locations for over 40 years. The results have been more than $481 million in dynamic and high-performing retail and mixed-use redevelopment in major Midwest, Mid-Atlantic and Southeast Markets and a long-range, hands-on management and ownership perspective.

Excess Space

C155L

Excess Space Retail Services, Inc. was the first national company to focus its business model around surplus real estate disposition and lease restructuring for retailers. We realized that it was a niche market and since our founding in 1992, we have been steadfast in our belief that this specialized segment of real estate is best served by a dedicated team that can effectively and expeditiously exceed our client’s needs. We are the leading specialist in real estate disposition, lease restructuring, lease renewals and valuations for retailers nationwide.

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SERVICE IS EVERYTHING BRANDPOINT SERVICES MERGED WITH LEGACY RETAIL SERVICES TO BRING OUR CUSTOMERS EVEN MORE CAPABILITIES. WE ARE COMMITTED TO BEING THE GO-TO RESOURCE FOR MULTI-SITE BRANDS LOOKING FOR MAINTENANCE OR REFRESH & REMODELING SERVICES ACROSS THE US & CANADA.

(800) 905-4342 BrandPointServices.com

© 2019 BrandPoint Services, Inc.

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ANALYSIS

The Rise of Competitive Socializing

BY AL URBANSKI

F

or some time now, mall and center owners have courted concepts like Dave & Busters and Round One to fill their big, empty boxes. These so-called eatertainment businesses require an average of 37,000 sq. ft. and, as property owners look to fill in smaller footprints, “competitive socializing” concepts have emerged as the most popular nontraditional retail tenants.

A new report from the research department of JLL states that brands like Punch Bowl Social and Bad Axe that combine entertainment and dining in smaller spaces (average 16,000 sq. ft.) now make up a third of what JLL calls the leisure retail market.

That compares to a little over 22% for eatertainment locations.

“We haven’t built a regional mall in a lot of years and the inventory we do have is aging because of too much GLA,” said JLL senior VP of leasing David Hull “Competitive socializing and dining are going to be the major space users. There are only so many Burlingtons and Dick’s concepts that are going to be available.”

Though emptied department stores have made malls an option for Dave & Busters and their progeny, freestanding buildings are the preferred sites for concepts combining arcades and bowling alleys with bars and restaurants.

JLL says that malls will increasingly feature newer concepts such as virtual reality experiences, escape rooms, and beercades that operate in spaces ranging from 2,000 to 10,000 sq. ft. With professional video game leagues now taking wing, JLL predicts that esports lounges, too, will become mall staples.

“Alternative uses have been around almost from the beginning of malls and shopping centers, and the rise of entertainment concepts is a natural metamorphosis,” Hull said. “As people become more time-squeezed, having retail shops, food and beverage, and entertainment in one location makes lots of sense.”

TYPE

DEFINITION

EXAMPLE(S)

AVG. SIZE(sq.ft.)

Competitive Socializing

Single-game activities like mini golf, darts or PingPong, usually with food and adult beverages

Bad Axe, Punch Bowl Social, SPiN, AceBounce

15,685

Beercade

A wide range of craft beers on tap and assortments of vintage arcade games that often cultivate feelings of 80s and 90s nostalgia

Barcade, 16 Bit Bar+Arcade, Headquarters Beercade, Emporium

6,944

Eatertainment

Multiple games and experiences under one roof with a blend of food and drinks that often caters to all ages

Dave & Buster’s, GameWorks, Pin Stripes, FTW

37,474

VR Arcade

Spaces with virtual reality headsets and gaming stations for people to experience computergenerated worlds

VR Junkies, Digital Reality Games, Head Games VR, Lucid VR

2,174

esports Lounge

A community for gamers to come together to play online games like “League of Legends,” “Overwatch” and “World of Warcraft”

PLAYlive Nation, Meltdown Bar, Howie’s Game Shack, Ignite Gaming, Gameyard LLC

10,108

Escape Room

Dedicated rooms where players must solve a series of puzzles and riddles using clues, hints and strategy

Escape Reality, Boda Borg, Breakout

10,428

SOURCE: JLL Research

BREAKDOWN OF LEISURE CONCEPTS IN RETAIL CENTERS Escape Room, 4.8% esports Lounge, 7.1%

Competitive socializing, 32.1%

VR Arcade, 7.1%

Growing national leisure concepts Eatertainment, 22.6% Eatertainment, the third most popular type, may see slowing growth due to its early saturation in major markets over the past decades.

Beercade, 26.2%

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REAL ESTATE Q & A

SPONSORED CONTENT

5Qs for CBL’s Stephen Lebovitz on Redevelopment

E

arlier this year, the financial community made a gesture that proved it still believed in brick-and-mortar retail. Sixteen banks came together to provide a $1.18 billion credit facility to CBL, one of the nation’s largest mall operators. This new facility doesn’t mature until 2023 and provides CBL with the time and financial flexibility to remake their properties. We asked CEO Stephen Lebovitz about what comes next.

Give us an idea of how far-ranging CBL’s redevelopment program is.

We really started this program in earnest in 2013 when we bought the Sears stores at Fayette Mall in Lexington, Kentucky, and CoolSprings Galleria in Nashville. We completed major redevelopment projects at both centers. We purchased another five Sears stores and two Sears Auto Centers in 2017 on a sale-leaseback transaction. Today, as a result of additional Sears closures and Bon-Ton’s liquidation, there are redevelopment opportunities at virtually every property in our portfolio.

Does CBL view department store closures as an opportunity?

We view it as a huge opportunity. When we are able to recapture a department store, we are recapturing anywhere form 15 to 30 acres of prime real estate. Now we can develop into the parking lots, adding restaurant pads as well as other uses that add value and create density. That said, there are still strong department stores that draw significant traffic.

What’s your formula for re-curating your malls?

Creating the right mix of entertainment, dining, service and successful experiential and value-oriented retail for each market is critical. We recently added the first Dave & Buster’s and Round1 to our portfolio, and we’re

working on replacing two former department stores in Pennsylvania with casinos.

We are adding fitness centers like TruFit and O2 Fitness to attract a younger customer, as well as more restaurants. I’m looking out my office window in Chattanooga right now at The Cheesecake Factory that just opened at Hamilton Place, which draws significant traffic to what used to be a Sears parking lot.

Stephen Lebovitz

With more than 60 mall properties, it’s a big job. What’s your game plan for managing it?

We are definitely prioritizing the malls with the highest potential for future growth. We have a strategy in place for each asset, with both local and home office teams working on sourcing redevelopment ideas.

We’ve transitioned the team that was primarily focused on new development into redevelopment. We’ve got a really talented staff that know this business and we’re seeing a lot of creativity.

What goals do you want to achieve for your shoppers?

To provide them with the stores and experiences that are going to get them off their couches and into our centers. Improving service, upgrading storefronts, incorporating digital. We’re putting together new marketing programs and events. We’re developing a hotel as part of our project here in Chattanooga as well as adding office space. We’re putting a supermarket into a former Bon-Ton at one location. It’s market-bymarket. There just aren’t the same rules there used to be.

BROOKFIELD SQUARE MILWAUKEE, WI Brookfield Square’s Sears redevelopment is nearly complete with the addition of new entertainment users, Movie Tavern by Marcus Theatre and WhirlyBall as well as new dining options, Uncle Julio’s and Outback Steakhouse, and an Orangetheory Fitness studio. Limited leasing opportunity still available. Opening late summer 2019.

CROSS CREEK FAYETTEVILLE, NC The first phase of this Sears redevelopment will bring entertainment operator Dave & Buster’s to the market as well as Bahama Breeze and Longhorn Steakhouse.

Leasing opportunities are still available in Phase II. Opening late 2020.

HAMILTON PLACE CHATTANOOGA, TN This former Sears location is being transformed into a mixed-use destination that includes The Cheesecake Factory (now open), Dave & Buster’s, DICK’S Sporting Goods, Aloft Hotel by Marriott, class ‘A’ office space as well as additional restaurants and retail. Limited leasing opportunities still available. Opening early 2020.

CBL PROPERTIES

2030 Hamilton Place Blvd., Suite 500 Chattanooga, TN 37421 423.855.0001 www.cblproperties.com

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LEARN MORE ABOUT OUR REDEVELOPMENTS Visit a CBL representative at RECon, NORTH HALL, N2702W

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Leasing

|

Acquisitions

|

Redevelopment

|

Property Management

Visit us at ICSC RECon 2019.

Essential Retail.

Smart Locations.

North Hall. Booth #1920T. Call for an appointment at 630.570.0700

We own and buy grocery-anchored centers in these key markets: Atlanta | Denver | Southern California | Dallas/Fort Worth/Arlington | Houston | Austin San Antonio | Tampa/St. Petersburg | Charlotte | Raleigh/Durham | Orlando Miami/Fort Lauderdale/West Palm Beach | DC Metro www.InvenTrustProperties.com | 630.570.0700 | Follow us on

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@InvenTrustProp

4/20/2019 11:56:44 PMAM 5/1/19 10:23

REAL ESTATE Q & A

5Qs for PECO’s Jeff Edison

on technology and traditional retail

J

eff Edison co-founded Phillips Edison — one of the nation’s largest owners of grocery-anchored shopping centers — just two years after the founding of the World Wide Web. PECO’s chief executive officer has watched the progress of tech’s influence on retail from the get-go, and we asked him for his views on its current impact.

Microsoft is working with Kroger on retail as a service, or RAAS. How is grocery’s moves toward digital affecting your centers?

We have been amazed at the transformation grocers are making as they embrace today’s quickly changing retail landscape. Their commitment to innovation is likely a core reason why internet disruptors have not yet found a way to make true inroads in the space.

How is Phillips Edison embracing technology?

Technology is reshaping every facet of our business. Data and analytics power the algorithms that optimize our decisions around merchandising, tenant mix and property acquisitions. Robotics are creating efficiencies, Alexa puts vital information at our team’s beck and call and drones are helping keep our properties clean and safe. Technology, innovation and change have always been a part of PECO’s DNA and we continue to reinforce these traits and invest in technology.

Do you see home delivery of groceries increasing? If so, how will this affect your non-grocery tenants?

Yes, if you include click and collect. One of the biggest challenges for these services is the cost of paying someone to collect the orders, but grocers are experimenting with technology to address this. Most U.S.

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consumers still visit neighborhood grocery stores an average of twice per week. Shoppers still want to touch and smell the food. And lastminute, on-the-way-home purchases are always going to happen. The foot traffic generated by high-quality, innovative grocers promotes the success of all the retailers in shopping center.

The touching-tasting-smelling aspect of Jeff Edison grocery will remain one of retail’s ultimate experiences, yes?

We’re seeing retailers continue to place an emphasis on creating custom experiences, reinforcing our belief that consumers will continue to want to see and touch the products they’re buying. Online retailers are starting to recognize this, and we’ve seen a rise in the of number them — including Amazon, Warby Parker and Allbirds — that are opening physical stores to complement their online marketplaces, validating the importance of bricks-and-mortar retail in an increasingly internetbased world.

What’s your prognosis for the health of traditional, brick-and-mortar retail?

Retail is a dynamic industry that has proven its resilience repeatedly. When PECO started in 1992, Walmart was only a small player in grocery. Today they are the largest grocer in the world. Walmart’s expansion caused significant changes and rampant stories of doom in the grocery sector but grocers adapted and the disruption created opportunities for the retail real estate investor. The industry’s historical strength and track record of successfully adapting to changing consumer preferences should not be overshadowed by buzz around store closures. Restoration Hardware’s three-story gallery store.

GROCERY IS OUR MAIN SQUEEZE. Our leasing team concentrates on great merchandising, maximizing occupancy and creating value across our national portfolio. We’re always looking for the next ripe opportunity to create great grocery-anchored shopping experiences.

Sweet and juicy deals are in season.

Visit phillipsedison.com/juicy to schedule a meeting at RECon or stop by Booth S233 Q Street.

GROCERY FOCUSED. RETAILER CENTERED. PHILLIPSEDISON.COM | 800.875.6585 SHOW SCOOP 44

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UN

D

AugER CONST ust RUCTIO 20 N 19

• Conyers, Georgia (Suburban Atlanta) • Interstate 20 and State Highway 138 • 2,500 to 40,000 SF • Hobby Lobby, Northern Tool + Equipment, 105-Room Hotel LEASING:

Paul Sevenich – 800.441.7032

T HE O RI G I N A L Tri-Land has been successfully repositioning

FIXER UPPER

undervalued and underperforming community retail centers in powerful urban/suburban locations for over 40 years. The results have been more than $481 million in dynamic and high-performing retail and mixed-use redevelopment and a long-range, hands-on management and ownership perspective.

VISIT US at ICSC RECon Booth S293 S Street

1 East Oak Hill Drive Milwaukee, WI

042-44_CSA_06_19_RE_SS_5Qs.indd 45 00154 TriLand Untitled-1 1 CSA ad May 2019.indd 1

Chicago, IL

Suite 302

Westmont, IL 60559

Indianapolis and Merrillville, IN

trilandproperties.com

Overland Park, KS

Conyers and Smyrna, GA

5/1/19 10:23 AM 4/12/19 4/21/2019 12:32:001:38 AM PM

REAL ESTATE

OH, OHIO!

BY AL URBANSKI

MEDIA PEOPLE TEND TO BE LOCATED IN BIG CITIES LIKE LOS ANGELES, CHICAGO, AND NEW YORK (the home of this writer), and one of the side-effects of city living is a misguided perspective of life in more bucolic settings. For our part, we write often about suburban town centers without ever having been immersed in the full experience many of the ones done well. So in March, we set off on Interstate 71 in Ohio in search of retail center innovation from Cincinnati to Columbus to Cleveland. Here’s what we found.

ROOKWOOD — CINCINNATI

Asked what shopping venues she frequents most, a millenial sales executive of our acquaintance who lives in the Pleasant Ridge neighborhood of Cincinnati told us she and her fiancé invariably find themselves at Rookwood. It’s easy to see why.

Easily accessible off I-71 just minutes from downtown, Rookwood is a quirky mix of retail types, architecture (the Le Blond Machine Tool smokestack), popular restaurants, and ground sculpture. It houses both a Bed, Bath & Beyond and a Sur La Table, an Old Navy and an REI, a BJ’s Brewhouse and a Five Guys.

The complex is essentially two contiguous centers — Rookwood Commons and Rookwood Pavilion — purchased by Hines in 2017 and joined together by updated dining and drinking options that build significant traffic. The eclectic mix includes Redlands, Buca di Beppo, P.F. Chang’s, and a replica of an authentic British pub called, simply, The Pub. Beyond the parking garage is a separate development with a Seasons 52, a Capital Grille, and a Marriott Residence Inn. Hines property manager Mike Seyferth told us that Hines was attracted to the site because it rides the border between Oakley and Hyde Park.

Young professionals are flocking to the two neighborhoods, where luxury apartment buildings have been rising at a brisk pace.

“Between the hotel, and these neighborhoods, and the highway access, traffic at Rookwood is fairly constant throughout the week,” Seyferth said.

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CROCKER PARK — WESTLAKE

Verticality.

It’s a term most often used to describe the leaping ability of basketball players, but it also describes the trait that set this pioneering town center apart from all the others when it opened in this Cleveland suburb in 2004. Developer Bob Stark’s inspiration for its design was re-creating the experience of shopping on Fifth Avenue in New York or the Magnificent Mile in Chicago.

“A lot of the experience there is in the windows. Everything happens on the sidewalk, and above are offices and apartments,” the Stark Enterprises CEO said.

Other town centers sought densification by parking themselves near residences and offices, Stark observed. There might be a second story above the stores in their streetscapes but no one living there, no one to visit the shops and stores and bars and restaurants on a daily basis. Then came Crocker Park.

“Crocker Park went all the way in a way no one else had before. We stacked different uses on top of each other, with day workers and residents doing everything in the same place,” Stark said. “That creates a positive tension that energizes a development.”

We approached the entrance to Crocker Park, set among nondescript suburban office parks, and had doubts about whether it could live up to its notices. Then we walked down Main Street past various storefronts and apartments representing architectural styles from different eras, as one would find in a real town. We saw residents rushing out on bikes and workers from the American Greetings headquarters (part of the development) strolling to lunch. We passed by storefronts you’d see in upscale bedroom communities — Barnes & Noble, Francesca’s, Raymond James, Lululemon, Banana Republic.

Standing in a light drizzle in the town square ringed by wrought-iron food kiosks that Stark imported from Italy, it hit like a lightning bolt.

We turned to our Stark Enterprises guides Stacie Schmidt and Tina Roberts and said, “You know, if you picked up Crocker Park and plopped it in the middle of downtown Cleveland, it would be the most popular place in town.”

“Exactly,” Stacie said.

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gamechanging UPGRADING PROPERTIES IN QUALITY MARKETS PREIT is at the forefront of modern placemaking – combining a diverse anchor mix with the best retail brands, destination dining and unique entertainment experiences.

Ride the free shuttle from LVCC to Caesar’s Palace to meet PREIT. Learn about our transformative redevelopment projects in top US markets.

Philadelphia, PA

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■

preit.com

5/1/19 10:21 AM 4/21/2019 12:08:04 AM

REAL ESTATE

EASTON TOWN CENTER — COLUMBUS

It was the late 1980s when Les Wexner had a vision of the future of physical retail. It was to be about places, not stores; experiences, not convenience. The founder of The Limited shared his perspective with the mall owners he’d worked with for years, but they were not ready to depart from a concept that still was working for them. So Wexner decided to play pioneer himself on a large tract of land he owned on the outskirts of Columbus.

“There were no national specialty retail chains until Les came in with The Limited. The Limited had 7,000 stores. Simon, GGP, all the mall developers were joined at the hip with Les. When they wanted to expand, they’d ask Les where he would go,” said Adam Flatto, president and CEO of The Georgetown Company.

Wexner had bought the land near the airport with the intention of building a large distribution center on it, but decided it had become too valuable for that use. In 1992, he called New York-based Georgetown in to discuss using the land for a new kind of retail development in the area that came to be known as Easton, a name invented by Wexner.

“Les felt that people were less excited about going to the mall, that they were seeking better experiences, so we put together the town center concept,” Flatto said. “We had to have a big enough footprint to make a mark, over 4 million square feet of retail. But we downplayed department stores and put our money into food and beverage.”

When Georgetown unveiled the model for Easton Town Center at RECon, it caused consternation. It had no highway frontage and no department store anchors. It was a grid with streets and outdoor shopping. “People thought we were kind of nuts,” Flatto said.

Today, Easton is a destination for people across the state of Ohio.

“People started coming here for dates, proms, weekends,” said Yaromir Steiner, the architectural designer whom Wexner hired to plan Easton after seeing his work at Coconut Grove in Miami. His Steiner + Associates is on-site at Easton and still manages the property.

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“It was one of the first efforts at placemaking. We wanted trees, fountains, squares. I was inspired by Boston, where you have interesting places strung together like pearls,” Steiner said. “Les came to us and said to forget the old mold and start from scratch.”

Though it doesn’t sit on the side of the highway, it’s hard to miss the ironwork of interlocking “Eastons” on the overpass at the exit for the town center on I-270 in Columbus. The first thing one sees on approaching the development along Easton Way is the expansive Hilton Hotel, behind which is a plaza with restaurants, shops, and buildings reminiscent of the center of vibrant town.

We were early for our tour with Easton’s chief executive Jennifer Peterson, so stopped for lunch at Fado’s Irish Pub, one of 60-plus places to eat and drink at the town center. It was like walking into a pub in Donegal. Irish soccer team banners hung from the ceiling, a fire was burning in the corner, HP Sauce sat on the tables, and the bartender had a Brogue. Steiner later told me that even the wall paneling was imported from Ireland.

Attention to detail is found in every facet of Easton.

“Les saw where the world was going,” Flatto said. “Twenty years ago Easton was an empty field. Now it generates $200 million in tax revenue for Columbus and the state of Ohio.”

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REAL ESTATE

PINECREST — CLEVELAND

JUNGLE JIM’S — CINCINNATI

After visiting a mall in East Cincinnati, we happened upon the single most interesting retail story in the Buckeye State. On the side of a common commercial highway, in an otherwise plain-Jane strip center, sat a store with a theme park monorail train emerging over the entrance, a store called Jungle Jim’s. We hit the brakes.

Passing statues of gorillas, we entered this distinctive supermarket, asked for directions to the comfort station, and were pointed to portapotties labeled “Men” and “Women.” Slightly appalled but greatly in need, we held our breath, pulled open the plastic door, and found ourselves in the poshest grocery store restroom in the Western World — ample stalls and sinks, stone and chrome fixtures, all spotless and gleaming.

From the parking lot, Jungle Jim’s appear to be a standard 50,000-sq.ft. supermarket, but most of the store frontage was concealed by other retail tenants. What we thought would be a quick store check turned out to be an hour-long odyssey through 130,000 sq.-ft. of slightly mad, absolutely over-the-top retail experience.

Jungle Jim’s has a hot sauce department offering 1,400 varieties and topped by an actual U.S. Navy World War II fire truck. Animated bees fly round a big beehive over the honey display, the fish department has an actual fishing boat in it, and there’s a psychedelic Hippie van perched above the natural foods section. Jim’s has the largest wine and beer selection in Cincinnati, and folks who want to drop by and hang out can grab a beer at the bar (40 brews on tap), select a fine cigar from the walk-in humidor, and enjoy their drinks and smokes in the outdoor Paradise Pavilion. Store-wide, products are sourced from some 75 countries.

Founder Jim Bonaminio, simply called “Jungle” by his employees, started selling produce in street-side stands in the 70s and was so adept at attracting crowds that lot owners put stores up on his sites and he kept having to move. He now owns the center in which this store resides, and with Jungle Jim’s as a calling card, he’s upgraded the tenant roster with new food and beverage establishments, including the Eastgate Brew & View cinema. He filled one large box with a devotional center for Crossroads, a mega-church with 14 locations in Cincinnati.

We got a tour of the store from natural foods manager Thomas Hunter, who spent 13 years as a Walmart store manager. “At Walmart, nobody wanted to hear your ideas,” Hunter said. “But Jungle always wants to hear our new ideas for the store. He’ll test them and if they work, they get adopted.”

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It’s fitting that the last stop on our I-71 retail trail was Pinecrest, Fairmount’s brand new place-to-be in Orange Village, halfway between Shaker Heights and Chagrin Falls.

It’s like the son and daughter of Easton and Crocker Park, a privileged child brought up with good taste, entering the world having ticked off all the densified, town center boxes. It bills itself as a “shopping, dining, office & living district.”

PInecrest sits across the road from a major healthcare complex, its workers ready-made tenants for the two- and threebedroom luxury apartments at the project’s 4th & Park building. Retail tenants include Firebirds Wood-Fired Grill, Silverspot Cinema, OrangeTheory, Shake Shack, City Works Pourhouse, Sephora, Vineyard Vines, and the cutest little freestanding Warby Parker you’ve ever seen. Pinecrest’s Whole Foods has a bar, and it was busy on the weekday afternoon we stopped in.

“This particular trade area is characterized by some of the highest income and education in the state, Fairmount principal Randy Ruttenberg told us. “There are extremely high barriers to entry in this geography and there was some supply deficit. Some of the nation’s most sought-after national retailers wanted to enter this market but couldn’t find the right locations.”

It took Fairmount about eight years to bring the project to fruition and involved the purchase of 42 individually owned homes and the passing of a local referendum.

“Residents are a mix of young professionals and emptynesters, the latter of which are moving out of larger homes in the Heights and other suburbs and want to be in an engaging dynamic 24-7,” Ruttenberg said. “We’ll offer them 15 different dining opportunities when all are opened, and there are about 62 retail spaces.”

Ruttenberg reported that 93% of the retail space was leased at Pinecrest, along with 94% of residential and 80% of office.

Occupancy rates at the AC Hotel on the site regularly run around 80%.

“We’ve been humbled by the response,” Ruttenberg said.

“Every time you build one of these things, you hold your breath and wait for the register to ring. We’ve been very, very pleased with sales volume across the board at Pinecrest.”

MAY/JUNE 2019

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ANALYSIS

Grocery Retail Is Still A Safe Bet

BY TAYLOR COYNE

T

into perfecting the online experience for he United States saw a surge in grocery expansion in 2018. shoppers, while also ensuring that stores Across the nation, grocery openings were up 29.4% from the remain easy to navigate and provide an year prior with 17 million sq. ft. of new grocery space. Rapidly enjoyable retail experience. It’s not just expanding regional grocers contributed to this surge, particularly about the in-store or online experience, in Florida, thanks to a number of Publix store openings across the it’s about providing flexible and reliable state. California and Texas, the usual frontrunners for grocery exoptions for customers no matter how they pansion, got the second and third spots with each accounting for 7.8 want to shop. % of this year’s new grocery square footage. Increasing their presHere are some new-concept success ences in California were Sprouts Farmers Market, Aldi, and Grocery stories from 2018: Outlet, — while Kroger and regional favorite H-E-B expanded in Texas.

Driverless delivery coming to a door The U.S. expansion of two German chains also fueled grocery near you. Kroger has partnered with growth. Aldi opened 82 stores, increasing its square footage by Nuro, a Silicon Valley startup, in Scott15.6%, while Lidl bolstered its East Coast presence with plans to sdale, Ariz., to test autonomous vehicle purchase 27 Best Market Stores in New York and New Jersey. More grocery delivery. Similarly, Walmart has of the same is likely in 2019 as regional grocers look to grow and partnered with Waymo, an Alphabetnational chains continue to open innovative grocery retail concepts. owned company focused on self-driving While transaction volume is down year-over-year, grocery contintechnology. Stop & Shop has a partnerues to be a sweet spot for retail real estate investors. The leading ship with Robomart and online grocer grocery-anchored centers in primary markets have become prized acquisitions and, in the past two years, their average price per sq. ft. has increased by 9.5 percent in primary markets. A good example is PERCENTAGE OF TOTAL NEW GROCERY SPACE BY SQUARE FEET at the Diamond Heights Shopping Center in San Francisco. Anchored 2017 2018 14.00%

by Safeway, it recently achieved cap rates of 4% with pricing at $635 per 12.00% sq. ft. Investors are increasingly 10.00% interested in experimental retail concepts that aim to stay relevant to 8.00% changing customers, and the grocery industry is working hard to do just 6.00% that.

4.00% Just how are grocers reinventing themselves? By investing in con2.00% venience and flexibility both online and in store. Grocers are plung0.00% FL CA TX NC IL VA PA AZ GA NY ing significant amounts of capital

CHAINSTOREAGE.COM MAY/JUNE 2019

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3.7%

1.7%

3.8% 3.3%

4.4%

2.1%

3.7%

5.1%

10.4%

3.7%

6.7%

6.8%

9.4%

7.83% 9.2%

7.83%

7.4%

6.0%

9.71%

12.2%

Two fastexpanding German chains spurred grocery growth. Aldi opened 82 stores and Lidl announced plans to open 27 stores in the Northeast.

More of the same is expected.

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ANALYSIS

HISTORIC GROCERY PRICING AVERAGE PRICE PER SQUARE FOOT ($US) $250 $200 $150 $100 $50 $0

AVERAGE CAP RATE(%) $219

$221

7.6% 7.4% 7.2% 7.0% 6.8% 6.6% 6.4% 6.2% 6.0% 0.0%

they need more efficiently — which makes the process more $172 convenient. Grocers are shrinking store sizes to appeal to this type of shopper, while adding in local foods and products to provide a unique experience.

Last year, Publix opened its first 2012 2013 2014 2015 2016 2017 2018 GreenWise market in Tallahassee which has prepared foods, craft beer, and a lounge. Hy-Vee Fast & Fresh opened in Iowa in a 10,000 sq. ft. space and is the second of the grocers’ small format Farmstead has begun working with concepts. Its first, HealthMarket, focused on health and fitness Udelv — both last-mile delivery systems consumers and included a health clinic and sports nutrition area. employing autonomous vehicles. The Giant Food recently opened its first Giant Heirloom Market in goal is to deliver groceries cost efficiently Philadelphia and will have plans for three more in 2019. Heirloom is without the long wait times consumers 9,500-sq.-ft. footprint with kombucha on tap and a craft-your-own are currently experiencing. olive stand. The store also offers next-day delivery through Peapod, providing the efficiency of a smaller store while giving shoppers Innovating the distribution center. As access to the services of the larger Giant Food network. consumers want the flexibility to shop Focusing on unique experiences. Grocers are making partneronline for groceries, grocers must find ships with other retailers to add specialty kiosks and products ways to make the process smoother to draw in consumers. Kroger has partnered with Walgreens to for their grocery delivery and click-andplace smaller Kroger Express stores inside pharmacies across the collect programs. To achieve this, grocers country. Hy-Vee allows retailers like Wahlburgers, the fast-casual are building new fulfillment centers and burger restaurant, and beauty retailer Basin to open smaller retail micro-distribution centers. Kroger has partnered with Ocado, the British e-grocer, concepts within their existing stores.

Wegmans made its New York City debut at the Brooklyn Navy to build automated warehouses across Yard. The space includes an in-store café with a full bar. Stop & the U.S. to speed up delivery times. The Shop, meanwhile, redeveloped 21 stores in Connecticut with infirst three facilities will be located in the store smokers, local produce, and kombucha fountains.

Cincinnati area, Central Florida, and the While grocery is a necessary retail category, it is striving to evolve Mid-Atlantic region. to meet the needs of customers who desire the flexibility of picking Giant Foods recently opened an e-comup a gallon of milk at a store even though they order the bulk of merce and fulfillment facility in Lancaster, their groceries online. The unique Pa., that has click-and-collect lanes for shopping habits of grocery retail cusshoppers and a counter where customtomers continues to be a major factor ers can place orders on the spot. Ahold driving both innovation and investDelhaize, Albertsons, and Walmart are also ment in the grocery industry. piloting micro-fulfillment centers to reduce last mile costs. $185

$180

$198

$205

Grocers are plunging significant amounts of capital into perfecting their online presences, at the same time ensuring that stores remain easy to navigate and provide enjoyable retail experiences.

Small stores with local goods. A lot of shoppers make short trips to the grocery store for items needed that day. Smaller stores allow shoppers to find the products SHOW SCOOP 52

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TAYLOR COYNE, a research manager at JLL, recently co-authored a report on tech trends changing retail and the strategies behind renovating malls.

MAY/JUNE 2019

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5/1/19 10:24 AM 4/20/2019 11:46:52 PM

ANALYSIS

Four Ways Food Will Change Retail Real Estate

BY MELINA CORDERO

Suburbanites spend more on food and beverage than their counterparts in urban-core or rural areas.

A

mericans remain hungry for even more food-and-beverage options, but the industry’s strong growth also brings challenges for restaurateurs, grocers, and their landlords who must monitor and adapt to ever-shifting demographics.

It’s easy to see why the food and beverage sector is a darling of the retail real estate industry these days. It has one of the lowest rates of e-commerce penetration of any major retail category. What’s more, it is gaining an increasingly larger share of consumer spending, rising to 24.3% of total retail sales in the past decade from 22.7% before the recession.

Yet the risks of F&B can’t be ignored: a notoriously high fail rate, substantial tenantimprovement costs for landlords and, perhaps most troubling of all, a high sensitivity to shifts in demographics and consumer tastes that require industry participants to be ever-vigilant in tracking the trends.

CBRE analyzed demographic, real estate and industry data to arrive at several near-term predictions about the trajectory of the U.S.

BABY BOOMERS SPEND THE MOST ON F&B MILLENIALS

GEN X

BABY BOOMERS

OTHER

100% 90% 80% 70%

11%

9%

36%

33%

CHANGING DEMOGRAPHICS WILL MAKE CONVENIENCE A CHIEF F&B CONSIDERATION

In simple terms, many of us don’t have a lot of time — and some don’t have the inclination — to prepare and cook many meals anymore.

Consider that single-person households made up 28% of all U.S. households last year compared with 17 in 1969, according to the Commerce Department. Dual-income households also are on the rise and now account for more than 60% of all U.S. households from 25% in 1970.

Other trends favor convenience: Many millennials, who rent or own homes with small kitchens, prefer the social experience of dining out and the convenience of carry-out or delivery.

MORE THAN AGE, THE RISE OF SINGLE-PERSON HOUSEHOLDS IS RESHAPING F&B DEMAND

60%

45%

DISTIBUTION OF U.S. HOUSEHOLDS BY SIZE

40%

1

2

3

4+

35% 30% 25%

50% 40% 30%

32%

34%

21%

24%

20% 15% 10%

20% 10% 0%

F&B industry. Among them: Convenience will rapidly become a leading factor in consumers’ F&B choices; densifying suburbs will emerge as the hottest F&B destination; and grocery-delivery service will dramatically revamp the cold-storage industry.

These trends have enormous repercussions for retail real estate.

F&B has steadily expanded its presence in retail centers in the United States. For example, restaurants have collectively increased the square footage they occupy in U.S. malls by 18% since 2007 to 43 million sq. ft., according to the International Council of Shopping Centers. At CBRE, as many as one in every three retail real estate transactions we handle involves F&B. Here’s a look at several of CBRE’s predictions and why we made them.

FOOD AT HOME

FOOD AWAY FROM HOME

SOURCE: CBRE SHOW SCOOP 54

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5% 0% 1968 1978 1988 1998 2008 2018 SOURCE: CBRE MAY/JUNE 2019

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As a result, convenience-focused concepts will flourish. Restaurants are experimenting with kitchen-only outposts for delivery. More grocers are setting aside space to offer prepared meals, as well as in-store restaurants and bars. Delivery services like DoorDash now are common.

A growing number of restaurants offer separate entrances and service counters for use by delivery services and customers picking up meals to take home.

One key facilitator of this trend will be location-analytics services (see cover story), which restaurants can use to pinpoint the most effective sites for sit-down restaurants and kitchen-only outposts. Another will be automation, as exemplified by Kroger’s partnership last year with online grocer Ocado to facilitate more delivery by establishing robot-staffed warehouses across the U.S.

INDUSTRIAL COLD STORAGE WILL HAPPEN IN A BIG WAY

Grocery-delivery services are catching on fast, and the most efficient and cost-effective way to facilitate the service at scale is through industrial cold-storage warehouses.

Consider that online grocery orders now account for roughly 3% of total U.S. grocery sales. FMI/Nielsen forecasts that will expand to up to 13% — roughly $100 billion — by 2022. In turn, CBRE calculates that growth will require demand for up to 100 million sq. ft. of cold-storage space to shift to industrial facilities from grocery stores over the next four to five years.

Again, demographic shifts come into play. A 2018 study by consultancy Brick Meets Click found that the percentage of 18- to 29-year-olds buying groceries online increased by 3 points to 22% while such ordering by older cohorts, while significant, declined a bit. The uptick for the younger category might reflect increasing earnings and purchasing power for some millennials, as well as some millennials more often ordering groceries for dining in.

We foresee this trend of growth in online grocery shopping resulting in greater demand for industrial cold-storage space in leading food-production states (such as California, Washington and Florida), high-population metros

$18,000

F&B SPENDING BY HOUSEHOLD LOCATION FOOD AT HOME FOOD AWAY FROM HOME TOTAL F&B SPENDING

$16,000

$594

$14,000

$600 $500

$12,000 $10,000 $8,000 $6,000

$400 $339 $3,241

$3,564

$3,990

$4,653

$4,000 $2,000

$700

$0

CENTRAL CITY METRO SUBURBAN HOUSEHOLDS (46.OM) HOUSEHOLDS (72.3M) SOURCE: CBRE

$300 $2,596

$200

$4,058

$100

$72 RURAL HOUSEHOLDS (10.8M)

TOTAL F&B SPENDING (BILLIONS)

AVERAGE ANNUAL F&B SPENDING

NEARLY 60% OF F&B SPENDING IS BY SUBURBAN RESIDENTS

$0

Note: Alcoholic beverages excluded from spending figures.

(such as Northern New Jersey, Chicago, Los Angeles) and major seaport markets (such as Los Angeles, Seattle, Oakland, Houston, Northern New Jersey and Miami).

FIRST-RING SUBURBS WILL SHINE AS F&B HOTSPOTS

Densification has pushed from the urban core into the first-ring suburbs of many major cities, resulting in more construction of mixed-use projects with ideal, groundfloor space for restaurants, bars and grocery stores.

These locations put F&B operators in position to capitalize on several advantageous shifts. First, suburbanites spend more on F&B in aggregate and on a per-household basis than their counterparts in urban-core or rural areas. Suburbs also have the greatest spending power. Second, urban cores attract daytime commuters who often pass through these first-ring suburbs or live there to be closer to work.

Additionally, while many first-ring suburbs are seeing the early stages of densification, few have the higher lease-rates typical of urban cores.

MILLENNIALS WILL DOMINATE U.S. F&B SPENDING WITHIN 10 YEARS

While millennials tend to dine out or order in frequently, they’re not the biggest F&B spenders. That distinction goes to baby boomers and generation Xers. Baby boomers collectively spend the most due to the sheer size of the generation. But Gen Xers, now in their prime earning years, spend the most on a per-household basis.

On average, millennials tend to be relatively frugal F&B spenders due to limited earning power and the burden of student debt. However, those obstacles will alleviate within the next 10 years, allowing millennials to spend more on F&B and trade up to pricier fare.

That, coupled with the magnitude of the millennial generation at 71 million members, creates a seismic force in F&B and most other industries.

MELINA CORDERO is CBRE’s Global Head of Retail Research. Follow her on Twitter at @melinascordero.

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100 million sq. ft. of additional cold-storage space will be needed to accommodate delivery of online orders from grocery stores.

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ANALYSIS

New Tenant Types Invigorate Retail Sector

BY SCOTT HOLMES

All-time highs of U.S. household wealth and disposable income are underpinning optimism in the economy.

T

he retail sector is making massive strides as companies re-engineer their selling platforms in a digitally oriented environment. As a result, multitenant construction is rising in conjunction with developer confidence, while total retail development remains subdued.

This year, retail completions are expected to stay on par with 2018, still at just a quarter of the last cycle’s high. Investors will continue to benefit from restrained supply growth as multi-tenant availability falls to the mid-6% range. Digital brands transitioning from online into physical locations will keep pressure on the vacancy rate. Furthermore, empty big boxes being converted to other property types like office space or industrial distribution centers will squeeze vacancy. Multi-ten-

RETAIL CAP RATE TRENDS BY MARKET TYPE

AVERAGE CAP RATE

10%

PRIMARY

SECONDARY

TERTIARY

9% 8% 7% 6% 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

SOURCES: MARCUS & MILLICHAP RESEARCH SERVICES; COSTAR GROUP, INC; REAL CAPITAL ANALYTICS

SHOW SCOOP 56

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ant rents will realign with their pre-recession peak this year as space demand climbs.

As the new age of retail comes into focus, the sector continues to improve. Omnichannel customer engagement is taking hold with more online retailers discovering the need for a physical presence as it can substantially impact sales. Because of this, many digital brands are rapidly expanding their brick-andmortar footprints, with Casper, UNTUCKit and Warby Parker spearheading these efforts.

Physical vendors are also adapting by establishing online shopping places, broadening their customer reach in response to evolving consumer preferences. Showroom-style layouts are the result of this shift to an omnichannel platform, giving customers the option to test a product in store and have it delivered to their homes.

Though numerous retailers have begun to transition to this approach, Best Buy has firmly embraced it, giving customers a true multi-dimensional platform. Grocery stores have found their niche by providing in-store pickup, car delivery, and home delivery options– trends that will likely increase in popularity.

While the internet has historically struggled to find its place within physical retail, new omnichannel concepts are helping the two mesh, stabilizing the sector.

The changing retail landscape is benefiting from an increase in discretionary spending as the U.S. economy is showing signs of sustained momentum in 2019. A tight labor market will help preserve growth and job creation is expected to reach two million for the ninth consecutive year. This will cause wages to rise, benefiting retail sales as consumers use the extra income to make more discretionary purchases on both goods and services. Food, fashion, and entertainment brands should see strong sales gains this year, as should fitness centers and home furnishings vendors.

The consumer outlook has begun to recede from peak levels.

International economies, for example, are losing steam, in part due to unresolved trade talks between the U.S. and China. The Federal Reserve is considering putting further interest rate

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ANALYSIS

RETAIL MORTGAGE ORIGINATIONS BY LENDER

RETAIL SUPPLY AND DEMAND COMPLETIONS

75% 50% 25% 0%

14 15 16 17 18

SOURCES: MARCUS & MILLICHAP RESEARCH SERVICES; REAL CAPITAL ANALYTICS

Retail real estate investors always chased rooftops; today they are more aggressively following employers.

hikes on hold as it adopts a wait and see approach to monetary policy. Considering these factors, economic expansion will moderate this year, producing GDP growth in the low- to mid-2% range. Though momentum is likely to ease, all-time highs of U.S. household wealth and disposable income are underpinning optimism in the economy.

Lenders are being more cautious and conservative than in prior years of the cycle.

Active lenders include local, regional, and national banks as well as insurance companies, with sentiment driven by the highprofile decline of several big-box retailers.

As a result, lending on tertiary assets and locations remains tighter, while net-leased assets and premier mixed-use structures are highly desired by lenders.

Investors have refined their investment strategies in hopes of obtaining necessary financing, and the adaptation of the retail sector into service- and experience-centric destinations has aided their process.

Despite continued store closures and the erosion of product-based retail by online competition, retail center owners have repopulated storefronts with a variety of service-oriented businesses. As this transformation has gathered momentum, properties have stabilized and values have gained steam.

Retail investment strategies have begun

SHOW SCOOP 58

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SQUARE FEET (MILLIONS)

REG’L/LOCAL BANK NAT’L BANK INT’L BANK INSURANCE AGENCY PRIVATE FINANCIAL CMBS

NET ABSORPTION

VACANCY RATE

120

8%

90

7%

60

6%

30

5%

0

09 11 13 15 17 19

VACANCY RATE

PERCENTAGE OF TOTAL

100%

4%

*FORECAST SOURCES: MARCUS & MILLICHAP RESEARCH SERVICES; COSTAR GROUP, INC.

to change, as well. In previous cycles, buyers chased rooftops to capitalize on household growth, but today investors are more aggressively following employers. Retail properties proximate to revitalized business centers provide opportunities through retenanting that caters to local workers and the addition of apartments in the vicinity.

The highly publicized challenge of dealing with big-box closures is somewhat overblown when considering the retail market as a whole.

Most retailers are not candidates for large blocks of space, so demand for small footprints stays consistent when several stores shutter. Additionally, the creative use of big-box space has proved effective. Data centers, office conversion, healthcare, fulfillment centers, and even self-storage are alternatives that backfill dark space.

With the retail sector continuing to evolve, buyers are broadening their searches to bolster portfolio yields. Private investors consider smaller metros as an opportunity to acquire assets while increasing the spread between returns and the cost of capital.

The limited construction of new retail space in many secondary and tertiary markets has funneled space demand into existing properties.

Investors are taking advantage of strong underlying fundamentals to expand their portfolios into assets that many consider undervalued relative to performance.

The fading idea of a retail apocalypse is beginning to show in many markets, intensifying the bidding environment as many investors now have the knowledge to create internet-resistant retail centers.

SCOTT M. HOLMES, Senior VP and director of Marcus & Millichap’s retail division, has more than 25 years’ experience in commercial real estate investment.

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REAL ESTATE

When Anchors Go Away

BY ALAN TREADGOLD

A

convenient, albeit misleading headline has gained great currency in the retail business — this being that physical retail is disappearing at a rapid rate as shoppers and sales migrate online, creating a real estate landscape rich in opportunity for those (few) retailers who do still actually want to open brick and mortar stores.

As is usually the case, the full picture is rather more complicated and nuanced. Certainly, physical retail is under tremendous pressure from online in particular, and some retailers are responding to competitive pressures and changing shopper behaviors by closing stores and rationalizing their networks — sometimes very severely. Among the most prominent in this respect is the department store sector, J.C. Penney and Sears in particular. This dynamic is by no means confined to the U.S. either. But this does not mean that all of retailing is migrating online and that all retailers are closing stores and rationalizing their networks.

In fact, many of the high-growth and highly visible specialty retailers that started out as online businesses are discovering the “joy of stores” and that, for many, the optimal route to market is to combine the online and the physical in ways which play to the relative strengths of both. Think Casper and Eve in mattress retailing.

In Europe, the phenomenon that is MyMuesli which is opening ever more stores while it continues to also grow its online business. In automotive, Tesla announced that it would close all its stores and then, a short while later, announced that, err…they won’t after all as it was clear that shoppers need the store experience to support the online engagement and vice versa. And, of course, the largest of them all, Amazon is both opening its own stores and buying large chains of other peoples, most notably Whole Foods Market.

Although, it is worth remembering that Amazon has never defined itself as an online only retailer or, indeed, as just a retailer at all.

While a relatively small number of retailers, such as department stores, are closing large numbers of stores, the challenge for many specialty retailers and mall operators is that these are often the anchor tenants that, in a previous era, were major traffic generators. And it remains the case that when a department store shutters in a shopping mall, the entire viability of that mall can come into question as a vicious downward spiral sets in — fewer stores lead to fewer reasons to visit, which leads to fewer stores and so on. In consequence, mall space is becoming ever more sharply polarized between prime space that is strongly tenanted, differentiated, and interestingly relevant to shoppers, and C and D grade centers which have none of these attributes and, for which, the closure of a department store anchor can tip the entire mall from viability to oblivion.

Neither is it the case that space vacated by the department store anchors and the large specialty store sub-anchors can be easily

re-tenanted by high growth speciality retailers looking for new locations. Very often the space is simply wrongly configured for such different uses, especially when it is multi-level space. Equally often, it is too expensive and complicated to refit a space built for one use to accommodate a very different use. The better option for many mall operators is to attempt to reimagine their centers in ways which dial up the entertainment component and, relatively, dial down the transactional retail part thereby, at least in principle, “future-proofing” their malls against further growth in online. This can mean reconfiguring vacated large units into gyms, kids’ clubs and play areas, and more localized and differentiated food offerings.

So, the narrative that when mass merchants exit shopping malls they are liberating space that speciality retailers can and are affordably reconfiguring and occupying is not what is actually taking place in most malls. Instead, what is happening is that malls are becoming much more sharply polarized between premium space valued by retailers and shoppers and, consequently, still expensive to occupy, and poor-quality mall space that is unattractive to shoppers and very difficult for speciality retailers to remain viable in once the anchor tenants have departed.

ALAN TREADGOLD is a retail expert at PA Consulting

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“It remains the case that when a department store shutters in a shopping mall, the entire viability of that mall can come into question.”

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REAL ESTATE

10 UNDER 40

Retail Real Estate’s Rising Stars CSA’S 2019 RISING STARS HAIL FROM A VARIETY OF BACKGROUNDS. Some have excelled in financing or mall development. Others work for major retailers or specialize in cutting-edge technologies that have helped their companies stay ahead of the curve. Two are new to the United States market, having worked for British-based entities across several countries. A few made their first deals while still in college — one when he was just eight years old. But all are under 40, with the youngest being just 28. And all have worked hard to forge relationships and orchestrate massive projects, often challenged by the balancing act of career and family. Here is how they made names for themselves.

BY DEBBY GARBATO

JOEL STEPHEN, 38

PAUL RITTENBERG, 36

Senior vice president, CBRE

Chief development officer Just Salad

British native Stephen made his first deal at age 8 after the family moved across England. Tired of their cramped apartment, he scoured newspapers, found a house, and recommended his parents buy it. They did.

Life has since been a non-stop real estate adventure for Stephen. During 13 years at CBRE, he’s closed 250 deals in more than 15 countries and lived in Europe, China, Hong Kong, and New York. He advises overseas brands that want to enter the U.S. and vice versa.

Sometimes, Stephen has had to rely on sheer wit. “They dropped me into Shanghai at age 27,” he said. “The managing director gave me a blank piece of paper and said, `Here’s your business plan. I’ll support you 100%, but it’s on you.’ I didn’t speak the language and nobody knew about tenant rep advisory.”

Five years later, Stephen had built an “amazing team” and had helped 35 brands expand. “We felt like kids,” he said. “Clients would come from the U.S., experienced people, being pitched to by people in their 20’s and 30s.”

Stephen credits the many mentors he’s had for his career success. “I’ve taken huge risks, thought about the worst that could happen and became comfortable with that. Mentors helped everywhere I went. I try to do that with others.”

Rittenberg has foodservice in his blood. His father worked for Friendly Ice Cream and National Supermarkets, then became a landlord. Paul himself held executive positions at Panera Bread, Au Bon Pain, and Decathlon Sport before taking the lead development role at Just Salad, which has generated double comp store growth and plans to grow by more than 50%.

“I was kitchen table schooled,” he said. “Dad loved the industry. I’d go to meetings with him — it was father and son time. In high school and college, I took any real estate class I could.”

His father extolled the value of relationships, advice that brought Rittenberg to the attention of Nick Kenner, Just Salad’s co-founder and CEO. “Somebody has always brought me along or got me in the door,” said Rittenberg. “Nick was friendly with three people I worked with in past lives. All three recommended me. They told him he was nuts if he didn’t talk to me.”

Rittenberg is on the road to taking what is largely a New York City chain national. Near term, this means doubling the 13-year-old chain’s presence in Chicago and moving into the Florida suburbs.

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EZRA STARK, 36

Chief operating officer Stark Enterprises Among the four children of noted Cleveland developer Bob Stark, Ezra is the only one to have aspired to the family business. The urge hit him early on “I’ve always had positive emotions about real estate, climbing around the equipment with my dad on construction sites as a kid, seeing how things are created,” Stark said.

From 16 on, he attended RECon shows with his father and sat in on his discussions with other company leaders. “They made it seem like everything was achievable. So while a lot of my peers would be camp counselors in the summer, I preferred being in the office at Stark Enterprises and soaking up information like a sponge,” he said.

Stark did a stint at Forest City Ratner (working alongside Ivanka Trump) to get a taste of New York City real estate before returning to Cleveland to handle kiosk leasing at Stark properties such as Crocker Park. Soon after, he transitioned into asset management and is now half COO, half CEO as he transitions into the leadership role at the company.

Expansion of both geography and real estate class is on his agenda.

“We now have properties in 10 states, from California to New York, and where we were always mainly retail, we now are putting our place-making skills to work in high-rise in-fill and student housing.”

WILLIE HOAG, 38

Principal Mid-America Real Estate Corp.

Possessor of a B.A. in English from Boston College, Hoag wanted to be a writer. Instead, he ended up selling B2B wireless packages for Team Mobile. When the recession hit, a tough business became tougher, so he decided to try real estate.

Fourteen years later, Hoag is a principal at one of the most active retail real estate companies in Chicago. His first two clients, LA Fitness and Aspen Dental, were not the types of retailers normally found in shopping centers, but the deals he made for them were a harbinger of things to come in the industry. Initially, people had doubts over whether these type tenants belonged in malls.

Today, LA Fitness has myriad mall locations and continues growing. Aspen Dental and ATI Physical Therapy have 700 and 900 respective locations. Three years ago, Hoag also started representing Oak Street Health and Well Now Urgent Care, which are also growing.

“This fateful turn of events made me innovate without knowing it,” said Hoag. “In the beginning, people resisted these tenants.

Now, they’re traffic drivers.”

MIKE LUBINSKI, 30

CHARLOTTE ELSTOB, 30

Vice president of international retail JLL

Assistant vice president, asset management, Western Division (Texas) RPAI

Earlier this year, U.K. native Elstob moved to the U.S. Since then, JLL’s newly appointed VP of international retail has been traveling the country learning about its myriad markets and cultures.

“This move has been one of my biggest challenges,” said Elstob, who works with European and Asian companies looking to enter the U.S. “I knew a few colleagues here, but not many. Much of my job involves learning a new market while pitching business to a new market.”

Elstob is no stranger to complex tasks. She started her career as a graduate surveyor for JLL in London, working her way up to director.

One of her most satisfying projects involved the 2015 repositioning of London’s Westfield Stratford City into a beauty brand destination.

“This was a huge win for the U.K. business,” said Elstob. “The center is the first stop for many international brands. It is really rewarding to transform something, giving retailers the opportunity to reach new demographics.”

Lubinski helped propel RPAI into the 21st century by making it the first company in the industry to implement Argus Enterprise. Used for budgeting, modeling and other functions, the software helped generate information that made RPAI attractive to investors.

“We were going public and needed information on the financial, tenant, and other sides,” said Lubinski, who joined RPAI eight years ago. “It’s hard to do without a model that outlines growth and projects portfolio performance. I was lucky to be part of that and leverage the software to take the company in a new direction.”

Initially a department of one, Lubinski built and leads a fiveperson analyst group. He believes RPAI is ahead of the curve in this regard. “In technology, real estate is kind of backwards compared to other financial sectors,” he said.

But technology alone cannot resolve everything. “Many people want instant solutions but don’t want to apply `old school’ work,” he observed.

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REAL ESTATE

AMI ZIFF, 34

DAN FRANZ, 28

Director of national retail Time Equities

Senior real estate manager Ross Stores

Over 10 years, Ziff has grown Time Equities’ retail holdings from 1.5 million sq. ft. to 5.7 million sq. ft. and is in contract for deals that will take it past the 6 million sq. ft. mark.

Ziff credits much of his success to improving his performance in areas he dislikes. “I learned to run towards things I hate doing,” he said. “Nobody wants to do things that are hard or they’re not good at. But if you keep pressing yourself and are detail-oriented, you can improve.”

Ziff particularly hates dealing with details, but addressing them has given him an advantage. “I found people are often sloppy,” he said. “If you build a reputation for delivering something crisp and accurate, you’ll propel forward. That’s one of mantras for running shopping centers.”

The leasing requirements of the value retailers he deals with are stringent, making details important. “It’s a disciplined strategy,” said Ziff. “It’s not easy getting them to lease space, even if they’re a dollar chain planning 900 stores.”

At 28, Franz is the youngest of this year’s winners, but he began cultivating his retail real estate acumen earlier than most.

During college, he worked for RightSight, where he effected deals for Kirkland Home Décor. He then joined Five Below, which was doing about 95 deals annually. Serving in a support role, he gained exposure and a true market understanding. Moving into a deal-maker position at Total Wine & More, he executed 23 leases in less than two years and took the chain into the Denver market.

Joining Ross just two years ago, Franz is involved in everything from leasing and site selection to legal, construction, and property management in five Southeastern territories. He considers landing this position as a huge accomplishment.

“Ross is not only opening 100 stores annually, they’re a `best in breed,’ he said. “Being here at 28 is really important. It’s a special feeling when you drive by a store you put together that created hundreds of jobs and will be there 30, 40 years.”

TODD PLEIMAN, 38

JOSEPH DOUGHERTY, 36

Vice president, capital markets Phillips Edison & Company

Executive vice president, principal Metro Commercial Real Estate

Somehow, Todd Pleiman manages to balance his busy life. During college, he co-founded a landscaping company where he built patios and hardscapes and later moved to renovating and and flipping homes. Thus began his passion for real estate. Today, the father of five is heavily involved in the near-term prospects of his kid’s sports teams while, at the same time, managing the long-term outlook for Phillips Edison’s business.

Pleiman is responsible for creating, executing and maintaining the capital markets strategies across all of Phillips Edison’s investment vehicles. Since 2012, he has executed more than 40 financing transactions. This has included recapitalizing PECO’s balance sheet to effectuate two mergers totaling over $6 billion in assets.

The 12-year veteran of the company credits his success to his love of the industry and hard work. “I try to push myself and have a passion for what I do,” he said. “I take pride in the capital relationships that I’ve helped to develop and playing a critical role in the company’s successes and growth over the years.”

When Dougherty’s family passes one of his building sites, his three young daughters recognize the company’s logo. This, he said, is one of the most satisfying aspects of his job.

“It’s rewarding to say Daddy helped put that together,” said Daugherty, who has been with Metro 13 years. “I’ve sacrificed a lot for my kids. My wife supported my career since day one.”

Introduced to real estate by a family friend, Dougherty completed a five-year, hands-on co-op real estate program at Drexel University. “It was more than an internship,” he said. “It was an entrepreneurial career path with new challenges daily.”

Outside of the founders, he is Metro’s youngest partner ever.

Specializing in landlord and tenant representation, he has completed more than 744 lease and sales transactions totaling 10.2 million sq. ft. and valued at over $1.1 billion. His next most active business pursuit is mentoring the many younger agents at Metro.

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REAL ESTATE

10 UNDER 40

THE DAZZLING DOZEN Selecting the 10 Under 40 class is one of our most difficult annual duties and many worthy nominees don’t make the final cut. Here are 12 of the worthiest.

CHRIS RESSA, 35

Chief operating officer, DLC As a new rep at DLC, Ressa set a torrid pace of more than 25 deals a year with retailers like TJX, Ross, and Burlington. Next, he led the Midwest team to a 500% increase in closed deals and got promoted to senior VP in charge of 15 other professionals. A public speaker with more than 27,000 followers on LinkedIn, Ressa is an established industry thought leader.

JOSHLYN STEELE, 35 Regional leasing manager, Kite Realty Group

This real estate prodigy grew up fast. Assistant property manager at 18, cancer survivor at 19, she six years ago became Kite’s youngest leasing rep and only woman in the job.

Steele oversees a portfolio of 1.3 million sq. ft. and has signed over 130,000 sq. ft. in the past two years.

ARLIN MARKOWITZ, 39

Senior vice president, CBRE Markowitz has executed over $500 million in Toronto investment sales. In 2018, his team completed in excess of 100 transactions and has more than 1 million sq. ft. of retail space listed in 50

properties. As a leasing agent, Markowitz has represented luxury labels like Hermès, Salvatore Farragamo, Zegna, Equinox, MCM, COS and Brooks Brothers. He also helped Japanese brand Muji enter the Canadian market.

TRIPP RUSS, 24

Vice president, brokerage, The Retail Connection Russ set an all-time record for rookie production and is TRC’s youngest ever VP. Focusing on landlord and tenant representation, he has worked on several high-profile landlord projects across Texas, including Knox Street and Heights Mercantile. His recent deal with Scissors & Scotch at The Crescent was named a finalist for DCEO 2018 Retail Deal of the Year.

MARY REICHARDT, 37

Corporate director of marketing, Butler Reichardt’s stints as marketing director for Alachua County and communications manager for Rep. Keith Perry positioned her well as the promoter of Gainesville’s premier retail property. In her short time at Butler Enterprises’ megacomplex in Gainesville (2 million sq. ft. of retail on 267 acres) she formulated the communications strategy for its new town center and planned a Whole Foods’ opening that drew 2,000 people.

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AMANDA T. WELLES, 27

Vice president, Venture Commercial Real Estate Strategies Welles joined Venture in 2014 as an intern.

Just two years later, she was named as the youngest VP in Venture’s history. Welles represents 3 million sq. ft. of retail for about 25 landlords at lifestyle and mixed-use projects in Dallas-Fort Worth. In 2017 and 2018, she conducted more than 125 lease transactions.

NEAL WADE, 39

Development partner, Baker Katz Wade has completed more than 50 purchases and sales of property, leading to his quick rise to development partner. His efforts were crucial to the closing of the company’s largest purchase — PlazAmericas Mall, an 850,000-sq.-ft. center in Houston that’s home to more than 175 retailers and restaurants.

DAVID FAZIO, 38

Executive vice president, brokerage, The Retail Connection One of TRC’s original team members and its youngest ever partner, Fazio handles national account coordination with TRC’s four Texas offices and is Chainlinks’ regional tenant council chair. He has negotiated 300 leases for Bed, Bath & Beyond, 275 for Visionworks and 115 for Famous Footwear.

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MARK KAPLAN, 34

Chief operating officer, RIPCO Real Estate

In just over two years, Kaplan has nearly doubled RIPCO’s number of brokers to 67, many of them long-tenured professionals. He represents dozens of public REITs and owners. The latter have included Extell Development Co., RXR Realty, Related Companies, Urban Edge, Acadia Realty Trust and Regency Centers. In 2018, Ripco was ranked Brooklyn’s leading brokerage firm for square footage leased.

BRIAN GOODWIN, 34

Senior vice president, Metro Commercial Real Estate, Inc.

Goodwin joined Metro 11 years ago.

Today, he is exclusive regional broker for PetSmart in 18 states and Puerto Rico and exclusive national broker for Mattress Firm from Maine to Florida. Since 2015, he has completed over 60 PetSmart leases, 30 for Mattress Firm and 100 for Lumber Liquidators. Real Estate Forum named Goodwin the #20 broker in the nation in 2017.

BRANDON ANAPOL, 39

Senior vice president, Metro Commercial Real Estate, Inc. Anapol has completed over 700 deals on behalf of retailers nationwide. In 2018 alone, his transaction volume exceeded $80 million. Clients have included Edge Fitness, Lumber Liquidators, Kona Grill,

Aspen Dental, European Wax Center, Kirkland’s, Urban Air, Bowlmor and Jamba Juice. Anapol is a seven-time recipient of the Costar power broker award.

BEN HINES, 27

Assistant vice president, Venture Commercial Real Estate Strategies, LLC Hines represents tenants in Texas and Louisiana, including Orvis, Clean Juice, and Ollie’s. He is a committee member on the North Texas Association of Realtors YPF and the south-central leader for X-Now. In 2017, he received the Rookie of the Year Award; in 2018, he was given the All-Star Award by X Team Retail Advisors.

CONGR ATUL ATIONS MIKE LUBINSKI AVP, Asset Management – Western Division

On being selected one of Chain Store Age’s 10 under 40: Rising Stars in Retail Real Estate

www.rpai.com NYSE:RPAI

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REAL ESTATE

The Vessel on opening day

History On The Hudson An instant neighborhood, Hudson Yards, debuts in Manhattan.

BY AL URBANSKI

I

It was a scene that the retail world was never supposed to witness again. Thousands of eager shoppers and curiosity seekers gathered outdoors on a chilly March morning to await the opening of a brand new, 1 million-sq.-ft. enclosed mall. Once inside, they lined up for discounts and giveaways at stores, many of which, like Neiman-Marcus, were new to the market. Most amazing of all was that this happened in Manhattan, the American mecca of street retail.

The mall is The Shops & Restaurants at Hudson Yards, a spanking new neighborhood sprung whole from the ground on the West Side across from the Javits Center. Nearly everything about the project carries an aura of incredulity.

• The $25 billion-dollar, 28-acre property is said to be the biggest private real estate development in United States history.

• It bursts upon the New York scene with 18 million sq. ft. of commercial and residential space (including the Shops and more than 30 restaurants).

• At 1,268 feet, 30 Hudson Yards is taller than the Empire State Building that sits six blocks due west of it.

• Through storm or blackout, the lights and atmospheric controls will remain on for Hudson Yards residents thanks to a microgrid and two onsite cogeneration plants that generate electricity and hot and chilled water twice as efficiently as conventional sources.

• Most of Hudson Yards is constructed on a

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Related Companies chief David Ross

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The Shops’ main gallery

Lobby at 30 Hudson Yards

New West Side skyline

Neiman’s New York debut

10-acre platform built over railyards that lead to Penn Station. Only about a third of the project is capable of supporting structures, leaving lots of open gathering space.

In that space sit five acres of gardens and public plazas bedecked with more than 200 mature trees and 28,000 plants. It also houses Vessel, the beehive-like tower of interconnected stairways that is an instant tourist attraction and that serves as the project’s trademark.

Perhaps the most remarkable thing about Hudson Yards is that, at a time when labor shortages regularly delay projects big and small, the gargantuan undertaking was delivered on schedule, six years after ground was broken by co-developers Oxford and Related Companies.

“I pause and take this all in and I’m still awed by all of it. This is an historic moment,” said Related chairman Stephen Ross at the March 15 grand opening ceremonies attended by a throng of dignitaries, project partners, and media. Ross emerged as the crucial member of the so-called “Group of 35” civic and business leaders who came together decades ago to plan for growth in the area, which borders Hell’s Kitchen to the north and Chelsea to the south.

More numerous were the regular folk who streamed into the mall and became part of the history alluded to by Ross. The Shops & Restaurants is a seven-story structure situated between the 10 and 30 Hudson Yards Towers.

Neiman Marcus takes up the top two floors and more than 100 shops do business in its 700,000 sq. ft. of gross leasable area.

Full list of retail tenants: Forty Five Ten, 3DEN, The Body Shop, H&M, Micro Kickboard, PiQ, Zara, Aritzia, Athleta, Banana Republic, H&M, Jo Malone London, Kiehl’s, Lululemon, MAC Cosmetics, Origins, Pandora, Sephora, Sundays, Verizon Wireless, Zara, AG Jeans by Adriano Goldschmied, Atelier Cologne, Batch, B8TA, Frankie CoLAB, Heidi Klein, Lovepop, M. Gemi, Mack Weldon, Madewell, Milk & Honey Babies, Muji, Rhone, Stance, Uniqlo, Snark Park, Avant Gallery, Brooks Brothers, Cartier, Coach, The Conservatory, Cremieux, Dior, Dunhill, Fendi, Kate Spade, Kenzo, Molton Brown, Patek Philippe, Piaget, Rolex, Rudsak, Sally Hershberger, Scanlan Theodore, Stuart Weitzman, Theory, Tiffany & Co., Tod’s, Tory Burch, Tumi, Van Cleef & Arpels, Vilebrequin, Vitra Eyewear, and Watches of Switzerland

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REAL ESTATE Q &A

CSA TALKS WITH…

RPAI’s Jason Kasal

Jason Kasal is a third-generation Texan and, as such, is a local resource for what is on trend when it comes to the Lone Star State. Yet the mad pace of new development projects in places like Houston and Dallas’s northern suburbs is fueled by a steady flow of thousands of out-of-staters following jobs to these vibrant Texas boomtowns.

For an up-close look at the retail scene there, we turned to Kasal, a vice president and senior leasing director for RPAI who oversees 37 properties in the state.

The idea is to have people like me in these markets and be aware of everything that’s going on in them.

RPAI has a pretty clearly laid out vision for the retail projects it undertakes, doesn’t it, Jason?

We invest in real estate, so we look for the best real estate. We don’t invest in tenants. We’ve identified 10 markets in the country where we want a presence and we feel we know these places better than any other owner. We have boots on the ground in all of them. The idea is to have people like me in these markets and be aware of everything that’s going on in them.

And you cover…?

Dallas, Houston, San Antonio, and Austin.

Tell us about an RPAI property that’s representative of what’s being demanded of retail in Texas.

Southlake Town Square, northwest of Dallas, is a good example. It’s a super-regional shopping destination that draws two million shoppers a year, located in Southlake, where the average household income tops $280,000 in a one-mile radius. It’s not a shopping experience you could find at any mall. It’s 1.2 million square feet, but doesn’t have any anchors. The average shop size is 2,500 square feet. Retailers include brands like Apple, Peloton, Lululemon, Madewell, Sephora and Tesla.

What kind of demographics drive the evolution of north Texas?

Many local residents are not a native Texans. In Plano, a lot of corporations like Toyota and Liberty Mutual have relocated here, and so you’ve got daytime populations of 60,000 people in a very concentrated area, and we’re the retail component at heart of it all. In Southlake, we’re close to DFW airport, and so we have a steady flow of

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new traffic from business travelers. We did a credit card study and found that a significant number of our shoppers did not reside in Texas.

Aside from upscale retail, did you add more food and beverage and entertainment tenants?

Yes, but not always. If we look our project in Plano, The Shops at Legacy is a 392,000-square-foot mixed-use asset that was just the opposite. It overly relied on F&B and entertainment and was light on retail in the beginning. At the top of our list when we bought the center in 2009 was Urban Outfitters. Once we added them, we were able to attract other retailers like Kendra Scott, Bluemercury, Benefit Cosmetics. and Travis Matthew Are retail chains, by and large, savvy about what’s going on in Texas?

Retailers are very sophisticated in their approach to Texas. Nearly all of the brands work with local brokers. If a retailer is saying that their open-to-buy is 10, they want to hit 10 home runs. This is especially true if they are new to the market and they are looking to local agents to help. Many brokers are very good at helping with a strategy that ranks center opening. Then there are the digitally native brands that know exactly where their customers are. For Soft Surroundings, Southlake was one of their best-performing Zip Codes for online and catalog sales before we engaged in a local store.

Do you think your town centers will continue to appeal to milliennials and Generation Z shoppers as they become a larger part of the shopper base?

Very much so, because the social interaction component is a big factor for them. At Southlake, we host several festivals including a street art show that draws 70,000 people over three days, and we see a lot of people return and spend money with us over the next 30 days. We’re seeing millennials and Gen Z especially, make purchasing decisions online before they get to the shopping center and the expectation is to take the product with them once they enter the store. If they really want something, even waiting two days for an online delivery is too long. We make sure we are providing an engaging space to shop with the most relevant brands offering instant fulfillment around a social component that can’t be duplicated elsewhere.

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PROJECT PROFILES

Tops of the Props

Some properties retailers will want to learn more about at RECon. SALEM GATE MARKET

Location: Interstate 20 and State Highway 138 in Conyers, Ga. Size: 253,000 sq. ft.

Owner/Operator: Tri-Land Properties Key Tenants: Hobby Lobby, Northern Tool + Equipment, 105-room hotel Construction status: Tri-Land Properties broke ground on the redevelopment on April 24, 2019.

Located 25 miles east of downtown Atlanta, Salem Gate Shopping Center’s first phase includes a 55,000-sq.-ft. Hobby Lobby, a 20,000sq.-ft. Northern Tool + Equipment, a 105-room hotel and an Allure Nail & Spa. Conversations with several other target retail and restaurant names from 2,500 sq. ft. to 40,000 sq. ft. are underway, and Tri-Land plans to announce additional names in family fashion, sporting goods, and value retail in the very near future.

Salem Gate is the centerpiece of what will become the Conyers Gateway Village District, the product of a new zoning ordinance adopted in 2016. “The City’s decision to modify the zoning on the property made this project possible,” says Tri-Land Properties President Richard Dube. “Salem Gate Market is the cornerstone of a larger transformation. And, that stone had to

be shaped and set in a very specific way to ensure that the foundation was strong.”

Longtime Conyers City Council member and now Mayor Vince Evans, says that the experience of working with Tri-Land has been a positive one: “They came to us with a true partnership mentality, and they have embraced the process of working with municipal authorities and responding to the needs of the community at every step.”

Tri-Land broke ground on Salem Gate Market in April.

CROCKER PARK

Location: Westlake, Ohio Size: 4.5 million sq. ft.

Owner/Operator: Stark Enterprises, Bob Stark (owner) Key Tenants: Tenants include Apple, Dick’s Sporting Goods, Anthropologie, Bath & Body Works, H&M, Hyde Park Prime Steakhouse, Market District, Bar Louie, Cantina Laredo, Hyatt Place and Blue Sushi Sake Grill.

Construction status: Open and operating Crocker Park spans more than 12 city blocks in Westlake, Ohio, providing the West Side of Cleveland with the best in food, fashion and events for the entire family. This groundbreaking lifestyle center offers national brands including Sephora, H&M, J.Crew and Nordstrom Rack mixed with locally owned and operated shops including Cleveland Clothing Co., Kernels by Chrissie and Banyan Tree. The restaurant list also includes a wonderful mix of national and locally owned dining options with patios and cuisines for everyone from steak to seafood, gastropubs and trendy brunch bites. Crocker Park hosts annual events all year long, from Liberty Fest, a patriotic music festival in June, to a charitable outdoor wine festival in September and a holiday tree lighting in November.

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PROJECT PROFILES

THE DAYTON’S PROJECT

Location: 700 Nicollet Mall, Minneapolis, MN 55402 Size: TOTAL GLA: 1.2 million sq. ft. RETAIL: 200,000 sq. ft. OFFICE: 850,000 sq. ft.

Owners: 601w Companies, United Properties, Telos Group Retail Brokers: Mid-America Real Estate — Minnesota, LLC

Office Brokers: Transwestern Key Tenants: Dayton’s Food Hall and Market, 40,000 square feet. Leasing is underway with a broad range of high-profile retailers, office tenants, and full-service restaurant purveyors.

Construction status: Under renovation with Grand Opening in Spring 2020 Located on Nicollet in the heart of Downtown Minneapolis, the iconic Dayton’s building is being reinvented for the 21st century. The downtown business district boasts a daytime population of 205,000 with a residential population of 43,000, estimated to grow to 70,000+ by 2025, along with average household incomes over $80,000. The Dayton’s Project offers 200,000 sq. ft. of retail over three levels (lower, street & skyway), plus 850,000 sq. ft of office on the upper floors. There are five skyway connections in the building with over 58,000 daily pedestrians.

Join The Dayton’s Food Hall & Market, curated

by James Beard Award-winning chef Andrew Zimmern and operated by Robert Montwaid of Gansevoort Market in New York. Grand Opening will be Spring 2020.

plus public event spaces and social gathering areas. The expansion will exceed $500 million of development over the coming four years and reflects the continuing demand from local and national firms that want to be part of the unique mixed-use environment already created at Easton. It also helps set the stage to establish Easton as a unique and

exciting new residential community while increasing office employment in the number one destination for corporate growth in Columbus and Central Ohio over the past 20 years. Through these expansions, Easton cements its place as the best-inclass example of a live-work-play project in the nation.

EASTON TOWN CENTER EXPANSION

Location: Columbus, Ohio Size: 700,000 sq. ft.

Owner/Operator: Co-developed by L Brands, The Georgetown Company and Steiner + Associates. The property is also managed by Steiner + Associates.

Key Tenants: A 40,000-sq.-ft. freestanding RH Columbus, The Gallery at Easton Town Center will anchor the expansion — one of only 19 in the country. Additional confirmed tenants include a Marriott Aloft Hotel, complete with a restaurant, fitness center and pool; Ivan Kane’s Forty Deuce, a speakeasy entertainment venue and bar, and Forbidden Root Brewery.

Local retailers such as The Beeline, True Food Kitchen, and interactive bowling concept Pins Mechanical make this urban district unique.

Construction status: Construction for the expansion is already underway with an expected completion date in 2022.

In its 20th anniversary year, Easton Town Center continues its evolution with a significant expansion that will feature popular local and national retailers, breweries and restaurants, entertainment venues and hotels,

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PROJECT PROFILES

THE SHOPPES AT MIDDLETOWN

Location: Middletown, New Jersey Size: 340,000 sq. ft.

Owner/Operator: National Realty & Development Corp.

Key Tenants: Wegmans, CMX Cinemas, and Pet Supplies Plus. In lease negotiations with national retail brands and restaurants with outdoor dining.

Grand Opening: 2021 Eastern Monmouth County’s premier retail destination is coming to Middletown, N.J. Located at the intersection of Route 35 and Kings Highway East, the 340,000-sq. ft.

Shoppes at Middletown will feature a collection of unique boutique shops and specialty restaurants with open café space. Anchored by Wegmans and CMX Cinemas, this new retail environment will be unlike any other found in Monmouth County, offering visitors the opportunity to enjoy shopping, entertainment, and dining in one unique setting.

Visit our Leasing Team at Booth 117 G Street, Central Hall to learn more about The Shoppes at Middletown and other exciting opportunities within our portfolio. 1.800.932 RENT (7368) www.nrdc.com.

ROCK RUN CROSSINGS

Location: Southwest suburban Chicago, at the crossroads of Interstates 55 and 80 Size: Set on 265 acres, with over 1 million square feet, including: a. Retail and dining: 500,000+ sq. ft. b. Entertainment: 120,000+ sq. ft. c. Office: 200,000+ sq. ft. d. Hotel/Lodging: 300,000+ sq. ft. e. Multi-Family: 600 units Owner & Developer: Cullinan Properties, Ltd. Key Tenants: Regal, part of the Cineworld Group, was recently announced as one of the first entertainment anchor tenants occupying 70,000 sq. ft. at Rock Run Crossings is beginning to take shape, with ongoing tenant deals completed and to be announced soon. Cullinan is in negotiations with additional retail, hotels, restaurants, office/medical and entertainment users.

Construction status: The site is shovel-ready with site clearing complete. A groundbreaking ceremony was held March 22, 2019. Initial retailer openings are anticipated in Fall 2021.

New full service interchange with direct access to the site off of I-55 with an estimated 230,000 VPD is underway.

Rock Run Crossings is an exciting super-regional development site located at the gateway to Chicagoland with excellent highway visibility and over 1 million sq. ft. of dedicated mixed-use space. Rock Run Crossings has regional access from Chicago, Central Illinois, Iowa, and Indiana markets, with an estimated 230,000 vehicles passing daily. Located in a dynamic growth corridor in Illinois’ Will County, a major growth in

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population and employment is forecast through 2040, and is well underway with the addition of Amazon facilities and other large employers.

Rock Run Crossings’ selection of retail shopping will complement other area offerings and fill a gap in unique and better shopping choices in the southwest Chicago suburbs. You’re invited to explore Rock Run Crossings to see why it is sure to become the destination of choice for so many.

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REAL ESTATE Q & A

5Qs for InvenTrust’s Ivy Greaner on the company’s ‘3G’ strategy

I

vy Z. Greaner joined InvenTrust properties less than a year ago. But the 30-year industry veteran who’s held top jobs with FivePoint and Ram Realty, has made an immediate impact on the fortunes of this fast-growing company. She spoke with us about the “3Gs” that guide InvenTrust’s strategic direction.

With all the talk about retail sales declining and customer traffic diminishing, how has InvenTrust Properties’ portfolio been performing?

Four years ago we made a strategic decision to concentrate our portfolio on three elements. One, grocery or necessity-based tenants that drive traffic to the property; two, the market the asset is located in, and, three, income growth potential. We call this our “3G” approach: acquiring top grocery-anchored centers in markets with above-average demographics that are also in demand by retailers. All of these factors have contributed to decreased year-over-year vacancy rates and increased base rents.

What are some of the markets performing especially well for retail?

We have focused our portfolio on key markets from the D.C. metro through Virginia and North Carolina, greater Atlanta, coastal Florida and Orlando, to Texas, Denver and Southern California. These are markets that retailers want to be in, and many are reinvesting in their stores located in these markets with household income growing and population increasing.

How have store closures affected your centers?

We have not experienced the large vacancy percentages that enclosed

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mall owners have faced. Tenant mergers and bankruptcies have, in many cases, led to opportunities for us. For instance, At Westpark Shopping Center in Glen Allen, Virginia, in the Richmond metro area, Publix is in the final phase of building its newest store in the market. We are finalizing a redevelopment of this 30year old property, including a façade rebuild, improved landscaping, parking lot repaving, and new LED lighting, and pylon signage.

Ivy Greaner

Does InvenTrust have plans for more redevelopment projects?

Yes, we do. We have been involved in light redevelopment over the last few years, building on outparcels and completing some façade improvements. We have now begun a deeper dive into unlocking more value from our properties by assessing opportunities for increasing revenue and maximizing land use for the community. This could include expanded products types such as multifamily and office.

Do you find that sustainability has become a necessary component of redevelopment plans?

Absolutely. Our redevelopment plans will include sustainable practices across the board. We’ve established some important goals for reducing controllable energy usage. We are significantly upgrading our portfolio on a rolling basis with LED lighting and energy management systems.

Smart irrigation has been incorporated as centers’ landscaping plans are overhauled. We are working to implement car charging stations in the appropriate markets, and waste recycling and diversion is put in place on all our new acquisitions. We are a proud member of GRESB, and we participate in their annual ESG [environmental, social and governance] assessment.

PROJECT PROFILES

WESTPARK SHOPPING CENTER

Location: Glen Allen, VA (Richmond Metro) Size: 176,910 sq. ft.

Owner/Operator: InvenTrust Properties Key Tenants: Publix (new location opening late May 2019), Christmas Tree Shops, Planet Fitness Construction status: Completing major center remodel in coordination with the opening of a new 56,000 sq. ft. Publix.

Renovations include: • Façade rebuild • Landscaping enhancements and hardscape improvements • Parking lot repaving • New LED lighting • New pylon signage facing Route 250 Westpark Shopping Center has been a popular local shopping destination for more than 30 years, and its fresh new look and amenities are welcomed by the community. With a thriving resident and daytime population, the center’s prime location on the main retail corridor of this affluent suburb northwest of Richmond is ideally suited for a variety of retail, restaurant, and service businesses. Everyday traffic will be driven by the store mix and the opening of Publix’ latest prototype store, including a dedicated pick-up drive-through for online orders.

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PROJECT PROFILES

SPRING CREEK

Location: Fayetteville, Ark. Size: 588,606 sq. ft.

Owner/Operator: DLC Management Corp.

Key Tenants: Walmart, The Home Depot, Best Buy, T.J. Maxx, Old Navy, Ulta Beauty, David’s Bridal, Jo-Ann Fabrics and Dollar Tree Construction status: Open and operating Spring Creek Center is located in Fayetteville, Ark., recently ranked No. 8 on MarketWatch’s “Top U.S. Cities To Raise A Family.” It is a 588,000-sq.-ft. open-air power center where you can find something for everyone in your family! From Walmart to Home Depot, Best Buy, Old Navy, TJ. Maxx and Ulta Beauty, the list goes on. Strategically located at the heavily trafficked intersection of Joyce Blvd and College Ave., which has over 65,000 vehicles pass by daily. In close proximity to University of Arkansas (24,000+ students) and the corporate headquarters of major employers Walmart and J.B. Hunt Transport.

LAKE NONA TOWN CENTER

Location: Orlando, Fla. Size: 4 million sq. ft.

Owner/Operator: Tavistock Development Company. Steiner + Associates serves as the retail, leasing, and development partner.

Key Tenants: Currently home to a 200-room, dual-branded Courtyard by Marriott and Residence Inn by Marriott Hotels, Drive Shack’s first location, Bosphorous Turkish Cuisine, Chroma Modern Bar + Kitchen, Park Pizza & Brewing Company, and Boxi Park — Central Florida’s first shipping container eatery and bar. Plans for a new a 200+-room full-service modern hotel and a Cinèpolis luxury movie theatre have already been announced. Tavistock and Steiner are in lease negotiations with a brewery, comedy club and live performance venue, bowling concept, and several additional restaurants and retailers. At full buildout, Lake Nona Town Center will include more than 80 specialty retailers, anchors, junior anchors, and restaurants.

Construction status: The first phase of Lake Nona Town Center opened in January 2016, with Phase II currently under construction.

Upon full buildout, Lake Nona Town Center will feature 4 million sq. ft. of office, retail, and commercial space.

In a city known worldwide for bringing immersive and engaging environments to life, and where more than 72 million visitors converge annually for business and leisure, Lake Nona is creating a new entertainment destination for locals and visitors alike. Lake Nona Town Center fronts SR-417, Orlando’s eastern beltway, and is located adjacent to Orlando International Airport and its new multimodal transportation hub and international terminal. The Town Center is a 100-acre experiential magnet and regional

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destination nestled within the 17-square-mile Lake Nona master-planned community. Tavistock has already completed millions of sq. ft. of office, medical, research, residential, university, hospitality, and commercial space in Lake Nona.

Lake Nona Town Center has already successfully opened and leased 85,000 sq. ft. of Class A office, a dual-branded Courtyard by Marriott and Residence Inn by Marriott hotel, 16,000 sq. ft. of retail and restaurant space, and a multilevel parking structure.

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NOW LEASING MONMOUTH COUNTY, NEW JERSEY’S NEW RETAIL DESTINATION JOIN WEGMANS & CMX CINEMA

GRAND OPENING 2021 The Shoppes at Middletown, located on Route 35 in Middletown, NJ is a new 340,000sf town center anchored by a Wegmans and CMX Cinema. Featuring a unique blend of boutique retail shops and specialty restaurants with outdoor dining, this vibrant retail environment will be unlike any other found in Monmouth County; one that will allow visitors to enjoy shopping, entertainment and dining in one extraordinary setting.

VISIT US AT ICSC RECON BOOTH 117 G STREET, CENTRAL HALL NATIONAL REALTY & DEVELOPMENT CORP. 3 Manhattanville Road, Suite 202, Purchase, NY 10577 nrdc.com 1.800.932.RENT shoppesatmiddletown.com

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PROJECT PROFILES

SOUTHLAKE TOWN SQUARE

Location: Southlake, Texas (Dallas / Ft. Worth MSA) Size: 1.4 million sq. ft.

Owner/Operator: Southlake Town Square is owned, leased and managed by RPAI US Management LLC, a subsidiary of Retail Properties of America, Inc. Key Tenants: Apple (remodeled to follow downtown Chicago design), Tesla, Peloton, J. McLaughlin, Brooks Brothers, Lululemon, LUSH, Madewell, Kendra Scott, Anthropologie, Sephora, Travis Matthew, 7 For All Mankind, and more.

Dining Options: Shake Shack, Del Frisco’s Grille, Truluck’s, Unleavened, HOPDODDY, Corner Bakery, and more.

Construction Status: Southlake Town Square is a completed project where we have more great retailers to announce soon!

Southlake Town Square is a 1.4 million sq. ft. regional shopping destination with more than 2 million shoppers within a 30-minute drive. Located among the most affluent zip codes in the United States, Southlake Town Square’s customers within a 1-mile radius have a medium household income of $224,000. Southlake Town Square brings together today’s best brands in fashion and retail in a one-of-a-kind shopping destination situated in the heart of a timeless town square.

The charm and character found at Southlake Town Square is unmatched compared to the greater trade area.

HAMILTON PLACE

Location: Chattanooga, Tennessee Size: 1.1 million sq. ft.

Owner/Operator: CBL Properties Key Tenants: Dillard’s, Belk, Altar’d State, H&M, American Eagle Outfitters, Aerie, Dave & Buster’s (under construction), DICK’S Sporting Goods (under construction) Dining Options: Aloft by Marriott (under construction), The Cheesecake Factory, P.F. Changs, Abuelo’s, Rodizio Grill, and J. Alexanders Construction Status: Redevelopment on the former Sears building is currently underway.

Construction will be completed in early 2020.

The Hamilton Place campus features five associated centers that include a mix of value-oriented retailers, boutique, and service tenants, as well as a variety of upscale eating establishments. CBL proactively purchased the Sears building at Hamilton Place for future redevelopment in 2017 and in early 2019,

construction on the redevelopment began.

Hamilton Place’s redevelopment includes the addition of new-to-market entertainment operator Dave & Buster’s, DICK’S Sporting Goods, a 135-room Aloft by Marriott hotel,

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class ‘A’ office space, The Cheesecake Factory, which opened in December 2018, as well as additional retailers and restaurants. The project is slated to be complete in late spring/early summer 2020.

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PROJECT PROFILES

BUTLER TOWN CENTER AT STENGEL FIELD

Location: State Road 24 (Archer Road), Interstate 75 and State Road 121 (34th Street), Gainesville, Fla. Size: 450,000 sq. ft. of retail, restaurants and residential (mixed use) Owner/Operator: Butler Enterprises Key Tenants: Now open in Phase 1: Whole Foods Market; P.F. Chang’s; Bonefish Grill, The Village Jeweler; Grub Burger; Hearth & Heart Boutique, European Wax Center and recently renovated, recliner stadium seating Regal 14 Cinema.

Opening in 2019: The Cheesecake Factory, Chase Bank, Pink Narcissus Lilly Pulitzer Boutique, Narcissus Fashion, Irish 31 Pub & Eatery, Agapanthus Boutique and Day Spa, and Noire the Nail Bar. Other Project Components: Stengel Field Food Hall, the first chef-curated food hall in the North Central Florida region; 200-plus luxury apartments; a hotel to serve 5 million annual visitors, and a public space with innovative water features and an area for entertainment events.

Construction Status: Phase 1 anchored by Whole Foods complete. Phase 2 including

WOODLAND MALL

Location: 3195 28th St SE Grand Rapids, Mich. 49512 Size: 1,170,000 sq. ft.

Owner/Operator: Pennsylvania Real Estate Investment Trust (PREIT) Key Tenants: • The Cheesecake Factory (lease executed and expected to open late October 2019) • Black Rock Bar & Grill (expected to open fall 2019) • Von Maur (expected to open October 2019 • Urban Outfitters (expected to open October 2019)

residential atop retail in progress. Completion of final residential phase of residential apartments is projected for 2022.

This Main Street-style mixed-use project will be the first of its kind in North Central Florida, a new community gathering place where people will live, shop, dine, and play near the University of Florida campus and the UF Health/ Shands medical complex. The Shops of Butler is a 300-acre development comprising Butler Plaza (est. 1975) Butler North (est. 2016), and

the new Butler Town Center — a walkable outdoor shopping experience not found elsewhere in this region of 1.2 million residents.

Town Center features the only Whole Foods Market, P.F. Chang’s, and Cheesecake Factory within a 1.5-hour radius. Street-level amenities include fountains and curated local art features. The Stengel Field Food Hall pays homage to the property’s history as a WWII air field and birthplace of the famous Pitts Special acrobatic airplane.

• REI (expected to open in the second quarter of 2019) • Tricho Salan (expected to open fall 2019) • Altar’d State • Apple • LUSH • Williams-Sonoma • Bath & Body Works • Pottery Barn • The North Face • Dry Goods • H&M • Celebration Cinema

Construction Status: Woodland Mall is currently open and the redevelopment project is expected to be complete by October 2019.

Located in Grand Rapids, Woodland Mall has established its presence as the premiere retail, dining, and entertainment destination in Western Michigan. The project is currently undergoing a multi-million-dollar redevelopment, which will improve upon its already exclusive lineup of high-impact tenants, transforming the property and strengthening this market-dominant asset. Von Maur, a first-to-portfolio, fashion department store and the brand’s first location in the Grand Rapids region will anchor the redevelopment along with Urban Outfitters, The Cheesecake Factory (only the second in the state), and more.

As the second largest redevelopment underway in PREIT’s portfolio, Woodland Mall demonstrates the successful results of a strategy that is a thoughtful curation of innovative and in-demand tenants. PREIT expects that this will increase traffic, drive sales, and meaningfully reimagine how shoppers experience the mall.

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FASHION DISTRICT PHILADELPHIA Location: 1101 Market St, Philadelphia, PA 19107 Size: 838,000 sq. ft.

Owner/Operator: PREIT, Macerich Key Tenants: City Winery, Century 21, Round One Entertainment, Nike, ULTA Beauty, AMC

Theatres, H&M, Levi’s Forever 21 Grand Opening: September 19, 2019 Fashion District Philadelphia is the largest premier shopping, dining, and entertainment destination in downtown Philadelphia.

Dedicated to achieving mass appeal, it has curated its tenancy to reflect four key brand pillars: Style, Dining, Entertainment and Arts & Culture. The project includes flagship, offprice, and traditional retailers including H&M, ULTA Beauty and Nike. To complement its fashion offerings, Fashion District is introducing several first-to-market and unique dining and entertainment offerings, including City Winery, a culinary and cultural wine experience; Market Eats, a collection of restaurants in partnership with Aramark; Round 1 Entertainment, the ultimate family entertainment zone; and AMC Theatres, Center City’s first movie theater since 2012.

Construction Status: Expected to open in phases beginning late 2019 Located in the heart of Silicon Valley, Westfield Valley Fair offers retail brands direct access to the country’s cradle of technological creativity. Valley Fair gives the world’s top retailers a unique opportunity to engage on an intimate and daily basis with the very consumers who are themselves at the forefront of today’s digital revolution.

The project will introduce an all-new Digitally Native Vertical Brand (DNVB) district curating many of the retail industry’s most innovative digital-first brands, a brandnew outdoor Dining District nestled amidst beautifully landscaped plazas, flowing water features, and native plants, as well as new luxury concourses that will be elegant, modern, and sleek, unlike any other retail setting in Northern California.

WESTFIELD VALLEY SQUARE

Location: 2855 Stevens Creek Blvd, Santa Clara, CA 95050 Size: 2.2 million sq. ft.

Owner/Operator: Unibail-Rodamco-Westfield Key Tenants: • Luxury fashion brands Jimmy Choo and John Varvatos • Valley Fair’s landmark deal for a new flagship Apple • Fashion from Indochino and Anne Fontaine • Jewelry from APM Monaco • Digital-first brands such as UNTUCKit and Gorjana • Athleisure apparel from Under Armour • In February, Valley Fair welcomed the spectacular new ShowPlace ICON Theatre. It offers a movie-going experience unlike any other in Northern California featuring sleek lounge spaces, fine dining, and adults-only seating areas.

Dining Options: Great future additions to the property’s restaurant, café, and dessert collection include the award-winning Del Frisco’s Double Eagle Steakhouse, Shake Shack, Salt & Straw, and SomiSomi.

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SPECS Puts Spotlight on Physical Retail

By Marianne Wilson Retail and restaurant executives from the nation’s leading companies and growing startups joined suppliers, architects and other industry professionals at Chain Store Age’s 55th annual SPECS Show. The premier networking and educational event for brickand-mortar retail, SPECS is focused on the industry trends and technology that are transforming the design/planning, construction and maintenance of physical stores.

This year’s show, held at the Gaylord Texas in Dallas, had a record of exhibitors and retail and restaurant executives in attendance. The attendees represented the full spectrum of retail, from convenience stores and discounters to specialty apparel and hardlines. Non-traditional retail was also well represented, including banks, fitness centers, medical and dental.

The program combined keynote presentations and educational sessions with

a dynamic exhibit floor and plenty of networking opportunities. Robert Herjavec, the investor and entrepreneur who is best known as a shark on ABC’s hit television show “Shark Tank,” kicked off the formal program with an inspiring keynote address.

Other keynote highlights included Kat Cole, COO and president of restaurant giant Focus Brands North America, whose 5,500-store portfolio includes Jamba Juice, Cinnabon, Auntie Anne’s, Moe’s Southwest Grill, Carvel, Schlotzsky’s, and more.

“The brands that win are the ones that stay closest to the customer…because the customer is driving everything,” Cole told the audience.

The show also included the presentation of CSA’s annual Breakout Retail Awards.

Five innovative and growing brands — Adore Me, b8ta, Lolli & Pops, Orangetheory Fitness and b8ta — were honored and

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shared the spotlight during a special Q&A. Sessions: The educational part of the program featured more than 20 individual workshop sessions, with many offering continuing education credits. A broad range of topics was covered, from pre-fab and modular building solutions to new energy regulations to facilities management software solutions. One session took on a longstanding challenge that has grown more complex in recent years: designing, building and preparing stores for threats and natural disasters. Another offered attendees an up-close look at the obstacles that disabled and aging consumers face in stores and other facilities.

Innovation and trends were also on the agenda, from a look at “phygital” retail — the merging of the offline and online experience — to a presentation on new experiential retail environments to diversity in the workforce. And “Women in Retail: Drivers of Change,” featured an all-star panel of female retail construction and facilities executives who shared their professional experiences and expertise with the audience.

Business networking has long been the hallmark of SPECS and this year was no exception. The show offered plenty of opportunities for attendees to collaborate and partner with high-level decision makers. Attendees came together on the show floor, during workshop sessions and at meals and evening receptions. Retailers and suppliers also had the chance to participate in time-efficient, one-on-one meetings at the Face-to-Face Information Exchange.

SPECS will return to the Lone Star State next year. SPECS Show 2020 will be held March 15 – 17, 2020, at the Gaylord Texan in Dallas. Look for updates on specsshow.com.

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Gary Esposito, SPECS Show chairman and VP, Chain Store Age, welcomed attendees to the event.

Left to right: Melissa Zimmerman, dir. of store care; Walgreens, Lisa Smola-Hollo, project manager, growth & development, Ulta Beauty, Sarah Kovac, dir. of architecture, Maverik.

Sarah Amundsen, senior dir. of store design, Target, and Shelley D’Addurno, dir., store development & sustainable faciltiies tech., Whole Foods Market, shared insights at the “Women in Retail: Drivers of Change” panel.

Lloyd Lords, VP of construction and facilities, BJ’s Wholesale, participated in the Face-to-Face Information Exchange.

Paul Blackburn, VP, retail development, design and merchandising, North America, L’Occitane en Provence, shared insights on his company’s latest store concepts.

The 2019 Breakout Retailers Awards were sponsored by HFA Architects + Engineers. Left to right: Mike Mettler, Orangetheory Fitness; Chris Horton, HFA; John Kennelly, b8ta; Larry Lott, HFA; Steve Heeley, Veggie Grill; Alexandra Diaz, Adore Me; Craig Hale, HFA; and Chen Sapirstein, Lolli & Pops.

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The Women in Retail reception was sponsored by American/Interstate Signcrafters. Left to right: Bibi Sukey, senior tenant coordinator, Brookfield Properties, and Tracy Scanlan Zaslow, senior director, design & construction, Luxury Brand Holdings, with American/Interstate’s Lisa Johnson and Marilyn Brennan.

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ON THE FLOOR:

Solution Center Highlights

Left to right: Daryl Groet and Ryan Wehmann, area construction managers, McDonald’s USA.

The newest products and services from suppliers in store planning and design, construction and facility management were highlighted in the SPECS Solution Center. It was a record SPECS in terms of the number of exhibitors.

The exhibit floor provided retailers and other specifiers at the show with a wide variety of solutions, including lighting, flooring, signage, fire protection, general contractors, facilities maintenance, HVAC/energy management and more. The floor also proved the ideal ground for attendees to catch up with one another, collaborate and partner, whether it was in the aisles, at booths or at lunch.

Left to right: R.E. Crawford Construction’s Matt Padgett and Susan Courter with Trudy Calder, director of construction, East, Gap Inc.

Left to right: Todd Franke, architect, Walmart, with Freshco Retail Maintenance's Ryan Masson.

Left to right: Tarkett’s Kevin Tierney with Paul Schleef, VP, store development, Tuesday Morning.

Left to right: Joann Stores’ Erin Lackey, manager, store projects/ store development, and Christopher Monyak, supervisor of fixture installation, with Dwight Groom of Groom Construction.

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Left to right: Trevor Stoltz, facilities and construction manager, Von Maur/Dry Goods, with RAB Lighting’s Chuck Preacher.

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Left to right: Excel Dryer’s Paul Marquez and Jackie Audrey, with AutoZone’s Tinika Davis, maintenance and special projects manager, and Desiree Jones, energy coordinator.

Gary Schulter, director of construction, Aaron’s, with Annette Debiec of Egan Sign Co.

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SESSION SPOTLIGHT:

FM Tunes Into Technological Evolution

By Dan Berthiaume

Retail facilities management professionals can benefit from the same type of advanced solutions that are transforming the rest of the enterprise.

In a panel session at SPECS, “Digital Age Devices and Software for FM,” three FM veterans discussed how traditional facilities practices are becoming streamlined and even automated with leading-edge technology. Panelists Bill Hayden, CEO of FacilitySource, James Duffy, director of sales and marketing for IFTI, and Steven “Spence” Spencer, consultant for Anderwood Consulting, engaged in a lively discussion that touched by many different areas of FM. Hayden kicked things off by describing how retail FM professionals are increasingly moving from spreasdsheets to platforms as volumes of data they have to manage grow.

“Retailers are asking ‘How do I leverage all this data now?’ There are mobile apps, heads-up displays,” Hayden said.

In addition to dealing with surging amounts of data, Hayden said retail FM executives are also being asked to be more

James Duffy, director of sales and marketing for IFTI, described how drones can automate assessments of physical infrastructure.

efficient and perform tasks such as longterm forecasting and financial modeling.

According to Hayden, predictive analytics and artificial intelligence (AI)-based machine learning are burgeoning technologies that will help retailers maximize FM efficiencies. These types of solutions allow retail FM executives to perform more process automation, such as automatically searching for requests and dispatching work orders without an agent.

“Real-time notifications enable the ‘Uberization’ of the network,” said Hayden.

Spencer’s commentary picked up where Hayden’s left off, with an explanation of what he termed a “call-less” facilities management system.

“Now that there are ‘employee-less’ stores, how do you know when something is broken?” asked Spencer. “The trend is toward cashier less checkout. There aren’t people in the store to call in a ticket.”

Sensors: To effectively perform FM tasks in this type of automated store environment, Spencer recommended retailers leverage sensors and systems. However, as even cashierless stores still need some human shelf-management personnel, these employees will become increasingly important to FM. “Your new maintenance person is the shelf management personnel,” said Spencer. “Who (else) initials the ticket — the camera? The guy monitoring the employee there?”

Spencer cautioned that even though sensors and other detection systems can greatly reduce reliance on human intervention in FM activities, the need for human assets will not be eliminated.

“It’s a Tower of Babel,” he said. “The

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maintenance program doesn’t talk to the security program.”

Duffy described how self-piloting drones can automate assessments of physical infrastructure.

“Drones can perform aerial imaging,” said Duffy. “They can provide multiple perspectives from varying elevations, and not from just one snapshot in time.”

As a result, Duffy said drones can be valuable tools for performing different types of assessment associated with FM activities such as repair and due diligence.

“Drones can perform roof assessment with thermal imaging,” said Duffy. “They can perform external assessments of HVAC systems and parking lots. You can start assessments at Level Two instead of at the beginning.”

To help make the case for advanced technology budgeting, Spencer suggested that FM executives “speak the language of the people you are trying to get money from.”

“Saying purchasing a new technology solution produces a cost saving is not true,” stated Spencer. “Cost saving comes from not spending money.”

Instead, Spencer advised retail FM executives to frame their high-tech budget requests as “cost avoidance” expenditures.

“Cost avoidance means if you don’t spend the money here, you’ll spend it over there,” he said. “It’s like not spending money to change the oil in your car, and then when it breaks down spending money to fix it.”

However they frame a technology budget request, Spencer urged panel attendees to make sure the solution being requested has a legitimate business use case.

“You’ll never win a budget request if you’re just getting a toy,” Spencer added.

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SESSION SPOTLIGHT:

HVAC Regs On The Rise

By Dan Berthiaume Many different factors — from global warming to trade disputes — are affecting the design, operation and cost of heating, ventilation and air conditioning (HVAC) systems.

That message was brought home during the SPECS session, “HVAC Regulations: What You Need to Know.” Bobby DiFulgentiz, director of product management and marketing, commercial products for Lennox International, emphasized that retailers must familiarize themselves with all the regulatory activity surrounding HVAC systems.

“There have been more HVAC regulations in the last 15 years than in the previous 50 years,” stated DiFulgentiz. “We are constantly battling new regulations for refrigerant or efficiency. In the current political climate, there are a lot of environmental regulations for commercial heating and air conditioning.”

Focusing his discussion specifically on rooftop-mounted HVAC systems, DiFulgentiz said federal policy has a major impact in three key areas: Department of Energy (DOE) minimum efficiency standards, tariffs on imported equipment and components, and tax reform.

In the area of efficiency, the DOE has been increasing minimum standards for HVAC systems. In 2017, the DOE raised the seasonal energy efficiency ratio (SEER) for systems weighing five tons and under from 13 to 14. Di Fulgenitz compared SEER to the miles per gallon (MPG) efficiency standard for an auto.

In 2018, the DOE raised the integrated energy efficiency ratio (IEER) for systems weighing more than five tons by 15%.

DiFulgentiz said IEER is like an MPG rating for larger HVAC equipment. Both SEER and IEER measure efficiencies and outputs across various temperature points. In 2023,

the DOE is scheduled to raise IEER for HVAC systems by another 15%.

According to the speaker, these tighter standards result in higher equipment prices.

“The new DOE regulations drive technology down to the value of your equipment,” he said. “HVAC manufacturers and developers are doing more to meet raised efficiency standards. This means there is more technology in lower tiers of equipment. The cost will go up. There will be a price increase in premium products, as well. There are going to be new products from each HVAC manufacturer.”

The federal government has changed regulations governing tax write-offs for capital equipment expenses. Companies can now immediately write off equipment expenses of up to $1 million.

DiFulgentiz also reviewed a number of global and state-level regulations affecting refrigerant, the substance HVAC systems run to take hot air and make it cold.

As the result of global agreements, popular refrigerants R-22 and R-410A are in the process of being phased out due to their potential to contribute to ozone depletion and global warming.

In addition, in the U.S., the state-level California Air Resources Board (CARB) is phasing out refrigerants with certain levels of global warming potential by 2023. Since major refrigerant manufacturers that sell material in the U.S. do business in California, this regulation affects every state.

“As a result, there are new alternative

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refrigerants which meet regulations,” said DiFulgentiz. “But they are flammable. There need to be sensors in HVAC equipment to use them safely, which creates a higher cost.”

Building Codes: The speaker also briefly reviewed some building codes which will have an impact on the type of HVAC systems retailers will need to install. The federal ASHRAE 90.1 regulation places more stringent equipment efficiency and minimum standards for HVAC systems installed in 2010 or later.

And in California, Title 24 places tougher energy efficiency standards on HVAC systems. In October 2020, California will begin enforcing ultra-low nitrous oxide emissions standards, with Los Angeles County having even tighter regulations.

At the time of the SPECS conference in early March, the U.S. and China were in an ongoing trade dispute. This caused the U.S. government to place tariffs on different HVAC components manufactured in China.

“This increases the cost of parts, which increases the price of the system,” said DiFulgentiz. “Tariffs on parts from China run to 21% in some cases. We’ll see what happens in the next couple of weeks — we really don’t know. Manufacturers can try to use components from other countries, but it doesn’t happen overnight.”

In one good piece of HVAC-related news for retailers, DiFulgentiz said the federal government has changed regulations governing tax write-offs for capital equipment expenses. Companies can now immediately write off equipment expenses of up to $1 million. The Consortium for Energy Efficiency (CEE) is offering different tiers of rebates for installations of high-efficiency HVAC equipment that could potentially reduce costs further.

MAY/JUNE 2019 CHAINSTOREAGE.COM

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SESSION SPOTLIGHT:

Innovation Comes To The Dumpster

By Dan Berthiaume

New developments in regulations and technology are affecting every aspect of facilities management, even the dumpster.

Hosting the SPECS session “Beyond the Dumpster,” Ric Hobby, senior VP of sales for Quest Resource Management Group, discussed all the various factors influencing modern dumpster management. Hobby framed his conversation around what he said were three key areas for dumpsters — bad news, good news, and great news.

According to Hobby, while the amount of industrial waste being produced keeps climbing, options for disposal are shrinking. In particular, he cited a waste import ban enacted by China in late 2017 as having a major impact on how U.S. businesses get rid of solid waste.

“China is restricting disposal of 24 material types of solid waste,” said Hobby. “We can no longer export a lot of goods back to China. So how do we dispose of waste instead of exporting it?”

Partially as a result of the China waste import ban, as well as growing waste volumes, Hobby said landfill rates have been spiking across the U.S. “Municipal waste programs that may have charged $70 per ton a few years ago are now well into six-digit fees,” said Hobby. “In the U.S., there were 534 million tons of waste generated by construction and demolition projects last year. In 2025, there will be 2.28

“Municipal waste programs that may have charged $70 per ton a few years ago are now well into six-digit fees. In the U.S., there were 534 million tons of waste generated by construction and demolition projects last year. In 2025, there will be 2.28 billion tons of waste generated by construction and demolition projects.”

— RIC HOBBY, SENIOR VP OF SALES, QUEST RESOURCE MANAGEMENT GROUP

billion tons of waste generated by construction and demolition projects.”

All this activity is occurring as there is a heightened public focus on pollution issues caused by improper disposal of industrial waste, noted Hobby.

“There are images nobody wants to see,” he said. “Children are picking through trash.

There is a floating landfill in the ocean and wildlife is getting attracted to it. You want to see this get fixed. In Los Angeles, there is a major cleanup effort underway.”

Technology comes to the rescue: While dumpsters have not traditionally been thought

Landfill rates are spiking across the United States as a result of growing waste volumes and China's waste import ban.

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of as hotbeds of technology innovation, Hobby said technological innovation is indeed occurring at the dumpster level.

“There are new sensors that can take pictures inside the dumpster,” said Hobby.

“You can see what is inside the container and where the fill levels are.”

According to Hobby, the next step in dumpster technology innovation is equipping cameras and sensors with artificial intelligence (AI).

“With AI, you will be able to take pictures inside the dumpster and look at the types of material that are there,” said Hobby. “It is very important for retailers to try to streamline waste hauling, services, and contamination (remediation).”

One positive development that will help retailers effectively dispose of the growing volumes of waste in their dumpsters is significant advancement in efforts to recycle waste, rather than simply bury it in landfills.

“Waste disposal facilities are evolving,” stated Hobby. “They are morphing into fullblown recycling facilities.”

Using magnets to remove recyclable metals from the waste stream, as well as hand sorting to extract papers and plastics, Hobby said recycling facilities are rerouting solid waste items into bailers so they can be turned into commodities.

“Construction sites are looking for specific materials,” said Hobby. “The cost for virgin raw materials can be $100 or more per ton.

The cost for recycled materials can be only $50 or $55 per ton.

As examples, Hobby cited waste plastics being recycled into carpet materials, shingles being repurposed for road paving materials, and concrete blocks being reused as concrete.

“A growing amount of materials will be recycled, including textiles and masonry,” said Hobby.

The great news, he added, is that tomorrow’s construction materials will be made with post-consumer recycled materials.

Hobby ended his presentation with a call to action.

“Recycling technologies allow waste materials to be brought back into the supply chain, creating a sustainable, circular economy that helps minimize waste, water and energy footprints,” he said. “But this will only happen if we all do our part.”

MAY/JUNE 2019 CHAINSTOREAGE.COM

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5/1/19 10:34 AM

SESSION SPOTLIGHT

Designing for Construction Aging Shoppers Cost Trends

By Al Urbanski

By Al Urbanski

Want to know what it’s like for elderly customers to navigate your stores? Just strap on a headset that impairs hearing, a pair of goggles that narrows your field of vision, straps around your ankles and knees that simulate joint stiffness, gloves that reduce grip strength, and 100 pounds of weights to reduce mobility.

Benjamin Moore national accounts manager Michael Ecke, the extremely game moderator of the SPECS session “Retail Through the Lens of the Disabled and Aging” did strap on this GERT (gerontologic simulator) suit and, trust us, it did not look at all pleasant.

Session speaker Michael Steiner said he himself dons the suit occasionally, as do many of his co-workers at Corgan, the architecture and design firm where he is project manager and senior associate. Some of the company’s biggest clients are airports and healthcare facilities, and the company is constantly refining interior designs to make it easier for the aged and disabled to traverse these large and challenging spaces.

Steiner noted that while few governmental code requirements are on the books for accommodating the aged, that’s likely to change soon. When it does, retailers will no doubt be affected. By 2030, all baby boomers will be older than age 65, according to the U.S. Census Bureau projections. One out of every five residents will be retirement age and seniors will outnumber children for the first time in U.S. history.

The bottom line for designers of public spaces is that everything takes longer for older folks.

“They struggle to find room signs, it’s hard for them to get in and out of chairs, railings are a necessity, and they tire easily,” Steiner said.

While different people will obviously have different problems and disabilities, Steiner said that bending their knees is a common problem among all the elderly, so a variety of seating options including high chairs were used in Corgan’s re-design of the interior of Love Field airport in Dallas.

Other design elements incorporated by Corgan were improved overhead lighting, even floor surfaces, and larger lettering on signs with green backgrounds, which seems offer greater legibility.

“The health care and aviation industries are being proactive in this area,” Steiner observed, “but retail no so much.”

Young Americans attracted to careers in the digital economy are staying away from lucrative jobs in the building trades, and that’s causing big problems for general contractors trying to bring new projects in on time and on budget.

Wages for carpenters, steelworkers, plumbers, and HVAC specialists are rising at a 3% pace as jobs outnumber the amount of available skilled workers, contractors told attendees at a SPECS panel on construction costs.

“Lots of trade schools are shutting down,” said Rick Winkel, CEO of Winkel Construction and president of the Retail Contractors Association, at the SPECS session, “RCA: Construction Cost Trends. “Kids don’t understand they can make a really good living in the trades.

They’d rather work in offices.”

Winkel said that trend is compounded by the fact that many skilled laborers who had to seek other employment during the recession never returned to the trades.

The crucial message for retail real estate executives operating in this environment is to plan ahead, the panel advised.

“I don’t think retailers appreciate the time it takes to fill a bid. If you don’t give sub-contractors ample time, they just pass,” said Justin Elder, president of the G.C. ElderJones. “The optimal timing would be to get the bid out three weeks before a job. Two weeks is often okay. But one week is not enough.

They’ll just delete the email.”

Making new builds even more expensive for retailers is rising materials costs, which Elder said are

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rising at a rate of 7%, in part due to tariffs on imports put in place by the Trump administration.

“While we understand that this may turn out well in the long run, in the short-term it’s putting a big strain on our suppliers,” Elder said.

“The current rate of price increases is not sustainable and many people are rethinking new projects because of it.”

Forward-thinking retailers, panelists said, pre-buy essential equipment to avoid paying exorbitant prices when supply of essential equipment is low. Both Trane and Carrier offer pre-buying plans for essential heating and air conditioning units.

“Lighting is another area where retailers can negotiate good deals to pre-buy fixtures and then have a handle on their fixed costs,” said Steve Bachman, CEO of Retail Construction Services.

Permitting fees also contribute to rising costs. Most municipalities mandate that contractors use outside firms to expedite the permitting process and they end up paying almost double what they did when dealing with the town directly.

“Just a few years ago, permitting in a municipality that cost $30,000 costs $50,000 today,” Bachman said.

While the labor shortage may force general contractors to be more accommodating to their subcontractors, they should be held to agreed-upon schedules.

“At some point,” Bachman said, “You’ve got to call your sub and say, ‘Hey, get your butt in here and do what you were contracted to do.’”

MAY/JUNE 2019 CHAINSTOREAGE.COM

4/29/19 11:15 AM

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5/1/19 10:35 AM

STORE SPACES

Primark Goes Big

By Marianne Wilson

Primark, the Irish value-retail giant, has opened a massive flagship dedicated to bargain-priced fashion and beauty. It’s a one-of-a-kind destination, complete with a Disney-themed café.

Located in Birmingham, U.K., the fivefloor, 160,100-sq.-ft. store — recipient of a Guinness World Record as the “largest fashion store in the world” — aims to provide an immersive shopping experience. In addition to clothing and accessories for the

entire family and home goods, the new Primark features a spacious beauty salon, a barber shop, three dining experiences and several customized in-store shops, including one devoted to Harry Potter and another to Disney.

There is also a custom lab, where shoppers can personalize T-shirts and other goods. Charging stations are located throughout the space, which has a highenergy, youthful vibe.

The new Primark in Birmingham has three restaurants, including a Disney-themed café (above).

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Here is a rundown of store services.

• Beauty studio: The Duck and Dry Express offers a range of services, including the blow-outs and braiding, brow and lash services, as well as manicures, pedicures and nail art; • Barbers: Primark has collaborated with famed London barber Joe Mills to create his first standalone site outside of London.

• Restaurants: The Mezz Café is located on the mezzanine floor, and offers coffees, frappes, and pastries.

The Mezz Restaurant, located on the lower ground floor, has a menu that includes breakfast items, salads, handmade stone-cooked pizzas, and more.

The first-floor Primark Café serves a range of sandwiches, paninis and desserts. Shoppers can customize doughnuts in the spray bar, with icing, chocolate and sprinkles.

The Disney Café is located on the top level. To enter, customers walk through oversized mouse ears. There are also tables with interactive games and entertainment to keep little ones occupied throughout the meal.

Primark, founded in 1969 in Ireland and the U.K.’s largest retailer by volume, is owned by U.K. retail and consumer group Associated British Foods. The retailer entered the U.S. in 2015 and currently has nine U.S. stores, with plans to open additional locations.

In a digital age, Primark famously does not sell online. The brand has long maintained that its bargainbasement prices do not support online home delivery. But that may be changing: Primark reportedly will test a reserve-and-buy-online service, with the items picked up at the customer’s local store.

MAY/JUNE 2019 CHAINSTOREAGE.COM

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Located in a former shopping center, the five-level, 160,100-sq.-ft. store include such extras as a beauty salon and nail bar.

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STORE SPACES

Trending Topics

By Marianne Wilson

WALMART ROLLING OUT MORE ROBOTS Walmart is expanding its use of autonomous floor scrubbers powered by a computer vision and artificial intelligence platform as part of its wider effort to use technology to automate a variety of low-level, repetitive tasks across stores. The self-driving scrubbers, which are currently deployed in some 300 stores, are being added to 1,500 additional locations. Walmart’s partners in the venture include Tennant Company, which is providing its T7AMR (autonomous mobile robot) floor cleaner.

The machine is equipped with Brain Corp.’s self-driving operating platform, BrainOS. The system has the capability to navigate autonomously, avoid obstacles, adapt to changing environments, manage data, generate reports and seamlessly interact with end users. The scrubbers use “assisted autonomy” technology, meaning they require initial direction from a Walmart associate before being put into autonomous mode.

“This cleaner is another great example of technology helping make the Walmart job better—rather than riding on a floor-cleaning machine for several hours, the associate is now working with robotics to complete their duties,” said John Crecelius, Walmart senior VP of central operations. “The machine allows our associates more time to focus on completing other tasks within the role, but most importantly, it frees them up to serve our customers better.”

The robots operate “collaboratively alongside Walmart associates by utilizing a simple and intuitive ‘teach and repeat’ approach, which allows associates to easily deploy the machine and adjust cleaning routes as the environment changes,” explained Brain Corp.

TARGET FLIPS THE SWITCH A lighting upgrade has paid off big time for Target Corp., helping it cut costs while also aiding the planet. In 2015, the retailer kicked off a test at about 100 stores in which it replaced the existing fluorescent ceiling light fixtures with LEDs. Currently, more than 2 million “smart” LED fixtures are in place across nearly all of Target’s stores nationwide, and are also being installed in all new construction.

The LED lighting has amounted to millions of dollars in cost savings, Target said, and is expected to make a big impact on the company’s energy reduction goals and new climate goals. The retailer credited the LEDs for reducing the energy required to power its stores by 10% annually. In terms of greenhouse gas emissions reductions, the energy reduction is the equivalent to taking 70,000 cars off the road for the year.

The company noted that the LEDs provide double duty. Their built-in digital technology interacts with the Target app, helping customers who choose to opt-in map their way through the store on a mobile phone. (Target’s LED lighting partner is Acuity Brands.)

Target plans to expand its use of LEDs during the next few years, installing the fixtures in hundreds of its parking lots, stockrooms and other store spaces.

STARBUCKS GETS LOCAL WITH SOLAR INVESTMENT Starbucks Coffee Company is taking a unique approach to renewable energy by investing in solar farms regionally to support a specific group of stores. The coffee giant has teamed up with solar company Cypress Creek Renewables and U.S. Bank on a portfolio of solar farms across Texas. As a part of the deal, two 10-megawatt solar farms developed, built and now operated by Cypress Creek, are providing enough energy for the equivalent of 360 Starbucks stores in Texas. ENGIE Resources is providing full retail energy requirements, including a structure that provides budget certainty via a fixed price and a simple retail energy supply contract.

Starbucks is separately investing in six Cypress Creek-owned solar farms in Texas, representing 50 megawatts of solar energy. In total, the portfolio of eight projects is reducing carbon emissions by an estimated 101,000 tons per year, the equivalent of planting nearly 2.5 million trees.

The U.S. Bancorp Community Development Corp., the tax credit division of U.S. Bank, brought Cypress Creek and Starbucks together to facilitate the transaction and provided a portion of the tax equity investment. The retailer and U.S. Bank previously worked together to develop and finance a solar project, a 47-megawatt solar farm in Maxton, N.C., that powers 600 Starbucks stores.

WHOLE FOODS JOINS INNOVATIVE ENERGY STORAGE PROGRAM Whole Foods Market has joined California’s Demand Response Auction Mechanism (DRAM) which shifts the grocer’s large refrigeration-based energy loads to off-peak hours while also offering financial incentives for buildings that reduce power consumption. Three Whole Foods locations in the northern part of the state will utilize energy storage to actively reduce power consumption and benefit from the financial incentives. The stores will earn the incentives during peak hours when demand for energy is high and the grid is stressed.

Whole Foods’ participation is possible through its use of Axion Exergy’s refrigeration battery platform, which enables real-time control of a grocery store’s power consumption using an advanced cloud platform, predictive analytics and a thermal energy storage retrofit. The platform actively manages the store’s power consumption by intelligently modulating its refrigeration systems.

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MAY/JUNE 2019

CHAINSTOREAGE.COM

4/29/19 11:07 AM

CHAIN STORE AGE -INJURY 2/3 Vert May Sept_Chain Store 3/8/19 10:07 AM Page 1

StoreSpaces e-newsletter The only industry newsletter dedicated to store planning & design, construction, and facilities management.

Get the latest news on retailers’ expansion and remodeling programs, new store prototypes, green initiatives, facilities updates and more. Find out who’s opening stores and where.

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STORE SPACES

Fast Fashion Gets a Revamp New H&M has upscale feel, lifestyle focus

By Marianne Wilson It’s not your typical H&M. The Swedish apparel giant has transformed its 24,000-sq.-ft. location at Kings Mall in Hammersmith, a borough of west London, giving it a much more upmarket look and relaxed vibe.

The redone store offers a dramatic departure from the chain’s typical format, with its bright white interiors and racks upon racks of tightly-packed merchandise.

It is one of several new interior concepts H&M has opened recently, with the locations all designed to create a personal and welcoming ambiance and an improved, more aspirational customer experience.

The Kings Mall store boasts a Mediterranean-styled interior that is warm and welcoming, with flagstone flooring and live greenery creating a covered courtyard feel.

The theme is reflected in the background music (a mix of Spanish and Italian pop songs) and the spacious fitting rooms, which are done in muted sepia-washed colors, arched mirrors and grey brick flooring with a herringbone pattern. A striking, wrought-iron staircase connects the three floors. Terrace-styled chairs and stools are located throughout space.

As much as the overall aesthetic, it is the curated, lifestyle merchandising strategy that sets the new H&M apart. Clothes displayed on tables are also grouped with accessories and products from the retailer’s home line. Staff faves are called out throughout the store. Sampling is encouraged in the beauty department.

Tech elements include digital screens outside the dressing rooms that show images of customers wearing their recent purchases, with the images shared via the #HMxME hashtag on Instagram. The store also blends the online and offline worlds.

Signs encourage shoppers to activate the in-store mode of the H&M app. Customers can use it to save favorites by scan-

ning price tags, search for different sizes or colors and explore what is currently available in the store. And when it comes to checking out, customers can opt for the traditional method or use self-service stations.

Signage at the checkouts encourages customers to recycle their old clothing in exchange for a small discount. They can

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also take advantages of services in the “Repair & Remake” department that encourage customers to keep their clothes longer by offering free repair of H&M clothes.

The service is available without charge for members of the H&M Club loyalty program (non-members pay a slight fee).

The department also offers embroidery personalization.

MAY/JUNE 2019 CHAINSTOREAGE.COM

4/29/19 11:05 AM

STORE SPACES Q & A

Facilities Management Goes Strategic Retail facilities management is rapidly evolving, fueled by technology developments that are changing the industry and moving it to more of a streamlined, integrated discipline. Michael Toth, CIO of multi-facility services and management company NEST, spoke with Chain Store Age about how these changes can benefit retailers.

Q What are the key trends in retail facilities management?

The industry is moving to integrated facilities management. An integrated facilities management (IFM) program moves retailers away from siloed, tactical management to an end-to-end strategic program. An IFM partner offers retailers operational execution, financial consulting and program analytics that help drive the bottom line.

Q What are some of the most common mistakes retailers make when it comes to executing an integrated facilities management program?

One of the biggest mistakes retailers make is getting locked in with a partner that holds them hostage with fees and lengthy contracts. The retailer ends up paying exorbitant amounts of technology fees — typically per location, per work order — that continue to go up year-over-year.

In addition, the retailer does not have the ability to customize the software to its operational specifications nor is it easy to access its data and leave the provider at the end of the contract.

Q Tell us about NEST’s IFM program and what makes you unique.

Our corporate culture is what really makes us unique. Many of our employees have been with us for 10 plus years and come from the retail industry. Each of them has built a personal relationship with our clients; when a customer calls in, they reach a live person and are never put into a queue.

Even our CEO tells our clients to just pick

up the phone and call him. In addition, we value our clients in the IFM program as strategic partners. In this partnership we work together to build solutions that are mutually beneficial.

Q How has technology impacted facilities management?

Technology has helped save retailers millions of dollars on their facilities and operational spend. It has given them access and insight into their facilities programs that they never had before. The CFO now has full transparency into the program and how it is affecting the bottom line. When technology is linked to industry expertise and business intelligence, it becomes the most powerful tool creating value for clients.

Q How has it (technology) impacted the services NEST offers?

Technology completely drives our integrated facilities management solution. We give our clients full transparency into their program, including the spend and operations’ activities on demand and in real time. Not only does the corporate office have access, but the individual locations are able to enter their service requests on demand and monitor the status of their requests.

Our command center, which operates around the clock 365 days a year, works directly with the independent service providers (ISPs) to schedule the request. In addition, the ISPs leverage the technology to submit the work orders, project quotes, pictures, etc. (with no associated technology cost to them). The corporate office has direct access

to the items from the ISPs to approve in real time and help speed up execution.

Q What benefits do technology FM solutions offer retailers?

FM technology solutions offer retailers a 360-degree view of their FM program including operations, vendors and, most importantly, spend. In-depth analytics help drive budget and forecasts while dashboards and reporting give the C-suite insight into overall program success. With a fully implemented solution retailers now have the time to drive more strategic programs and elevate away from the tactical daily execution.

Q Why is insight into data so critical?

It can help drive savings to the bottom line.

Data is vital for budget and forecasts. It’s critical to understand what has been paid for already, what has been billed and not paid and what services have been completed but not billed. Without knowing these three numbers at any given time, you do not have the full picture of your FM spend and you cannot adjust if necessary.

Q What advice do you have for retailers that want to bring greater efficiencies into their FM programs?

Seek a strategic partner that gives your organization full end-to-end program visibility through integrated facilities management, financial consulting services and industryleading technology with no technology fees or contracts. And seek one that also provides an alternative to the legacy cost models that dominate our industry.

CHAINSTOREAGE.COM MAY/JUNE 2019

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SHOP TALK Trending Stores: Showfields, which bills itself as “the most interesting store in the world,” has opened in downtown Manhattan. Part retail, part art exhibition and part community space, the four-level, 14,707-sq.ft. store is reflective of a new retail model that makes it easy for digitalfirst brands to connect with customers in the physical space without taking on the risks and costs of a dedicated store. The brands select Showfields a space, which is then customized, fitted out (including with technology) and staffed by Showfields, with the brand paying a monthly fee. The line-up, which will rotate, includes about 40 curated brands from wellness, home and design, along with dedicated food, drink and event programming. … Ikea has brought its downsized, urban format to the U.S., opening its first U.S. city-center location, on the Upper East Side of Manhattan. Tagged the Ikea Planning Studio, the 17,350-sq.-ft. store is focused on small space/city-living solutions and provides personalized design and planning services.

All purchases are delivered (for a cost) to the customer’s home.

π THE FINISHING TOUCH!

… Also coming stateside is Godiva Café, which recently opened its first U.S. outpost in Manhattan. The luxury chocolate brand expects to open 10 additional locations in the Northeast by yearend. … Digitally native home furnishings and décor giant Wayfair will open its first full-service brick-and-mortar location, at the Natick Mall in Natick, Massachusetts, in early fall. … Champion Athleticwear continues to expand its retail footprint, with the opening of its fifth U.S. store, in downtown Philadelphia.

The 3,040-sq.-ft. outpost is Champion’s first two-floor store in the U.S. — with the entire second level dedicated to customization. Customers can create their own unique Champion gear using a variety of colors, fonts and patches via on-site embroidery and customization services. Champion’s heritage is on display with archival items that range from vintage product and memorabilia to wallpaper made of collages of company ads, catalogs and other images from the brand’s 100-year history.

Company Updates: Retail design consultancy ChangeUp Inc., Dayton, Ohio, acquired Interbrand Retail from Omnicom Group.

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Connected

TECH VIEWPOINT

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Proposed Antitrust Legislation Could Reshape E-commerce

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By Dan Berthiaume

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From e-commerce and mobility to in-store technology and social media, Connected Retail keeps retail executives in the know about the fast-paced, ever-evolving world of retail tech.

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Sen. Elizabeth Warren (D-MA) recently called for the government to break up Amazon, Google and Facebook. In addition to accusing the three online giants of stifling competition by using their market power to pressure smaller companies into mergers, Warren calls out their proprietary third-party marketplaces as unfairly limiting completion.

As a remedy to what she sees as an unfair situation, Warren would seek to pass legislation requiring companies that have annual revenue of $25 billion or more and also offer a public online marketplace, exchange, or platform for connecting third parties to be designated as “platform utilities.” Platform utilities of this size could not own both their utility and any third-party participants.

There is no guarantee Warren’s plan will ever get off the ground, and I’m not here to say whether it is right or wrong. I am interested, however, in how it would benefit three of the targeted companies’ e-commerce competitors.

Walmart: Anything that weakens Amazon’s position in e-commerce can only benefit Walmart. Like Amazon, Walmart has a national distribution network that can quickly deliver packages to online shoppers anywhere and the clout to force favorable terms from its suppliers. But it also has an extensive store network to support its online efforts.

If Amazon falls from its number one ecommerce spot, Walmart is first in line for the throne. Yes, Walmart has an online marketplace with third-party sellers. But its operating model may fall outside regulatory action.

Pinterest: Although not technically an online retailer, Pinterest enables users to engage in e-commerce through such features as shoppable product pins and “Shop the Look,”

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recently updated with computer vision.

Now Pinterest has hired Walmart CTO Jeremy King, instrumental in building Walmart’s omnichannel retail business, as head of engineering. The company also publicly filed for an IPO; with rumors that it may seek valuation as high as $12 billion. A thriving e-commerce operation would surely impress financial investors and analysts.

Although Facebook does offer its own third-party marketplace and engages in omnichannel partnerships with retailers, the company’s Instagram subsidiary is much more of a direct e-commerce competitor to Pinterest. Instagram’s online retail efforts, like its in-app “Checkout on Instagram” feature, are developed independently of Facebook. But the disruption caused by Warren’s proposed undoing of the Facebook-Instagram merger may inhibit the visual social platform’s e-commerce developments.

Walmart, Ebay and Pinterest are among the companies that would benefit from proposal to break up Amazon, Google and Facebook. eBay: Anything weakening the influence of the Amazon and Google online thirdparty marketplaces can only help online marketplace pioneer eBay. Since eBay essentially sells none of its own merchandise, it shouldn’t be subject to proposed marketplace regulations.

A new e-commerce environment where the Amazon and Google marketplaces had to operate without the resources of their parent companies would create a huge competitive opening for eBay. Along with Walmart, eBay would stand to potentially pick up the online business of a lot of brands and retailers that currently operate stores on the Amazon and/ or Google platforms. eBay seems to be preparing for an influx of business from younger and international consumers with plans to accept Google Pay for some purchases, as well as its ongoing acceptance of Apple Pay.

Dan Berthiaume dberthiaume@chainstoreage.com MAY/JUNE 2019 CHAINSTOREAGE.COM

4/29/19 11:03 AM

TECH

Getting Physical With Virtual, Augmented Reality

By Dan Berthiaume Retailers are increasingly seeing opportunities for virtual reality (VR) and augmented reality (AR) solutions in the brick-and-mortar store environment.

VR, which creates a realistic digital experience, and AR, which overlays digital information into a viewer’s line of sight, can be used in both online and physical retail settings. Here are a few recent examples of retailers leveraging VR and AR technology to enhance the brick-and-mortar customer experience.

Macy’s: Facing the future of cosmetics Leveraging technology from AR beauty solutions provider Modiface and in-store beauty displays, Macy’s is enabling customers at select locations across the country to virtually test single beauty products or entire looks, which they can also share on social media.

This virtual makeup experience is available for more than 1,000 beauty products across major brands covering face, eyes and lip cosmetics in Macy’s mobile app as well as on in-store displays.

Helzberg Diamonds: Creating some omnichannel dazzle Specialty jewelry retailer Helzberg Diamonds has introduced the “Helzberg Virtual Ring Experience,” which is designed to bridge the online and in-store shopping environments.

Walmart’s virtual reality experience — complete with full-motion chairs — offered a five-minute journey into the hidden world of a popular film franchise.

The display leverages AR images on an interactive touchscreen to enable couples to virtually try on more than 100 ring styles in multiple viewing angles. Customers can also share photos of their selections through social media and email with family and friends.

The new concept is a part of a broader strategy around customer interaction in both the digital and physical space. The company now has seven “next-generation” stores which feature the virtual ring display and other digital enhancements, with plans to double that number by late 2019.

Walmart and AT&T: Bringing fantasy to life Walmart and AT&T have both offered instore promotional tie-ins that let customers virtually interact with settings and characters from popular fantasy series. Earlier this year, Walmart collaborated with the DreamWorks Animation to provide an immersive VR experience in the parking lots of select stores, tied to the February theatrical release of “How to Train Your Dragon: The Hidden World.” Participants were led to a dragon’s cave to suit up in headsets, sit in specialized Positron motion VR chairs running on HP VR technology, and take a five-minute virtual journey through the world of the film with immersive real-world sound, motion and sensory cues.

Similarly, AT&T partnered with HBO and VR headset provider MagicLeap to provide an immersive encounter with monsters and characters from “Game of Thrones.” At AT&T flagship stores, customers had the opportunity to wear a Magic Leap One VR headset and participate in a themed experience called “The Dead Must Die: A Magic Leap Encounter.”

Customers wearing the headset entered a virtual representation of the King’s Landing setting from the show. Carrying a virtual torch, they proceeded to have interactive encounters with series figures such as wights and White Walkers.

Store Offerings Lag Consumer Interest Two recent studies suggest consumers are more ready to experience VR- and AR-enabled in-store shopping than retailers are to provide it.

According to “The Future of Shopping” from McKinsey, more than 60% of U.S. consumers have never encountered VR or AR technology in a brick-and-mortar store. However, 62% would definitely/ probably use VR/AR applications that provided more information, and 59% would definitely/probably use VR/ AR applications to see a product “in context,” such as visualize a paint color on a wall.

Furthermore, 64% of U.S. consumers would use a VR-enabled digital shelf to browse products, and 59% would use it to receive product recommendations.

Fifty-eight percent of U.S. consumers would use a VR-enabled digital shelf outside a store’s location to make purchases.

And in “Special Report: The Future Store” Boston Retail Partners revealed that 32% of consumers are more likely to shop at a store offering an augmented reality (AR) experience and 29% would like a virtual reality (VR) experience as part of their shopping environment.

However, the study also demonstrated that retailers are playing catch-up when it comes to in-store deployment of AR and VR solutions.

Only 9% offer AR to their brick-andmortar customers and another 29% plan to within three years. Even fewer (7%) currently offer VR capabilities to instore customers and 23% plan to within three years.

CHAINSTOREAGE.COM MAY/JUNE 2019

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TECH

GNC Gets Personal Retailer taps into data to enhance in-store experience

By Dan Berthiaume GNC Holdings is applying data analytics and lessons from online retailing to its extensive brick-and-mortar operation.

The specialty health and wellness retailer operates some 8,400 locations, of which approximately 6,200 are in the United States (including about 2,200 in-store shops at Rite Aid locations). Joe Gorman, executive VP operations, GNC, spoke with Chain Store Age about how the company is using omnichannel strategies, advanced data analytics and good old human interaction to provide the type of brick-and-mortar experience that appeals to today’s savvy customers.

How have customer expectations of the store experience changed in the past few years?

Customers have come to expect the same experience from brick-and-mortar as they see online — from more personalized interactions to speedy checkout. They want access to more information to ensure they’re making meaningful purchases, which means that in-store associates need to be equipped with the tools to meet those consumer needs.

How can retailers provide customers with solutions to make the in-store experience more personal?

Retailers must understand their audience in order to make the in-store experience more

personal. This involves using data on the back end to truly understand what their audience wants. We know that everything from the store design to signage plays a big role, so it’s important to figure out what works best for your consumers: how do they shop in store? What products are they buying more of? How can we engage them throughout?

We recently launched our concept store in South Hills Village Mall in Bethel Park, Pennsylvania, to test out certain concepts to see what resonates with our consumers. The store features registered dietician consults, customized regimen recommendations, an in-store body composition analyzer, and health and wellness seminars, all of which are meant to educate consumers on their unique health profile to provide a truly customized plan that meets their needs.

While this is specific to our store, retailers must dig into what works for them, whether it’s providing perks that consumers can only receive by coming into the store or making sure store associates are going above and beyond to make consumers’ shopping experiences more seamless.

How can retailers provide associates with solutions to make the in-store experience more personal?

At GNC, all of our associates go through an in-depth training program before stepping out on the sales floor.

This ensures they have the right tools to make each customer experience unique and customized.

Giving associates an opportunity to learn about each product and

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102_CSA_6_19_SS GNC.indd 102

how it might benefit a consumer, as well as providing them with hands-on training that’s both fun and educational, gives them what they need to be able to tailor each recommendation to the consumer.

It’s also important to remember that people have different ways of retaining information, and staying in constant communication with your associates is key to making sure they succeed.

What can retailers do on the back end to make the store experience more personal?

Use data to your advantage. Customer data allows you to gather valuable insights on the effectiveness of product placement, store location, advertisements, etc., to create a shopper-first experience. As the current retail blueprint is shifting, retailers must evolve their thinking and provide customized solutions without losing sight of the customer.

Additionally, use your e-commerce channels to your advantage. Tap into what customers are doing online to mimic your online experience in-store.

What strategies help reduce friction between the brick and mortar and digital channels to enable more personalization in-store?

“Incorporating tablets within the store, as well as in-store use of loyalty data, has helped provide a customized experience for our consumers. Through tablets we can access customers’ past purchases to serve them more quickly and even provide recommendations for alternative or supplementary products they may want to try.

“Understanding the customers’ purchasing habits helps us bridge the gap in store for recommendations on what to buy.

Additionally, having the ability to shipto-home and sign up for our subscription services enables a “how to” buy dimension that brings the customers back.”

MAY/JUNE 2019 CHAINSTOREAGE.COM

4/29/19 11:00 AM

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