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UP-AND-COMING RETAIL DEVELOPMENT TRENDS The retail industry is seeing several trends spike in popularity in 2022. From data-driven technology to redevelopment, here are the top trends in retail development.
1. REDEVELOPMENT The mega-mall and traditional shopping centers no longer reign supreme. Consumers are looking for a more localized shopping experience beyond a singular purchase. Retail developers are taking established shopping centers and creating modern, open-air, and sustainable mixed-use assets. These developments introduce multiple opportunities in one space and become a community staple, offering services and entertainment alongside favorite storefronts.
2. UTILIZING TECHNOLOGY Technology is top-of-mind for retail developers in today’s age. As physical stores begin to launch high-tech initiatives, designers and contractors need to ensure the building has the correct infrastructure. Augmented reality (AR), QR codes, and in-queue checkout are all different ways retailers are using technology in daily store operations.
“NIKE HOUSE OF INNOVATION 000” ALLOWS PATRONS TO RESERVE SHOES ONLINE, PICK UP IN SMART LOCKERS, AND TRY ON IN-STORE.
3. COLLABORATION Teamwork is the main objective when starting development. Construction, marketing, and IT are working as partners to design next-level locations and environments that keep customers coming back and interacting with the retailer’s brand before and after entering the doors.
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The future of retail development is bright but not without its challenges. Costs are predicted to heighten in the near term while the nation continues to battle with unbalanced supply and demand and historic inflation. The new generation of shoppers expects more and has revitalized brick-and-mortar retail, forcing a modern wave of design and technology in construction. As the retail landscape shifts, developers will need to pay close attention to the mix of vendors they engage and the overall experience they are offering patrons.
Tripp Brown tripp.brown@matthews.com (615) 667-0157 MATTHEWS™ | 47
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ALL THE NEWS, ALL THE DEALS Real estate is never just about real estate. It’s also government
policy, financial markets and new technologies that are changing the way we do business. At The Real Deal, we cover it all so you can stay one step ahead to make smarter decisions.
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NOVEMBER 7-9, 2022 1HOTEL SOUTH BEACH
More than 125 of the Nation’s Top Owners, Developers & Investors are Already Signed Up to Attend Ascent 2022. Are you on the list? Ask how you can join the invitation-only list of executives from: Angelo Gordon Apollo Capital One Ares Management Walker & Dunlop Investment Partners Tryperion Partners Marcus Partners HIG Capital Pine Tree Invesco DRA Advisors Howard Hughes Corporation Blackstone TGM Associates Mesa West Capital Silverstein Properties Related Group Equinox Development Properties LaSalle Investment Management Hines DLC Management Stonemont Financial Group Blue Vista Capital Management Time Equities Veritas Investments Dalfen Industrial CA Ventures CIM Group Aurora Capital MSD Partners Churchill Real Estate Monarch Alternative Capital GEM Realty Capital Pearlmark Real Estate Square Mile Capital MRP Realty Olympus Ventures Bain Capital Real Estate Cadre GTIS Partners North American Properties Post Brothers CBRE Investment Management Starwood Capital KAWA Capital Management The Bedrock Group Madison Realty Capital Stonehill Strategic Capital Quad Property Group Grand Peaks Properties Slate Asset Management The Rockefeller Group Lonestar Development Partners Contrarian Capital Management Barker Pacific Group Olive Tree Holdings Taconic Partners Canyon Partners iStar Thor Equities Wingate Companies American Real Estate Capital MetLife KKR The Meridian Group City Center Realty Partners Rising Realty Partners The Milestone Group Nuveen StepStone Group Peachtree Hotel Group 29th Street Capital Wharton Equity ACORE Capital 90 North Group Cielo Property Group Prelude Capital Big V Properties Kingbird Investment Management Cedar Street Companies
Email curators@bisnow.com now.
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March 2022 YOY Rent change for 10’x10’ units Source: Yardi Matrix
National Miami Atlanta Charleston (SC) Tampa Charlotte Phoenix Orlando Houston Las Vegas Inland Empire 0%
2%
4%
6%
8%
■ Non-Climate-Controlled
10%
12%
14%
16%
18%
■ Climate-Controlled
New Development Activity Over 3,300 self-storage properties have been built in the U.S. since 2010, with over half of them completed since 2018, according to CoStar. There are 3,992 self-storage facilities in various stages of development currently – 726 of which are under construction, 1,410 in planning, and 554 are prospective developments. However, given the rising material costs for construction, competition for labor, and slow municipal approval processes, development competition may be deterred. The total number of self-storage properties in the U.S. stands at over 50,000, according to Storage Cafe.
The self-storage market was valued at $48.02 billion in 2020 and is projected to reach $64.71 billion by 2026 with a compound annual growth rate of 5.45 percent. These metrics are impressive from any investment standpoint, and the concerns surrounding oversupply are less apparent as demand has largely absorbed new products. Emerging markets with considerable population growth, and large gateway cities, will continue to give new development opportunities.
buyer composition Source: RCA
2017-19
Medical Office 10%
58%
14%
77%
Mobile/Mfd. Housing R&D/Life Sciences
2021
16%
Self-Storage Student Housing
35%
Cold Storage 12% Tech/Data Center 13%
11%
31% 23%
76% 30% ■ User/Other
14%
11%
19%
■ Private
50% 11%
55%
26%
25%
76%
34%
61%
24%
34% ■ REITs
12% 35%
26% 30%
20%
51% 20%
14%
13%
82% 25%
23%
53% 39%
60%
10% 12%
65%
Age-Restricted
15%
■ Institutional
40%
17%
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Self-Storage Outlook The self-storage industry is less sensitive to economic shifts as demand for storage exists both during economic downturns (as people downsize in housing or move in with family) and when the economy is strong (more disposable income and heightened demand for commercial users). As such, self-storage facilities hold value better and recover quicker during weak periods. There is now more capital than ever chasing these deals, with institutional funds and private equity groups entering the space with hundreds of millions of dollars to place. Although interest rates are set to rise in 2022, cap rates should see little to no change in institutional quality investment opportunities. With exceptionally high occupancy rates in place, most operators will start spring leasing with pricing power to increase rates and bring current leases up to market rates. It’s unlikely rent growth will match that of 2021’s 8.5 percent, but Yardi Matrix analysts anticipate strong overall growth in 2022. Despite the difficulty of matching a year like 2021, the self-storage industry is poised to continue to outperform other asset classes and attract investors from every commercial real estate sector.
austin mcleod austin.mcleod@matthews.com (404) 445-1093
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EVENTS GlobeSt. – Serving the CRE Industry for more than 70 years! GlobeSt.’s suite of publications and events covers the entire commercial real estate ecosystem, providing our users with a 360-degree view of their industry. Punctuated by well-researched and incisive news and analysis, and bolstered by insightful thought leadership, innovative ways to access information, exclusive events, and pragmatic tools for implementing new strategies, GlobeSt.’s real estate industry capabilities are uniquely focused on giving our readers a competitive edge in their business initiatives.
GlobeSt.com GlobeSt.com’s trusted and independent team of experts provides commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build their businesses. We celebrate those that are adapting and succeeding in new ways, translate the impact of macro issues, local market trends and emerging technologies into digestible, shareable information that can be immediately put into real-life practice.
GlobeSt. Real Estate Forum magazine GlobeSt. Real Estate Forum magazine is a must-read for the nation’s leading decision makers in all segments of the commercial property industry. Each issue delivers in-depth analysis of the latest market conditions, insightful case studies, company profiles, interviews with innovative thinkers, demographic trends – everything you need to know to make smart business decisions.
GlobeSt. Events
EVENTS
GlobeSt.’s event portfolio delivers a combination of local market commercial real estate forums and national forums designed to tackle some of the most challenging real estate opportunities across sectors such as Healthcare, Apartments, Net Lease and Industrial.
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THE
EXPLOSIVE GROWTH
IN APARTMENT RENTS
BY AUSTIN GRAHAM 114 | SPRING/SUMMER 2022
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