Sandy Sigal, CEO/co-chairman for Tarzana, CA-based-Newmark Merrill, says infill retail space, such as Ralph's Markets, 99-Cent Stores and Wal-Mart--the type of product his firm invests in--has always done better than trendy retail space and, "if anything, for the next year we're optimistic about our tenant pool."
Although the "all important holiday season" was a letdown in 2000 and spelled an end to some retail businesses, Marianne Waggoner, executive manager of Retail Services for CB Richard Ellis, contends, "We're actually at the end of a cycle of expansion and emerging retail properties." She notes, however, that retailers with a strong brand like the popular Kohl's stores, which announced plans to expand westward just last week, will grow stronger and thrive, even during hard times. "Strong branding--something that you're known for--seems to be the characteristic that bridges all others--gets you past the other issues--and will become an increasingly dominant."
Waggoner also says that retailers who offer a mix of internet and traditional store shopping--provide customers with a "brick and a click"--have great ideas and concepts; provide new, exciting shopping experiences and promote them well; listen to their customers and respond accordingly, and offer convenience and competitive pricing, will lead the retail market in the years to come.
Reflecting on the disappointment over sales during the 2000 holiday season, she says that retailers' expectations were far too lofty, unrealistic, given market indicators earlier in the year--rising interest rates, gas prices and electricity--that signaled a slowdown. However, Waggoner notes that the indicators came too late for most retailers, who had already invested in inventory--placed their bets--hoping to continue to ride the retail wave they had enjoyed over the past 10 years. "The 10-year wave had to catch up at some point," Waggoner adds. "The wave kept some retailers in business that probably should have closed years ago."
As for CBRE's role in the changing retail marketplace, Waggoner says her firm will continue to assist those retailers who need help disposing of or repositioning their businesses--advise them on how to improve their bottoml ines--and owners in making the right tenant fits. "We take an integrated service approach and can help with strategies that best service the client... ensure tenants have strong credit, fit with the theme of a center and meet the community's needs."
As for Sigel, he says, "Clearly we're staying away from tenant groups that are somewhat trendy or require discretionary spending. We're not investing in properties dependent on housing growth, which suffer in the receding tide of a turndown."
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