Smart Retail Landlords Must Create Major Events

Scott Kaplan, an EVP at JLL.

INLAND EMPIRE, CA—Last week, GlobeSt.com exclusively reported that JLL hired Scott Kaplan as EVP and Erik Westedt as SVP to expand its Southern California Retail practice. GlobeSt.com chatted further about the state of the market among other things in this exclusive Q&A. GlobeSt.com: How would you describe the state of retail leasing market in Southern California? Scott Kaplan: Overall the market is very strong. The significant leasing activity from grocery stores, quick-serve restaurants and discount retailers is continuing with no immediate slow down in sight. In many cases historic rents are being achieved in Orange County as well as Inland Empire. There continues to be a focus towards the ‘A’ real estate and retailers paying a premium to be in those centers. More than ever the specifics of the project is much more important than the geographic market where the property is located. Flagship properties can name their price to investors and interest from tenants seem endless. In general, good retail real estate figures things out. As an example, the Shoppes at Chino Hills has been able to secure Old Navy. Victoria Gardens in Rancho Cucamonga continues to achieve above average sales (top 10% of shopping centers). Simon did a great job turning around Ontario Mills and further expansion is underway.  The big question — as landlords drive rents, will retailers keep paying? Good brands and good operators are keeping up and are expected to continue to do so for the near future. GlobeSt.com: What does it take for a retail landlord to succeed in today’s market? Kaplan: Measuring success has changed over the last decade.  In today’s market, it starts with a good marketing program. Creating a culture and environment with architecture, customer service and right tenant mix with restaurants, pocket parks and water fountains provides for the foundation of a premier experience. The smart landlords create major events so that consumers have reasons to take their family. Consumers no longer have to shop but they want to be around people and go out. The environment of a center has become crucial to the success. GlobeSt.com: How can the redevelopment of a center play an integral role in its success? Kaplan: As the environment of the center has become center stage to its success, redevelopment of center has and will continue to be a crucial step to achieving that success. Along with redevelopment comes more restaurant and entertainment choices. For example, Kaleidoscope and The Triangle in Orange County continue to grow with consumers through the redevelopment evolution of its centers. Redevelopment will continue to allow centers to be successful. GlobeSt.com: Discuss the differences and similarities between the retail leasing market in the Inland Empire vs. Orange County? Kaplan: It is much more about the shopping center than the geographic market. A well located and well anchored center will attract best-of-class retailers. In Orange County we are seeing more expansion of regional restaurant chains, many of them focused along the coastal region. Inland Empire is seeing strong activity from restaurants and retailers alike. One of the more notable new commitments to the Inland Empire market is Whole Foods with the 365 concept, a first class example of how location and anchor is the driver of demand.